Exhibit 10.1

FACILITY AGREEMENT

FACILITY AGREEMENT (this “Agreement”), dated as of October 2, 2015, between AAC
HOLDINGS, INC., a Nevada corporation (“Borrower”) and the lenders set forth on
the signature page of this Agreement (together with their successors and
assigns, the “Lenders” and, together with the Borrower, the “Parties”).

W I T N E S S E T H:

WHEREAS, the Borrower wishes to borrow from the Lenders up to One Hundred
Million Dollars ($100,000,000) for the purposes described in Section 2.1;

WHEREAS, each Material Domestic Subsidiary (defined below) of Borrower shall
guaranty the Obligations (defined below); and

WHEREAS, the Lenders desire to make loans to the Borrower for the purposes set
forth in Section 2.1.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the Parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 General Definitions. Wherever used in this Agreement, the Exhibits
or the Schedules attached hereto, unless the context otherwise requires, the
following terms have the following meanings:

“Acquisition Loans” shall have the meaning provided therefor in Section 2.4.

“Acquisition Notes” means the Senior Subordinated Notes issued to the Lenders
evidencing the Acquisition Loans in the form attached hereto as Exhibit A-2.

“Affiliate” shall have the meaning provided therefor in the Conversion Notes and
Incremental Conversion Notes.

“Agreement Date” means the date of this Agreement.

“Applicable Laws” means all statutes, rules and regulations of Governmental
Authorities in the United States or elsewhere applicable to the Borrower and its
Subsidiaries.

“Authorizations” has the meaning set forth in Section 3.1(r).

“Business Day” means a day on which banks are required to be open for business
in The City of New York.

--------------------------------------------------------------------------------

“Change of Control” shall have the meaning assigned to such term in the Credit
Agreement.

“Code” means the Internal Revenue Code of 1986, as amended, and any Treasury
Regulations promulgated thereunder.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” shall mean the common stock, $0.001 par value, of Borrower.

“Common Stock Equivalents” means any securities of Borrower which would entitle
the holder thereof to acquire at any time shares of Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock.

“Consolidated” means, when used with reference to financial statements or
financial statement items of the Borrower and its Subsidiaries or any other
Person, such statements or items on a consolidated basis in accordance with the
consolidation principles of GAAP.

“Consolidated EBITDA” shall have the meaning provided therefor in the Credit
Agreement.

“Conversion Failure” shall have the meaning provided therefor in the Conversion
Notes.

“Conversion Notes” means the Convertible Notes issued to the Lenders evidencing
the Initial Loans in the form attached hereto as Exhibit A-1.

“Conversion Shares” shall have the meaning provided therefor in the Conversion
Notes and Incremental Conversion Notes.

“Credit Agreement” means the Credit Agreement dated as of March 9, 2015, among
Borrower, the lenders party thereto, Bank of America, N.A., as administrative
agent and the other Persons party thereto, as may be amended, restated,
supplemented, modified, renewed, replaced or refinanced from time to time;
provided, however, that this Agreement shall not give effect to any such
amendment, restatement, supplement, modification, renewal, replacement or
refinancing that has not been approved in writing by the Required Lenders.

“Credit Parties” shall mean the collective reference to the Borrower and
Guarantors.

“Default” means any event which, at the giving of notice, lapse of time or
fulfillment of any other applicable condition (or any combination of the
foregoing), would constitute an Event of Default.

“Disbursement Condition” means Borrower shall have authorized and reserved for
issuance a number of shares of Common Stock sufficient to cover all shares
issuable on conversion of the Conversion Notes and Incremental Conversion Notes
(computed without regard to any limitations on the number of shares that may be
issued on exercise).

 

2

--------------------------------------------------------------------------------

“Dollars” and the “$” sign mean the lawful currency of the United States of
America.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

“Event of Default” has the meaning given to it in Section 5.4.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder.

“Excluded Taxes” means with respect to any Lender, (a) income Taxes imposed on
(or measured by) such Lender’s net income, franchise Taxes and branch profit
Taxes, in each case imposed by the United States of America, or by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Lender is organized or incorporated or in which the applicable lending office of
such Lender is located, (b) Other Connection Taxes, (c) any United States
federal withholding Tax imposed on amounts payable to such Lender under the laws
in effect at the time such Lender becomes a party to this Agreement, except to
the extent such Lender acquired its interest in a Note from a transferor that
was entitled, immediately before such transfer, to receive Additional Amounts
with respect to such withholding Tax pursuant to Section 2.7(a), (d) any Taxes
that are directly attributable to such Lender’s failure to comply with
Section 2.7(e) other than as a result of a change in Applicable Laws or (e) any
United States federal withholding Taxes imposed under FATCA due to such Lender’s
non-compliance with Section 2.7(f).

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any intergovernmental
agreements with respect thereto, any current or future regulations or official
interpretations thereof, and any agreements entered into pursuant to
Section 1471(b)(1) of the Code.

“Final Payment” means such amount as may be necessary to repay the outstanding
principal amount of the Notes and any other Obligations owing by the Borrower to
the Lenders pursuant to the Loan Documents.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“Foreign Subsidiary Holding Company” means any Domestic Subsidiary substantially
all of the assets of which consist of, directly or indirectly, Equity Interests
in Foreign Subsidiaries.

 

3

--------------------------------------------------------------------------------

“GAAP” means generally accepted accounting principles consistently applied as
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession).

“Governmental Authority” means any government, quasi-governmental agency,
governmental department, ministry, cabinet, commission, board, bureau, agency,
court, tribunal, regulatory authority, instrumentality, judicial, legislative,
fiscal, or administrative or public body or entity, whether domestic or foreign,
federal, state or local, having jurisdiction over the matter or matters and
Person or Persons in question.

“Guarantor” means each Material Domestic Subsidiary of Borrower and each other
Person that executes a Guaranty.

“Guaranty” means the Guaranty of the Obligations in the form of Exhibit B
attached hereto.

“Incremental Conversion Notes” has the meaning provided therefor in Section 2.3.

“Incremental Loans” has the meaning provided therefor in Section 2.3.

“Indebtedness” shall have the meaning assigned to such term in the Credit
Agreement, and all initial capitalized terms used in such definition which are
defined in the Credit Agreement shall have the meanings assigned to such terms
in the Credit Agreement.

“Indemnified Person” has the meaning given to it in Section 6.11.

“Indemnified Taxes” means all Taxes including Other Taxes, other than Excluded
Taxes.

“Indemnity” has the meaning given to it in Section 6.11.

“Ineligible Transferee” means those Persons identified to Lenders in writing
prior to the Agreement Date, as updated in writing from Borrower to Lenders from
time to time with the consent of Required Lenders (such consent not to be
unreasonably withheld).

“Initial Funding Date” shall have the meaning set forth in Section 2.2.

“Initial Loans” means the Loans made available by the Lenders to the Borrower
pursuant to Section 2.2 in the aggregate principal amount of Twenty Five Million
Dollars ($25,000,000) or, as the context may require, the principal amount
thereof from time to time outstanding.

“Interest Rate” means 2.5% per annum with respect to the Initial Loans and
Incremental Loans and 12.0% per annum with respect to the Acquisition Loans.

“IP” and “Intellectual Property” have the meaning given to it in Section 3.1(n).

“IRS” means the United States Internal Revenue Service.

 

4

--------------------------------------------------------------------------------

“Lien” means any lien, pledge, preferential arrangement, mortgage, security
interest, deed of trust, charge, assignment, hypothecation, title retention, or
other encumbrance on or with respect to property or interest in property having
the practical effect of constituting a security interest, in each case with
respect to the payment of any obligation with, or from the proceeds of, any
asset or revenue of any kind.

“Loans” means the Initial Loans, the Acquisition Loans and the Incremental
Loans.

“Loan Documents” means this Agreement, the Notes, the Guaranty, the Registration
Rights Agreement, and any other document or instrument delivered in connection
with any of the foregoing and dated the Agreement Date or subsequent thereto,
whether or not specifically mentioned herein or therein.

“Loss” has the meaning given to it in Section 6.11.

“Material Adverse Effect and “Material Adverse Change” means a material adverse
effect on or a material adverse change in (a) the business, operations,
condition (financial or otherwise), or assets of the Borrower and its
Subsidiaries taken as a whole, (b) the validity or enforceability of any
provision of any Loan Document, (c) the ability of the Credit Parties to timely
perform the Obligations or (d) the rights and remedies of the Lenders under any
Loan Document; provided, however, any adverse effect that results directly or
indirectly from general economic, business, financial or market conditions shall
not be deemed to be a Material Adverse Effect.

“Material Contract” means any contract of any Credit Party that has been filed
or was required to have been filed as an exhibit to the SEC Reports pursuant to
Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

“Material Domestic Subsidiary” means any Domestic Subsidiary of the Borrower
that, together with its Subsidiaries, (a) generates more than 5% of Consolidated
EBITDA on a Pro Forma Basis for the four (4) fiscal quarter period most recently
ended or (b) has total assets (including equity interests in other Subsidiaries
and excluding investments that are eliminated in consolidation) of equal to or
greater than 5% of the total assets of the Borrower and its Subsidiaries, on a
Consolidated basis as of the end of the most recent for (4) fiscal quarters;
provided, however, that if at any time there are Domestic Subsidiaries which are
not classified as “Material Domestic Subsidiaries” but which collectively
(i) generate more than 10% of Consolidated EBITDA on a Pro Forma Basis or
(ii) have total assets (including equity interests in other Subsidiaries and
excluding investments that are eliminated in consolidation) of equal to or
greater than 10% of the total assets of the Borrower and its Subsidiaries on a
Consolidated basis, then the Borrower shall promptly designate one or more of
such Domestic Subsidiaries as Material Domestic Subsidiaries and cause any such
Domestic Subsidiaries to comply with the provisions of Section5.1(vii) such
that, after such Domestic Subsidiaries become Guarantors hereunder, the Domestic
Subsidiaries that are not Guarantors shall (A) generate less than 10% of
Consolidated EBITDA and (B) have total assets of less than 10% of the total
assets of the Borrower and its Subsidiaries on a Consolidated basis.

 

5

--------------------------------------------------------------------------------

“Notes” means the Conversion Notes, the Incremental Conversion Notes and the
Acquisition Notes.

“Obligations” means all obligations and liabilities (monetary or otherwise) of
Borrower and the Guarantors arising under or in connection with this Agreement
and the other Loan Documents.

“Organizational Documents” means the Certificate of Incorporation, Bylaws,
memorandum and articles of association or similar documents of Borrower or any
of its Subsidiaries, as the context may require, each as amended, restated,
supplemented or otherwise modified from time to time.

“Other Connection Taxes” means with respect to any Lender, Taxes imposed as a
result of a present or former connection between such Lender and the
jurisdiction imposing such Tax (except a connection arising from such Lender
having executed, delivered, become a party to, performed its obligations or
received a payment under or engaged in any other transaction pursuant to the
Loan Documents or assigned any interest in any Loan Document).

“Other Taxes” means any and all present or future stamp or documentary Taxes or
any other excise or property Taxes, duties, other charges or similar levies, and
all liabilities with respect thereto, together with any interest, additions to
tax or penalties applicable thereto (including by reason of any delay in
payment) arising from any payment made hereunder or from the execution,
delivery, registration or enforcement of, or otherwise with respect to, any Loan
Document or the delivery to a Lender of the Conversion Shares, except any such
Taxes that are Other Connection Taxes imposed with respect to an assignment
(other than an assignment made in connection with the exercise of remedies
following an Event of Default).

“Permitted Acquisition” means any transaction or series of related transactions
by which Borrower or any of its Subsidiaries acquires all or substantially all
of the assets of a Person or going business, division, or line of business or
product or acquires equity interests of any Person having at least a majority of
combined voting power of the then outstanding equity interests of such Person;
provided, solely to the extent that such transaction or series of related
transactions is being funded in whole or in part with the proceeds of an
Acquisition Loan:

(i) immediately prior to, and after giving effect thereto, no Default or Event
of Default shall have occurred and be continuing or would result therefrom;

(ii) all transactions in connection therewith shall be consummated, in all
material respects, in accordance with all applicable laws and in conformity with
all applicable Authorizations;

(iii) Borrower shall have taken, or caused to be taken, each of the actions set
forth in Section 5.1(vii) within the timeframe(s) set forth in such Section;

(iv) Subject to the last paragraph of Section 5.1, Borrower shall have delivered
to Lenders at least three (3) Business Days prior to such proposed acquisition
(or such later date as the Lenders may agree in their sole discretion), (i) a
description of the material terms of such transaction or series of transactions,
(ii) either, at Borrower’s

 

6

--------------------------------------------------------------------------------

option, (A) audited financial statements (or, if unavailable,
management-prepared financial statements) of the target for its most recent
fiscal year and for any fiscal quarters ended within the fiscal year to date,
which financial statements shall have been audited by an independent public
account reasonably satisfactory to the Lenders (or, with respect to management
prepared financial statements, in form and detail reasonably acceptable to the
Lenders and certified by the chief financial officer of the target) or (B) a
quality of earnings report or other due diligence report on the target from a
third party reasonably acceptable to the Lenders, which report shall be in form
and substance reasonably satisfactory to the Lenders, (iii) Consolidated
projected income statements of the Borrower and its Subsidiaries (giving effect
to such transaction or series of transactions) and (iv) such other information
and documents that any Lender may reasonably request;

(v) any Person or assets or division acquired in accordance herewith shall be in
a business or line of business (or assets used in a type of business) not
substantially different from those lines of business conducted by the Borrower
and/or its Subsidiaries as of the Initial Funding Date or any business or line
of business complementary, related or incidental thereto;

(vi) the acquisition shall have been approved by the board of directors or other
governing body of the Person acquired or the Person from whom such assets or
division is acquired;

(vii) the acquisition is a “Permitted Acquisition”, as such term is defined in
the Credit Agreement; and

(viii) the Consolidated EBITDA of Borrower determined on a pro forma basis for
the twelve month period commencing on the date of such acquisition is greater
than the Consolidated EBITDA of Borrower determined on a pro forma basis for
such period without giving such pro forma effect to such acquisition, such
calculation to be certified as true and correct to Lenders in writing by
Borrower.

“Permitted Indebtedness” means:

(i) the Obligations;

(ii) Indebtedness of any Loan Party (as defined in the Credit Agreement) to the
lenders under the Credit Agreement; and

(iii) other Indebtedness, so long as the aggregate principal amount of such
Indebtedness, together with the principal amount of all Indebtedness permitted
by clause (ii) of this definition, does not cause Borrower’s Consolidated Total
Leverage Ratio (as defined in the Credit Agreement) to exceed 4.75 for the most
recent Test Period.

“Permitted Liens” has the meaning provided therefor in Section 7.01 of the
Credit Agreement.

 

7

--------------------------------------------------------------------------------

“Person” means and includes any natural person, individual, partnership, joint
venture, corporation, trust, limited liability company, limited company, joint
stock company, unincorporated organization, government entity or any political
subdivision or agency thereof, or any other entity.

“Principal Trading Markets” means the Trading Markets on which the Common Stock
are listed on and quoted for trading, which, as of the date of this Agreement,
shall be the New York Stock Exchange.

“Pro Forma Basis” has the meaning assigned to such term in the Credit Agreement.

“Register” has the meaning set forth in Section 1.4 (b).

“Registration Rights Agreement” means the Registration Rights Agreement dated as
of the Agreement Date between Lenders and Borrower.

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Lenders of the Registrable Securities (as defined in the Registration Rights
Agreement).

“Required Lenders” means, at any time, Lenders holding Loans representing more
than 50% of the sum of the Loans outstanding.

“Restricted Lender” means the initial Lenders party to this Agreement and their
Affiliates and any assignee of any interest in a Note that notifies the Borrower
in writing that it wishes to be deemed a Restricted Lender.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

“SEC Reports” shall have the meaning set forth in Section 3.1(j).

“Securities” means the Conversion Notes, the Incremental Conversion Notes and
the Conversion Shares.

“Securities Act” means the Securities Act of 1933, as amended, including the
rules and regulations promulgated thereunder.

“Subordination Agreement” shall have the meaning set forth in Section 4.1(h).

“Subsidiary or Subsidiaries” means, as to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.

 

8

--------------------------------------------------------------------------------

“Tax Affiliate” means (a) Borrower and its Subsidiaries and (b) any Affiliate of
the Borrower with which Borrower files or is required to file consolidated,
combined or unitary tax returns.

“Taxes” means all present or future taxes, levies, imposts, stamp or other
duties, deductions, charges or withholdings and all liabilities with respect
thereto, (including by reason of any delay in payment).

“Test Period” means, at any date of determination, the period of four
consecutive fiscal quarters of Borrower then ended for which financial
statements have been filed with the SEC.

“Trading Market” means whichever of the New York Stock Exchange, the NYSE
Alternext (formerly the American Stock Exchange), the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC Bulletin
Board on which the Common Shares are listed or quoted for trading on the date in
question.

Section 1.2 Interpretation. In this Agreement, unless the context otherwise
requires, all words and personal pronouns relating thereto shall be read and
construed as the number and gender of the party or parties requires and the verb
shall be read and construed as agreeing with the required word and pronoun; the
division of this Agreement into Articles and Sections and the use of headings
and captions is for convenience of reference only and shall not modify or affect
the interpretation or construction of this Agreement or any of its provisions;
the words “herein,” “hereof,” “hereunder,” “hereinafter” and “hereto” and words
of similar import refer to this Agreement as a whole and not to any particular
Article or Section hereof; the words “include,” “including,” and derivations
thereof shall be deemed to have the phrase “without limitation” attached thereto
unless otherwise expressly stated; references to a specified Article, Exhibit,
Section or Schedule shall be construed as a reference to that specified Article,
Exhibit, Section or Schedule of this Agreement; and any reference to any of the
Loan Documents means such document as the same shall be amended, supplemented or
modified and from time to time in effect.

Section 1.3 Business Day Adjustment. If the day by which any payment or other
performance is due to be made is not a Business Day, that payment or performance
shall be made by the next succeeding Business Day.

Section 1.4 Registration.

(a) The Borrower shall record on its books and records the amount of the Loans,
the interest rate applicable, all payments of principal and interest thereon and
the principal balance thereof from time to time outstanding.

(b) The Borrower shall establish and maintain at its address referred to in
Section 6.1, a record of ownership (the “Register”) in which the Borrower agrees
to register by book entry the interests (including any rights to receive payment
hereunder) of each Lender in the Loan, and any assignment of any such interest,
and (ii) accounts in the Register in accordance with its usual practice in which
it shall record (1) the names and addresses of the Lenders (and any change
thereto pursuant to this Agreement), (2) the amount of the Loan and each funding
of any participation therein, (3) the amount of any principal or interest due
and payable or paid, and (4) any other payment received by the Lenders from the
Borrower and its application to the Loan.

 

9

--------------------------------------------------------------------------------

(c) Notwithstanding anything to the contrary contained in this Agreement, the
Loans (including any Notes evidencing the Loans) are a registered obligation,
the right, title and interest of the Lenders and their assignees in and to the
Loans shall be transferable only upon notation of such transfer in the Register
and no assignment thereof shall be effective until recorded therein. This
Section 1.4 shall be construed so that the Loans are at all times maintained in
“registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2)
of the Code.

(d) The Borrower and the Lenders shall treat each Person whose name is recorded
in the Register as a Lender for all purposes of this Agreement. Information
contained in the Register with respect to any Lender shall be available for
access by the Borrower or such Lender at any reasonable time and from time to
time upon reasonable prior notice.

ARTICLE 2

AGREEMENT FOR THE LOAN

Section 2.1 Use of Proceeds. The proceeds of the Initial Loan and Incremental
Loans shall be used for working capital, general corporate purposes and
acquisitions and the proceeds of the Acquisition Loans shall be used solely to
fund Permitted Acquisitions.

Section 2.2 Initial Loans. Subject to the conditions set forth in Section 4.1
and this Section 2.2, the Lenders shall disburse Initial Loans in the amount of
$25,000,000 to the Borrower on a date (“Initial Funding Date”) not less than
three (3) Business Days following the satisfaction of the conditions set forth
in Section 4.1. The Initial Loan shall be evidenced by the Conversion Notes.
Lenders shall fulfill the Initial Loans in accordance with their respective
allocations set forth on Schedule 1 hereto.

Section 2.3 Incremental Loans. Subject to the conditions set forth in
Section 4.2 and this Section 2.3, at any time and from time to time after the
Initial Funding Date and prior to September 30, 2016, upon twenty (20) days’
prior written request by Borrower delivered to Lender on a Business Day other
than the last Business Day of any calendar month (“Incremental Loan Request”) by
Borrower to Lenders, Lenders shall make additional advances to Borrower (each an
“Incremental Loan” and collectively the “Incremental Loans”) up to the aggregate
sum of $50,000,000. Each Incremental Loan Request shall be in a minimum amount
of $10,000,000 and shall be further subject to a conversion price for conversion
of the Incremental Loans into shares of Common Stock and other terms mutually
acceptable to Lenders and Borrower (“Conversion Terms”). The Incremental Loans
shall be evidenced by notes (“Incremental Conversion Notes”) substantially in
the form of the Conversion Notes, with such modifications thereto to provide for
the Conversion Terms for such Incremental Loans. Borrowers shall have no
obligation to request, and Lenders shall have no obligation to provide,
Incremental Loans unless the Parties have agreed upon Conversion Terms
acceptable to each Party in its sole discretion. Lenders shall fulfill the
Incremental Loans in accordance with their respective allocations set forth on
Schedule 1 hereto.

 

10

--------------------------------------------------------------------------------

Section 2.4 Acquisition Loans. Subject to the conditions set forth in
Section 4.3 and this Section 2.4, at any time and from time to time after the
Initial Funding Date and prior to September 30, 2016, upon not less than twenty
(20) days’ prior written request by Borrower delivered to Lender on a Business
Day other than the last Business Day of any calendar month (“Acquisition Loan
Request”) by Borrower to Lenders, Lenders shall make additional advances to
Borrower (each an “Acquisition Loan” and collectively the “Acquisition Loans”)
up to the aggregate sum of $25,000,000 for the payment of the purchase price of
any Permitted Acquisition. Each Acquisition Loan Request shall be in a minimum
amount of not less than $5,000,000. Acquisition Loans shall be evidenced by the
Acquisition Notes. Lenders shall fulfill the Acquisition Loans in accordance
with their respective allocations set forth on Schedule 1 hereto.

Section 2.5 Payment.

(a) Borrower shall repay the outstanding principal amount of the Initial Loans
and Incremental Loans, together with all accrued and unpaid interest thereon on
the sixth anniversary of the Initial Funding Date. Borrower shall repay the
outstanding principal amount of each Acquisition Loan, together with all accrued
and unpaid interest thereon on the fifth anniversary of the Initial Funding
Date. Except as specifically provided herein, the Conversion Notes and
Incremental Conversion Notes shall not be prepayable. The Acquisition Notes
shall be prepayable at any time after the funding date of the applicable
Acquisition Loan and prior to the second anniversary of the Agreement Date
without penalty or premium, and on and at any time after the second anniversary
of the Agreement Date and prior to the maturity of such Acquisition Loan in an
amount equal to 102% of the outstanding principal amount of such Acquisition
Loan prepaid, plus an amount equal to interest on such principal amount of the
Acquisition Loan computed at the applicable Interest Rate for a period of twenty
(20) calendar quarters, less the amount of interest actually paid by Borrower on
such principal amount prepaid to the date of such prepayment. All such
prepayments shall include any accrued and unpaid interest on such Acquisition
Loan prepaid.

(b) Lenders shall have the right to convert all or any part of the principal
amount of their Conversion Notes and Incremental Conversion Notes into shares of
Common Stock in accordance with the terms of the Conversion Notes and
Incremental Conversion Notes. Upon the Share Delivery Date (as defined in the
Conversion Notes and Incremental Notes, as applicable) Borrower shall pay to
Lenders all accrued and unpaid interest in cash on the principal amount of the
Conversion Notes and/or Incremental Conversion Notes converted into shares of
Common Stock.

Section 2.6 Payments. All payments by the Borrower under any of the Loan
Documents shall be made without setoff or counterclaim. Payments of any amounts
due to the Lenders under this Agreement shall be made in Dollars in immediately
available funds prior to 11:00 a.m. New York City time on such date that any
such payment is due, at such bank or places as the Lenders shall from time to
time designate in writing at least five (5) Business Days

 

11

--------------------------------------------------------------------------------

prior to the date such payment is due. The Borrower shall pay all and any costs
(administrative or otherwise) imposed by banks, clearing houses, or any other
financial institution, in connection with making any payments under any of the
Loan Documents, except for any costs imposed by the Lenders’ banking
institutions.

Section 2.7 Taxes.

(a) Any and all payments hereunder or under any other Loan Document shall be
made, in accordance with this Section 2.7, free and clear of and without
deduction for any and all present or future Taxes except as required by
applicable law. If Borrower (or another applicable Credit Party) shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any other Loan Document and such Taxes are Indemnified Taxes,
(i) the sum payable hereunder or thereunder shall be increased by as much as
shall be necessary so that after making all required deductions (including
deductions for Indemnified Taxes applicable to additional sums payable under
this Section 2.7(a)), each Lender shall receive an amount equal to the sum it
would have received had no such deductions been made (any and all such
additional amounts payable shall hereafter be referred to as the “Additional
Amounts”), (ii) Borrower shall make such deductions, and (iii) Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with Applicable Laws. Within thirty (30) days after the date of any
payment of such Taxes, Borrower shall furnish to the applicable Lender the
original or a certified copy of a receipt evidencing payment thereof or other
evidence of such payment reasonably satisfactory to such Lender.

(b) Borrower agrees to pay and authorizes each Lender to pay in its name (but
without duplication), all Other Taxes. Within 30 days after the date of any
payment of Other Taxes, Borrower shall furnish to the applicable Lender the
original or a certified copy of a receipt evidencing payment thereof or other
evidence of such payment reasonably satisfactory to such Lender.

(c) Without duplication of Section 2.7(a) or Section 2.7(b), Borrower shall
reimburse and indemnify, within ten (10) days after receipt of demand therefor,
each Lender for all Indemnified Taxes (including all Indemnified Taxes imposed
on amounts payable under this Section 2.7(c)) paid or payable by such Lender,
whether or not such Indemnified Taxes were correctly or legally asserted. A
certificate of the applicable Lender(s) setting forth the amounts to be paid
thereunder and delivered to Borrower shall be conclusive, absent manifest error.

(d) If any Lender determines, in its sole discretion exercised in good faith,
that it has received a refund of any Indemnified Taxes as to which it has been
indemnified pursuant to this Section 2.7 (including by the payment of Additional
Amounts), it shall pay to Borrower an amount equal to such refund (but only to
the extent of indemnity payments made under this Section 2.7 with respect to the
Taxes giving rise to such refund), net of all out-of-pocket expenses (including
Taxes) of such Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund). Borrower, upon the
request of such Lender,

 

12

--------------------------------------------------------------------------------

shall repay to such Lender the amount paid over pursuant to this paragraph
(d) (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) in the event that such Lender is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (d), in no event will a Lender be required to pay any amount
to Borrower pursuant to this paragraph (d) the payment of which would place the
Lender in a less favorable net after-Tax position than the Lender would have
been in if the Tax subject to indemnification and giving rise to such refund had
not been deducted, withheld or otherwise imposed and the indemnification
payments or additional amounts with respect to such Tax had never been paid.
This paragraph shall not be construed to require any Lender to make available
its Tax returns (or any other information relating to its Taxes that it deems
confidential) to Borrower or any other Person.

(e) Each Lender that is a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for United States federal income tax purposes
shall, on or before the date on which the Lender becomes a party to this
Agreement, provide to Borrower a properly completed and executed IRS Form W-9
certifying that such Lender is not subject to backup withholding tax. Each
Lender that is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for U.S. federal income tax purposes (a
“Foreign Lender”) and is entitled to an exemption from or reduction of U.S.
withholding tax with respect to payments under this Agreement shall, on or
before the date on which the Lender becomes a party to this Agreement, provide
Borrower with a properly completed and executed IRS Form W-8ECI, W-8BEN,
W-8BEN-E or W-8IMY or other applicable forms (together with any required
supporting documentation), or any other applicable certificate or document
reasonably requested by the Borrower, and, if such Foreign Lender is relying on
the portfolio interest exception of Section 871(h) or Section 881(c) of the Code
shall also provide the Borrower with a certificate (the “Portfolio Interest
Certificate”) representing that such Foreign Lender is not a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, is not a “10 percent shareholder”
of the Borrower described in Section 881(c)(3)(B) of the Code, and is not a
controlled foreign corporation receiving interest from a related person (within
the meaning of Sections 881(c)(3)(C) and 864(d)(4) of the Code); provided that
if the Foreign Lender is a partnership and one or more direct or indirect
partners of such Foreign Lender are claiming the portfolio interest exemption,
such Foreign Lender may provide a Portfolio Interest Certificate in a form
reasonably satisfactory to the Borrower on behalf of each such direct and
indirect partner. Each Lender shall provide new forms (or successor forms),
certificates and documentation as reasonably requested by Borrower from time to
time. In addition, each Lender shall notify Borrower in writing within a
reasonable time after becoming aware of any event requiring a change in the most
recent forms, certificates or documentation previously delivered by such Lender
to Borrower.

(f) If a payment made to a Foreign Lender under any Loan Document would be
subject to United States federal withholding Tax under FATCA if such Lender were
to fail to comply with the applicable reporting requirements of FATCA, such
Lender shall deliver to the Borrower at such time or times reasonably requested
by the Borrower such U.S. tax forms reasonably requested by the Borrower as may
be

 

13

--------------------------------------------------------------------------------

necessary for the Borrower to comply with its obligations under FATCA and to
determine that such Lender has complied with such Lender’s obligations under
FATCA or to determine the amount to deduct and withhold from such payment.

Section 2.8 Fee and Costs. Borrower shall pay to Lenders for their pro rata
benefit, (a) on the Initial Funding Date, a fee equal to 2% of the Initial
Loans, (b) on the date of each Incremental Loan, a fee equal to 2% of such
Incremental Loan, and (c) on the date of each Acquisition Loan, a fee in the
amount of 2% of such Acquisition Loan. Borrower agrees to reimburse the Lenders
for reasonable, documented expenses for attorneys, accountants and other
professional advisors, and other out-of-pocket expenses incurred by Lenders
(i) in connection with their due diligence, negotiation and documentation of the
transactions contemplated by the Loan Documents (including their review,
negotiation and documentation of any post-closing obligations of the Credit
Parties) up to an aggregate sum not to exceed $300,000 and (ii) in connection
with all amendments and modifications thereto, whether or not consummated. At
Lender’s election, such reimbursed amounts may be deducted from the Initial
Loans.

Section 2.9 Interest. The outstanding principal amount of the Loans shall bear
interest at the Interest Rate (calculated on the basis of the actual number of
days elapsed in each month). Interest shall be paid quarterly in arrears
commencing on January 1, 2016 and on the first Business Day of each January,
April, July and October thereafter (each, an “Interest Payment Date”).

Section 2.10 Interest on Late Payments. Without limiting the remedies available
to the Lenders under the Loan Documents or otherwise, to the maximum extent
permitted by applicable law, if the Borrower fails to make a required payment of
principal or interest with respect to the Loan when due or any Credit Party
shall fail to timely comply with any other provision of this Agreement or any
other Loan Document (regardless of any cure period provided in Section 5.4(b) of
this Agreement), the Borrower shall pay interest, in respect of such principal
and interest at the rate per annum equal to the Interest Rate plus two percent
(2%) for so long as such payment remains outstanding or such covenant is not
timely cured. Such interest shall be payable on demand.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of the Borrower. Borrower represents
and warrants to the Lenders that, except as set forth in a Schedule to this
Agreement and subject in all respects to the information set forth on Schedule
3.1 attached hereto and incorporated herein by reference:

(a) Each Credit Party and each of its Subsidiaries is conducting its business in
compliance with its Organizational Documents, which are in full force and
effect.

(b) No Default or Event of Default has occurred and is continuing.

 

14

--------------------------------------------------------------------------------

(c) Each Credit Party and each of its Subsidiaries (i) is capable of paying its
debts as they fall due and has not admitted in writing its inability to pay its
debts as they fall due, (ii) is not bankrupt or insolvent or deemed to be
bankrupt or insolvent under applicable law and (iii) has not taken action, and
no such action has been taken by a third party, for any Credit Parties’ or any
of its Subsidiaries’ winding up, dissolution, or liquidation, examinership or
similar executory or judicial proceeding or for the appointment of a liquidator,
custodian, receiver, trustee, administrator, examinership or other similar
officer for any Credit Party or any or all of its assets or revenues.

(d) No Lien exists on any Credit Party’s or any of its Subsidiaries assets,
except for Permitted Liens.

(e) The obligation of the Borrower to make any payment under this Agreement
(together with all charges in connection therewith) is absolute and
unconditional.

(f) No Indebtedness of any Credit Party or any of its Subsidiaries exists other
than Permitted Indebtedness.

(g) Borrower is validly existing as a corporation in good standing under the
laws of the State of Nevada. Each Credit Party and each of its Subsidiaries has
full power and authority to own its properties, conduct its business and enter
into the Loan Documents and to consummate the transactions contemplated under
the Loan Documents, and is duly qualified to do business as a foreign entity and
is in good standing in each jurisdiction where the failure to be so qualified
could reasonably be expected to result in a Material Adverse Effect.

(h) There is not pending or, to the knowledge of any Credit Party, threatened,
any action, suit, investigation, hearings or other proceeding before any
Governmental Authority (a) to which any Credit Party or any of its Subsidiaries
is a party or (b) which has as the subject thereof any assets owned by any
Credit Party or any of its Subsidiaries, except, as would not reasonably be
expected to have a Material Adverse Effect. There are no current or, to the
knowledge of any Credit Party, pending, legal, governmental or regulatory
enforcement actions, suits or other proceedings to which any Credit Party or any
of its Subsidiaries or any of their assets is subject, except, as would not
reasonably be expected to have a Material Adverse Effect.

(i) Each Credit Party has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by each of the Loan
Documents to which it is a party and otherwise to carry out its obligations
hereunder and thereunder. Each Credit Party’s execution and delivery of each of
the Loan Documents to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby (including, but not limited to, the
sale and delivery of the Notes and the reservation for issuance and
the subsequent issuance of the Conversion Shares upon exercise of the Conversion
Notes) have been duly authorized by all necessary action on the part each Credit
Party, and no further action is required by any Credit Party, its

 

15

--------------------------------------------------------------------------------

directors or its stockholders or members in connection therewith other than in
connection with the Required Approvals (as defined below). Each of the Loan
Documents to which it is a party has been (or upon delivery will have been) duly
executed by each Credit Party and each of its Subsidiaries and is, or when
delivered by each Credit Party and each of its Subsidiaries a party thereto, in
accordance with the terms hereof, will constitute the legal, valid and binding
obligation of such Credit Party and its Subsidiaries party thereto enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, examinership, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application. The execution, delivery and performance of the Loan Documents by
the Credit Parties and their Subsidiaries and the consummation of the
transactions therein contemplated (including, but not limited to, the delivery
of the Conversion Notes and the reservation for issuance and subsequent issuance
of the Conversion Shares) will not (A) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any Lien (other than pursuant to the
Loan Documents) upon any assets of any Credit Party or any of its Subsidiaries
pursuant to, any agreement to which any Credit Party or any of its Subsidiaries
is a party or by which any Credit Party or any of its Subsidiaries is bound or
to which any of the assets of any Credit Party or any of its Subsidiaries is
subject, except to the extent that no Material Adverse Effect would reasonably
be expected to result therefrom, (B) result in any violation of or conflict with
the provisions of the Organizational Documents, (C) result in the violation of
any Applicable Law or (D) result in the violation of any judgment, order, rule,
regulation or decree of any Governmental Authority. No consent, approval,
authorization or order of, or registration or filing with any Governmental
Authority is required for the execution, delivery and performance of any of the
Loan Documents or for the consummation by any Credit Party and any of its
Subsidiaries of the transactions contemplated thereby except for such
registrations and filings in connection with (i) the filing with the Commission
of one or more Registration Statements in accordance with the requirements of
the Registration Rights Agreement, (ii) filings required by applicable state
securities laws, (iii) the filing of a Notice of Sale of Securities on Form D
with the Commission under Regulation D of the Securities Act, (iv) the filing of
any requisite notices and/or application(s) to the Principal Trading Markets for
the issuance and sale of the Securities and the listing of the Conversion Shares
for trading or quotation, as the case may be, thereon in the time and manner
required thereby, and (v) those that have been made or obtained prior to the
Initial Funding Date (the “Required Approvals”).

(j) Except as set forth on Schedule 3.1(j), since January 1, 2014, the Borrower
has filed all reports, schedules, forms, statements and other documents required
to be filed by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective filing dates, or to the extent corrected
by a subsequent restatement, the SEC Reports complied in all material respects
with the requirements of the Securities Act and

 

16

--------------------------------------------------------------------------------

the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Borrower has
never been an issuer subject to Rule 144(i) under the Securities Act. Each of
the Material Contracts to which the Borrower is a party or to which the property
or assets of any Credit Party are subject has been filed when required as an
exhibit to the SEC Reports.

(k) Intentionally Omitted.

(l) Each Credit Party and each of its Subsidiaries holds, and is operating in
good standing (where applicable) and in compliance in all material respects
with, all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders of any Governmental Authority (collectively,
“Necessary Documents”) required for the conduct of its business and all
Necessary Documents are valid and in full force and effect; and neither any
Credit Party nor any of its Subsidiaries has received written notice of any
revocation or modification of any of the Necessary Documents and neither any
Credit Party nor any of its Subsidiaries has any reason to believe that any of
the Necessary Documents will not be renewed in the ordinary course of business,
and each Credit Party and each of its Subsidiaries are in compliance in all
material respects with all applicable federal, state, local and foreign laws,
regulations, orders and decrees applicable to the conduct of its business.

(m) Each Credit Party and each of its Subsidiaries have good and marketable
title to all of their assets free and clear of all Liens except Permitted Liens.
The property held under lease by each Credit Party and each of its Subsidiaries
is held under valid, subsisting and enforceable leases with only such exceptions
with respect to any particular lease as do not interfere in any material respect
with the conduct of the business of any Credit Party or any of its Subsidiaries.

(n) Except as set forth on Schedule 3.1(n), to the knowledge of the Credit
Parties, each Credit Party and each of its Subsidiaries own or have the right to
use pursuant to a valid and enforceable written license, implied license or
other legally enforceable right, all of the Intellectual Property (as defined
below) that is necessary for the conduct of their business as currently
conducted (the “IP”). To the knowledge of the Credit Parties, the IP that is
registered with or issued by a Governmental Authority is valid and enforceable;
to the knowledge of the Credit Parties, there is no outstanding or pending
unresolved action, suit, other proceeding or claim by any third person
challenging or contesting the validity, scope, use, ownership, enforceability,
or other rights of any Credit Party or any of its Subsidiaries in or to any IP
and neither any Credit Party nor any of its Subsidiaries has received any
written notice regarding, any threatened action, suit, or other proceeding. To
the knowledge of the Credit Parties, no Credit Party nor any of its Subsidiaries
has infringed or misappropriated any material Intellectual Property rights of
others. To the knowledge of the Credit Parties, there is no pending unresolved
action, suit, other proceeding or claim by others that any Credit Party or any
of its Subsidiaries infringes upon, violates or uses the Intellectual Property

 

17

--------------------------------------------------------------------------------

rights of others without authorization, and neither any Credit Party nor any of
its Subsidiaries has received any written notice regarding, any such action,
suit, other proceeding or claim. Except as set forth on Schedule 3.1(n), neither
any Credit Party nor any of its Subsidiaries is a party to or bound by any
material options, licenses, or agreements with respect to IP other than licenses
for computer software, content or technology acquired in the ordinary course of
business. The term “Intellectual Property” as used herein means (i) all patents,
patent applications, patent disclosures and inventions (whether patentable or
unpatentable and whether or not reduced to practice), (ii) all trademarks,
service marks, trade dress, trade names, slogans, logos, and corporate names and
Internet domain names, together with all of the goodwill associated with each of
the foregoing, (iii) copyrights, copyrightable works, and licenses,
(iv) registrations and applications for registration for any of the foregoing,
(v) computer software (including but not limited to source code and object
code), data, databases, and documentation thereof, (vi) trade secrets and other
confidential information, and (vii) copies and tangible embodiments of the
foregoing (in whatever form and medium).

(o) Neither any Credit Party nor any of its Subsidiaries is in violation of the
Organizational Documents, or in breach of or otherwise in default under, and no
event has occurred which, with notice or lapse of time or both, would constitute
such breach or other default in the performance of any agreement or condition
contained in any agreement under which it may be bound, or to which any of its
assets is subject, except to the extent that a breach or other default in the
performance of such agreement would not reasonably be expected to result in a
Material Adverse Effect.

(p) All United States federal and state income Tax returns, and all other
material local and foreign Tax returns, reports and statements (collectively,
the “Tax Returns”) required to be filed by any Tax Affiliates have been filed
with the appropriate Governmental Authorities, all such Tax Returns are true and
correct in all material respects, and all United States federal and state income
Taxes and all other material Taxes, assessments and other governmental charges
and impositions reflected therein or otherwise due and payable have been paid
prior to the date on which any liability may be added thereto for non-payment
thereof except for those contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves are maintained on the books
of the appropriate Tax Affiliate in accordance with GAAP. No Tax Return is under
audit or examination by any Governmental Authority, and no Tax Affiliate has
received written notice from any Governmental Authority of any audit or
examination or any assertion of any claim for Taxes. Proper and accurate amounts
have been withheld by each Tax Affiliate from their respective employees for all
periods in full and complete compliance in all material respects with the Tax,
social security and unemployment withholding provisions of Applicable Laws and
such withholdings have been timely paid to the applicable Governmental
Authority. No Tax Affiliate has participated in a “listed transaction” within
the meaning of Treasury Regulation Section 1.6011-4(b)(2) or has been a member
of an affiliated, combined or unitary group other than the group of which a Tax
Affiliate is the common parent.

(q) Other than as set forth in Schedule 3.1(q) neither any Credit Party nor any
of its Subsidiaries has granted rights to market or sell its products or
services to

 

18

--------------------------------------------------------------------------------

any other Person, and are not bound by any agreement that affects the exclusive
right of any Credit Party or any of its Subsidiaries to develop, license, market
or sell its products or services, in each case including rights relating to
products under development by any Credit Party or any of its Subsidiaries.

(r) Each Credit Party and each of its Subsidiaries: (A) at all times has
complied with all Applicable Laws, except to the extent that any noncompliance
would not reasonably be expected to have a Material Adverse Effect; (B) has not
received any warning letter or other written correspondence or notice from any
Governmental Authority alleging or asserting material noncompliance with any
Applicable Laws or any licenses, certificates, approvals, clearances,
authorizations, permits and supplements or amendments thereto reasonably
required in connection with the business of any Credit Party or any of its
Subsidiaries by any Applicable Laws (together, the “Authorizations”);
(C) possesses and complies with the Authorizations, which are valid and in full
force and effect; (D) has not received written notice that any Governmental
Authority has taken, is taking or intends to take action to limit, suspend,
modify or revoke any Authorization and has no knowledge that any Governmental
Authority is considering such action; (E) has filed, obtained, maintained or
submitted all reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as reasonably required by any
Applicable Laws or Authorizations, except to the extent that failure to do so
would not reasonably be expected to have a Material Adverse Effect.

(s) Borrower (i) maintains proper books of record and account, in which full,
true and correct entries in conformity with GAAP consistently applied are made
of all financial transactions and matters involving the assets and business of
Borrower and (ii) maintains such books of record and account in material
conformity with all applicable requirements of any Governmental Authority having
regulatory jurisdiction over Borrower.

(t) (i) To the knowledge of each Credit Party, no “prohibited transaction” as
defined under Section 406 of ERISA or Section 4975 of the Code that is not
exempt under ERISA Section 408 or Section 4975 of the Code, under any applicable
regulations and published interpretations thereunder or under any applicable
prohibited transaction, individual or class exemption issued by the Department
of Labor, has occurred with respect to any Employee Benefit Plan, except for
such transactions as would not have a Material Adverse Effect, (ii) at no time
within the last seven (7) years has any Credit Party or any ERISA Affiliate
maintained, sponsored, participated in, contributed to or has or had any
liability or obligation in respect of any Employee Benefit Plan subject to
Section 302 of ERISA, Title IV of ERISA, or Section 412 of the Code or any
“multiemployer plan” as defined in Section 3(37) of ERISA or any multiple
employer plan for which any Credit Party or any ERISA Affiliate has incurred or
could incur liability under Section 4063 or 4064 of ERISA, (iii) no Employee
Benefit Plan represents any current or future liability for retiree health, life
insurance, or other retiree welfare benefits except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or similar
state law, (iv) each Employee Benefit Plan is and has been operated in
compliance with its terms and all applicable

 

19

--------------------------------------------------------------------------------

laws, including but not limited to ERISA and the Code, except for such failures
to comply that would not have a Material Adverse Effect, (v) no event has
occurred (including a “reportable event” as such term is defined in Section 4043
of ERISA) and no condition exists that would subject any Credit Party or any
ERISA Affiliate to any tax, fine, lien, penalty or liability imposed by ERISA,
the Code or other applicable law, except for any such tax, fine, lien, penalty
or liability that would not, individually or in the aggregate, have a Material
Adverse Effect, (vi) no Credit Party maintains any Foreign Benefit Plan,
(vii) no Credit Party has any obligations under any collective bargaining
agreement. As used in this clause (t), “Employee Benefit Plan” means any
material “employee benefit plan” within the meaning of Section 3(3) of ERISA,
and all stock purchase, stock option, stock-based severance, employment,
change-in-control, medical, disability, fringe benefit, bonus, incentive,
deferred compensation, employee loan and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA, under which (A) any current or former employee, director or independent
contractor of any Credit Party or any of its Subsidiaries has any present or
future right to benefits and which are contributed to, sponsored by or
maintained by any Credit Party or any of its respective Subsidiaries or (B) no
Credit Party nor any of its Subsidiaries has had or has any present or future
obligation or liability on behalf of any such employee, director or independent
contractor; “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended; “ERISA Affiliate” means any member of any Credit Party’s controlled
group as defined in Code Section 414 (b), (c), (m) or (o); and “Foreign Benefit
Plan” means any Employee Benefit Plan mandated by a government other than the
United States of America is subject to the laws or a jurisdiction outside of the
United States.

(u) As of the date hereof, each Credit Party’s Subsidiaries are set forth in
Schedule 3.1(u).

(v) All of the issued and outstanding shares of capital stock of the Borrower
are duly authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state and foreign securities laws, and
were not issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities that have not been waived in
writing; the Conversion Notes and Conversion Shares have been duly authorized,
and the Conversion Shares, when issued and delivered in accordance with the
terms of the Conversion Notes and the Incremental Conversion Notes, if any, will
have been validly issued and will be fully paid and nonassessable. Borrower has
reserved from its duly authorized capital stock a sufficient number of shares of
Common Stock to issue the Conversion Shares, free and clear of all encumbrances
and restrictions, except for restrictions on transfer set forth in the Loan
Documents or imposed by applicable securities laws and except for those created
by the Lenders. Assuming the accuracy of the representations and warranties of
the Lender in this Agreement, the Securities will be issued in compliance with
all applicable federal and state securities laws. Borrower shall, so long as any
of the Conversion Notes or Incremental Conversion Notes are outstanding, take
all action necessary to reserve and keep available out of its authorized and
unissued capital stock, solely for the purpose of effecting the conversion of
the Conversion Notes and Incremental Conversion Notes, the number of shares of
Common Stock issuable upon

 

20

--------------------------------------------------------------------------------

such conversion and/or exercise (without taking into account any limitations on
the conversion of the Conversion Notes and Incremental Conversion Notes as set
forth therein). There are no preemptive rights or other rights to subscribe for
or to purchase, or any restriction upon the voting or transfer of any shares of
Common Stock pursuant to Borrower’s Organizational Documents or any agreement to
which Borrower or any of its Subsidiaries is a party or by which Borrower or any
of its Subsidiaries is bound and all of the foregoing rights, if any, have been
fully waived in respect of the issuance of the Notes and the Conversion Shares.
As of the date hereof, Schedule 3.1(v) to this Agreement sets forth an accurate
list of Borrower’s outstanding shares of capital stock, options and warrants,
and there are no other (i) except as set forth in such Schedule, options
issuable or issued under Borrower’s option plans, or (ii) any other options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from Borrower or any Subsidiary of Borrower any shares of the capital
stock of Borrower or any Subsidiary of Borrower.

(w) The issuance of the Notes and the Conversion Shares will not obligate
Borrower to issue shares of Common Stock or other securities to any Person
(other than the Lenders) and will not result in a right of any holder of
Borrower securities to adjust the exercise, conversion, exchange or reset price
or other right under any of such securities. There are no stockholders’
agreements, voting agreements or other similar agreements with respect to the
Borrower’s capital stock to which Borrower is a party or, to Borrower’s
knowledge, between or among any of Borrower’s stockholders.

(x) Assuming the accuracy of the representations and warranties of the Lenders
set forth in Section 3.3 of this Agreement, no registration under the Securities
Act is required for the offer and sale of the Securities and the Acquisition
Notes by the Borrower to the Lenders under the Loan Documents. The issuance and
sale of the Securities and the Acquisition Notes hereunder complies and will
comply in all material respects with and does not and will not contravene the
rules and regulations of the Principal Trading Market.

(y) Borrower is not, and immediately after issuance of any Notes will not be, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. Borrower shall conduct its business in a manner so that it will not
become subject to the Investment Company Act of 1940, as amended.

(z) Other than the Lenders, no Person has any right to cause Borrower to effect
the registration under the Securities Act of any securities of Borrower other
than those securities which are currently registered on an effective
registration statement on file with the Commission.

(aa) Borrower’s shares of Common Stock are registered pursuant to Section 12(b)
or 12(g) of the Exchange Act, and Borrower has not taken any action designed to
terminate the registration of the shares of Common Stock under the Exchange Act
nor has the Borrower received any notification that the Commission is
contemplating terminating such registration. Borrower is in compliance in all
material respects with all listing and maintenance requirements of the Principal
Trading Markets.

 

21

--------------------------------------------------------------------------------

(bb) Neither Borrower nor, to Borrower’s knowledge, any person acting on behalf
of Borrower, has offered or sold any of the Securities by any form of general
solicitation or general advertising.

(cc) The Borrower is in compliance in all material respects with all of the
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it. The
Borrower has established disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) for the Borrower
and designed such disclosure controls and procedures to ensure that information
required to be disclosed by it in the reports it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission’s rules and forms. Borrower’s certifying
officers have evaluated the effectiveness of its disclosure controls and
procedures as of the end of the period covered by its most recently filed
periodic report under the Exchange Act (such date, the “Evaluation Date”). The
Borrower has presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness
of its disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in
Borrower’s internal control over financial reporting (as such term is defined in
the Exchange Act) that have materially affected, or are reasonably likely to
materially affect, its internal controls over financial reporting.

(dd) Intentionally Omitted.

(ee) Assuming the accuracy of the representations and warranties of the Lenders
set forth in Section 3.3, none of the Borrower, nor, to the Borrower’s
knowledge, any of its Affiliates or any Person acting on its behalf has,
directly or indirectly, at any time within the past six (6) months, made any
offers or sales of any Borrower security or solicited any offers to buy any
security under circumstances that would (i) eliminate the availability of the
exemption from registration under Regulation D under the Securities Act in
connection with the offer and sale by the Borrower of the Securities as
contemplated hereby or (ii) cause the offering of the Securities pursuant to the
Loan Documents to be integrated with prior offerings by the Borrower for
purposes of any applicable law, regulation or stockholder approval provisions,
including, without limitation, under the rules and regulations of any Trading
Market on which any of the securities of the Borrower are listed or designated.

(ff) The Borrower has not, and to the Borrower’s knowledge no one acting on its
behalf has, (i) taken, directly or indirectly, any action designed to cause or
to result in the stabilization or manipulation of the price of any security of
the Borrower to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for soliciting purchases
of, any of the securities of the Borrower or (iii) paid or agreed to pay to any
Person any compensation for soliciting another to purchase any other securities
of the Borrower.

 

22

--------------------------------------------------------------------------------

Section 3.2 Acknowledgment. Borrower acknowledges that it has made the
representations and warranties referred to in Section 3.1 with the intention of
persuading the Lenders to enter into the Loan Documents and that the Lenders
have entered into the Loan Documents on the basis of, and in full reliance on,
each of such representations and warranties, each of which shall survive the
execution of this Agreement until the Obligations are paid in full and each
representation and warranty set forth in Sections 3.1(v) (except for the last
sentence thereof), (w), (x), (aa) and (ee) shall be deemed to be continuously
made at all time until the Obligations are paid in full.

Section 3.3 Representations and Warranties of the Lenders. Each Lender,
severally and not jointly, represents and warrants to Borrower and its
Subsidiaries as of the Agreement Date that:

(a) Such Lender is duly organized and validly existing under the laws of the
jurisdiction of its formation.

(b) Each Loan Document to which it is a party has been duly authorized, executed
and delivered by such Lender and constitutes the valid and legally binding
obligation of such Lender, enforceable in accordance with its terms, except as
such enforceability may be limited by (i) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally, and (ii) applicable equitable principles (whether considered in a
proceeding at law or in equity).

(c) Such Lender has full power and authority to make the Loans and to enter into
and perform its other obligations under each of the Loan Documents and carry out
the other transactions contemplated thereby.

(d) Each of the Conversion Notes, Incremental Conversion Notes and Conversion
Shares to be received by such Lender hereunder will be acquired for such
Lender’s own account, and not with a view to the resale or distribution of any
part thereof in violation of the Securities Act, except pursuant to sales
registered or exempted under the Securities Act, and such Lender has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of the Securities Act without prejudice, however, to such
Lender’s right at all times to sell or otherwise dispose of all or any part of
such Securities in compliance with applicable federal and state securities laws.
Nothing contained herein shall be deemed a representation or warranty by such
Lender to hold the Securities for any period of time and such Lender reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.

(e) Such Lender can bear the economic risk and complete loss of its investment
in the Securities and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
contemplated hereby.

 

23

--------------------------------------------------------------------------------

(f) Such Lender understands that the Securities are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from Borrower in a transaction not involving a public offering and that
under such laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances.

(g) Such Lender is an “accredited investor” as such term is defined in
Regulation D promulgated under the Securities Act.

ARTICLE 4

CONDITIONS OF DISBURSEMENT OF LOANS

Section 4.1 Conditions to the Disbursement of Loans. The obligation of the
Lenders to make the Initial Loans shall be subject to the fulfillment of the
following conditions:

(a) The Lenders shall have received each Loan Document executed and delivered by
each Credit Party thereto;

(b) The Lenders shall have received (i) copies of each Organization Document
executed and delivered by each Credit Party, as applicable, and, to the extent
applicable, certified as of a recent date by the appropriate governmental
official; (ii) signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party; (iii) resolutions of
the board of directors or other governing body of each Credit Party approving
and authorizing the execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party or by which it or its assets may
be bound , certified as of the Initial Funding Date by an authorized officer as
being in full force and effect without modification or amendment; (iv) a good
standing certificate (or appropriate comparable confirmation in the relevant
jurisdiction) from the applicable Governmental Authority of each Credit Party’s
jurisdiction of incorporation, organization or formation, and (v) such other
documents as Lenders may reasonably request;

(c) Each Credit Party shall have obtained all Authorizations and all consents of
other Persons, in each case that are necessary or advisable in connection with
the transactions contemplated by the Loan Documents and each of the foregoing
shall be in full force and effect and in form and substance reasonably
satisfactory to Lenders. All applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated by the Loan Documents or the financing thereof and no
action, request for stay, petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable agency to take action to set aside its consent on its own motion
shall have expired;

(d) Lenders shall have received executed copies of the favorable written
opinions of (i) Bass, Berry & Sims PLC, counsel for the Credit Parties, and (ii)

 

24

--------------------------------------------------------------------------------

Ballard Spahr LLP, special Nevada counsel for the Credit Parties, as to such
matters as Lenders may reasonably request and otherwise in form and substance
reasonably satisfactory to Lenders;

(e) No Default or Event of Default shall have occurred and be continuing;

(f) All of the representations and warranties set forth in Section 3.1 shall be
true and correct in all material respects as if made on the Initial Funding Date
(unless made as of a specific earlier date, in which case such representations
and warranties shall remain true and correct in all material respects as of said
earlier date);

(g) The Disbursement Condition shall have been satisfied;

(h) The Lenders and the agent for the lenders under the Credit Agreement shall
have entered in a subordination agreement (the “Subordination Agreement”) in
form and substance acceptable to Lenders and the lenders under the Credit
Agreement and no Event of Default (as defined therein) shall exist under the
Credit Agreement; and

(i) No Material Adverse Change shall have occurred since June 30, 2015.

Section 4.2 Condition to the Disbursement of Incremental Loans. The obligation
of the Lenders to make an Incremental Loan shall be subject to the fulfillment
of the following conditions:

(a) Lenders shall have received an Incremental Loan Request;

(b) Lenders shall have received Incremental Conversion Notes executed by
Borrower in the aggregate principal amount of the Incremental Loan;

(c) Lenders, in their sole discretion, shall have agreed with Borrower upon the
Conversion Terms;

(d) No Default or Event of Default shall have occurred and be continuing or
would be created by such Incremental Loan;

(e) After giving effect thereto, Borrower shall be in compliance with all
financial covenants under the Credit Agreement as in effect on the Agreement
Date on a pro forma basis without giving effect to any waivers, consents,
modifications or amendments thereto by the lenders thereunder related to such
financial covenants which have not been approved in writing by Required Lenders;

(f) All of the representations and warranties in Section 3.1 shall be true and
correct in all material respects as if made on the date of funding of each such
Incremental Loan (unless made as of a specific earlier date, in which case such
representations and warranties shall remain true and correct in all material
respects as of said earlier date);

 

25

--------------------------------------------------------------------------------

(g) No Event of Default (as defined in the Credit Agreement) shall exist under
the Credit Agreement without giving effect to any consent by the lenders
thereunder or the waiver of any Event of Default thereunder which, in either
case, has not been approved in writing by the Required Lenders; and

(h) Lenders shall have received confirmation in writing from Borrower that the
issuance of the Incremental Conversion Notes and the Conversion Shares issuable
pursuant thereto will not necessitate shareholder approval under the rules of
any Principal Trading Markets.

(i) Borrower and its Subsidiaries shall not have had the operating licenses of
rehabilitation facilities representing more than twenty percent (20%) of
Borrower’s consolidated gross revenues suspended, revoked or not renewed by any
applicable Governmental Authority.

Section 4.3 Condition to the Disbursement of Acquisition Loans. The obligation
of the Lenders to make an Acquisition Loan shall be subject to the fulfillment
of the following conditions:

(a) Lenders shall have received an Acquisition Loan Request and a certification
by an authorized officer of Borrower that the proposed acquisition is a
Permitted Acquisition;

(b) Lenders shall have received Acquisition Notes executed by Borrower in the
aggregate principal amount of the Acquisition Loan;

(c) All conditions precedent to the closing of the Permitted Acquisition shall
have been satisfied except for the funding of the purchase price with the
proceeds of such Acquisition Loan;

(d) No Default or Event of Default shall have occurred and be continuing or
would be created by such Permitted Acquisition;

(e) After giving effect thereto, Borrower shall be in compliance with all
financial covenants under the Credit Agreement as in effect on the Agreement
Date on a pro forma basis without giving effect to any waivers, consents,
modifications or amendments thereto by the lenders thereunder related to such
financial covenants which have not been approved in writing by Required Lenders;

(f) All of the representations and warranties in Section 3.1 shall be true and
correct in all material respects as if made on the date of funding of each such
Acquisition Loan (unless made as of a specific earlier date, in which case such
representations and warranties shall remain true and correct in all material
respects as of said earlier date); and

(g) No Event of Default (as defined in the Credit Agreement) shall exist under
the Credit Agreement without giving effect to any consent by the lenders
thereunder or the waiver of any Event of Default thereunder which, in either
case, has not been approved in writing by the Required Lenders.

 

26

--------------------------------------------------------------------------------

(h) Borrower and its Subsidiaries shall not have had the operating licenses of
rehabilitation facilities representing more than twenty percent (20%) of
Borrower’s consolidated gross revenues suspended, revoked or not renewed by any
applicable Governmental Authority.

ARTICLE 5

PARTICULAR COVENANTS AND EVENTS OF DEFAULT

Section 5.1 Affirmative Covenants. Unless the Required Lenders shall otherwise
agree:

(i) Borrower shall and shall cause its Subsidiaries to maintain their existence
and qualify and remain qualified to do their business as currently conducted,
except for any merger or dissolution of a Subsidiary in accordance with
Section 5.2(i) or where the failure to maintain such qualification would not
reasonably be expected to have a Material Adverse Effect.

(ii) Borrower shall and shall cause its Subsidiaries to comply with all
Applicable Laws, except to the extent that any noncompliance would not
reasonably be expected to have a Material Adverse Effect.

(iii) Borrower shall obtain and shall cause its Subsidiaries to make and keep in
full force and effect all Authorizations, except to the extent that any failure
to do so would not reasonably be expected to have a Material Adverse Effect.

(iv) Borrower shall promptly notify the Lenders of the occurrence of (i) any
Default or Event of Default, (ii) any claims, litigation, arbitration, mediation
or administrative or regulatory proceedings that are instituted or threatened
against Borrower or any of its Subsidiaries concurrently with any public
disclosure of any such event, and (iii) each event which, at the giving of
notice, lapse of time, determination of materiality or fulfillment of any other
applicable condition (or any combination of the foregoing), would constitute an
event of default (however described) under any Loan Document.

(v) Borrower will timely file with the Commission (subject to appropriate
extensions made under Rule 12b-25 of the Exchange Act) any annual reports,
quarterly reports and other periodic reports required to be filed pursuant to
Section 13 or 15(d) of the Exchange Act.

(vi) Borrower shall, so long as any of the Conversion Notes or Incremental
Conversion Notes are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued capital stock, solely for the
purpose of effecting the conversion of the Conversion Notes and Incremental
Notes, the number of shares of Common Stock issuable upon such conversion
(without taking into account any limitations on the conversion of the Notes as
set forth therein).

(vii) In the event that any Person becomes a Material Domestic Subsidiary of
Borrower, Borrower shall within thirty (30) days of such Person becoming a
Material Domestic Subsidiary (or such later date as the Lenders may agree in
their sole discretion) cause such Material Domestic Subsidiary to become a
Guarantor; provided, however, neither (x) any Domestic Subsidiary of a Foreign
Subsidiary nor (y) any Foreign Subsidiary Holding Company shall be required to
become a Guarantor to the extent such Guaranty would result in a material
adverse tax consequence of the Borrower.

 

27

--------------------------------------------------------------------------------

If any notice or information required to be furnished (other than an Acquisition
Loan Request) contains material non-public information (any such notice or
information, a “Public Notice”), the Borrower, instead of delivering such Public
Notice to all the Lenders shall promptly deliver such Public Notice to each
Lender that is not a Restricted Lender and promptly notify each Restricted
Lender in writing or orally that Borrower desires to deliver to such Restricted
Lender a Public Notice. Within five (5) Business Days of receipt of such
notification the Restricted Lender may either (i) refuse the delivery of such
Public Notice, in which case Borrower’s obligations with respect to such Public
Notice and such Restricted Lender shall be deemed satisfied, or (ii) enter into
good faith negotiations with the Borrower to agree on the time period within
which the Borrower will make the material non-public information contained in
such Public Notice publicly available by including such information in a filing
with the SEC. If Borrower and such Restricted Lender agree on such time period,
the Borrower shall promptly deliver to such Restricted Lender such Public Notice
and shall include the applicable material non-public information in a public
filing with the SEC within such agreed to time period. The failure to agree on
such time period will be deemed to satisfy Borrower’s obligations with respect
to such Public Notice and such Restricted Lender. For avoidance of doubt, it is
the Parties’ intention that the requirements of this paragraph shall not prevent
Borrower from borrowing any Loan that would be made in accordance with the terms
hereof but for the provisions of this paragraph, nor shall such requirements be
construed as a waiver of any Lender’s obligation to fund such a Loan.

Section 5.2 Negative Covenants. Unless the Required Lenders shall otherwise
agree:

(i) Other than transactions permitted by Section 7.04 of the Credit Agreement,
Borrower shall not and shall not permit any Subsidiary to (a) liquidate,
dissolve or be wound up provided that a Subsidiary may merge into Borrower or
any other Subsidiary, or (b) enter into any merger, consolidation or
reorganization, unless in the case of this Section 5.2(i)(b) (x) Borrower or a
Subsidiary is the surviving corporation or, (y) subject to a Change of Control,
if the survivor is a Person other than Borrower or a Subsidiary, such Person
assumes the Obligations of Borrower under this Agreement and the other Loan
Documents. Borrower shall not establish any Material Domestic Subsidiary unless
such Material Domestic Subsidiary executes and delivers to the Lenders a
Guaranty in accordance with Section 5.1(vii);

(ii) Other than transactions permitted by Sections 7.03, 7.04, 7.05, 7.06, 7.08,
7.09, and 7.13 of the Credit Agreement, Borrower shall not and shall not permit
any Subsidiary to (a) enter into any partnership, joint venture, syndicate,
pool, profit-sharing or royalty agreement or other combination, or engage in any
transaction with an Affiliate (other than a Subsidiary), whereby its income or
profits are or might be, shared with another Person (other than a Subsidiary),
or (b) make any cash dividend or distribute, or permit the dividend or
distribution of, any of its assets, including its intangibles, to any of its
shareholders in such capacity or its Affiliates (other than a Subsidiary)
(except for distributions in which Lenders participate pursuant to the
provisions of the Notes);

 

28

--------------------------------------------------------------------------------

(iii) Borrower shall not and shall not permit any Subsidiary to (a) create,
incur or suffer any Lien upon any of its assets, except Permitted Liens, or
(b) assign, sell, transfer or otherwise dispose of, any Loan Document or its
rights and obligations thereunder;

(iv) Borrower shall not and shall not permit any Subsidiary to create, incur,
assume, guarantee or be liable with respect to any Indebtedness, except for
Permitted Indebtedness;

(v) Borrower shall not and shall not permit any Subsidiary to sell or otherwise
transfer its assets other than as permitted by the Credit Agreement; and

(vi) Borrower shall not issue any Equity Interests (i) senior to its shares of
Common Stock or (ii) convertible or exercisable for Equity Interests senior to
its Common Stock.

Section 5.3 [Intentionally Deleted.]

Section 5.4 General Acceleration Provision upon Events of Default. If one or
more of the events specified in this Section 5.4 shall have happened and be
continuing beyond the applicable cure period (each, an “Event of Default”), the
Required Lenders, by written notice to the Borrower (an “Acceleration Notice”),
may declare the principal of, and accrued and unpaid interest on, all of the
Notes or any part of any of them (together with any other amounts accrued or
payable under the Loan Documents) to be, and the same shall thereupon become,
immediately due and payable, without any further notice and without any
presentment, demand, or protest of any kind, all of which are hereby expressly
waived by the Borrower, and take any further action available at law or in
equity, including, without limitation, the sale of the Loan and all other rights
acquired in connection with the Loan:

(a) The Borrower shall have failed to make payment of (i) principal when due, or
(ii) interest or any other amounts due under the Notes or any other Obligations
within five (5) Business Days of their due date.

(b) Any Credit Party shall have failed to comply with the due observance or
performance of (i) Section 5.1(v), other than the failure to timely file an 8-K,
(ii) Section 5.1(v) solely as a result of the failure to timely file an 8-K and
such failure is not remedied by Borrower within five (5) days of the due date
for such filing, or (iii) any other covenant contained in this Agreement or the
other Loan Documents (other than the covenant described in (a) above, or as
otherwise expressly provided in this Section 5.4) or in the other Loan Documents
and, in the case of (iii) above, such default is not remedied by the Borrower or
waived by the Required Lenders within thirty (30) days (inclusive of any
extension periods or cure periods contained in any such covenant or provided by
Applicable Laws) after the earlier of (A) receipt by any Credit Party of notice
from the Lenders of such default, or (B) actual knowledge of any Credit Party of
such default.

(c) Any representation or warranty made by any Credit Party or any of its
Subsidiaries in any Loan Document shall be incorrect, false or misleading in any

 

29

--------------------------------------------------------------------------------

material respect (except to the extent that such representation or warranty is
qualified by reference to materiality or Material Adverse Effect, to which
extent it shall be incorrect, false or misleading in any respect) as of the date
it was made or deemed made.

(d) (i) Any Credit Party or any of its Subsidiaries shall generally be unable to
pay its debts as such debts become due or be deemed to be unable to pay its
debts, or shall admit in writing its inability to pay its debts as they come due
or shall make a general assignment for the benefit of creditors; (ii) any Credit
Party or any of its Subsidiaries shall declare a moratorium on the payment of
its debts; (iii) the commencement by any Credit Party or any of its Subsidiaries
of proceedings to be adjudicated bankrupt or insolvent, or the consent by it to
the commencement of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization,
examinership, intervention or other similar relief under any applicable law, or
the consent by it to the filing of any such petition or to the appointment of an
intervenor, receiver, liquidator, assignee, trustee, sequestrator, examiner (or
other similar official) of all or substantially all of its assets; (iv) the
commencement against any Credit Party or any of its Subsidiaries of a proceeding
in any court of competent jurisdiction under any bankruptcy or other applicable
law (as now or hereafter in effect) seeking its liquidation, winding up,
dissolution, reorganization, examinership, arrangement, adjustment, or the
appointment of an intervenor, receiver, liquidator, assignee, trustee,
sequestrator, examiner (or other similar official), and any such proceeding
shall continue undismissed, or any order, judgment or decree approving or
ordering any of the foregoing shall continue unstayed or otherwise in effect,
for a period of sixty (60) days; (v) the making by any Credit Party or any of
its Subsidiaries of an assignment for the benefit of creditors, or the admission
by it in writing of its inability to pay its debt generally as they become due;
or (vi) any other event shall have occurred which under any applicable law would
have an effect analogous to any of those events listed above in this subsection.

(e) One or more final judgments against any Credit Party or any Subsidiary or
attachments against any of their respective property, which in the aggregate
exceed $3,000,000 (net of any anticipated insurance proceeds), and such
judgment(s) remains unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days from the date of entry of such
judgment.

(f) Any Authorization held by any Credit Party or any of its Subsidiaries shall
have been suspended, cancelled or revoked, and such suspension, cancellation or
revocation would reasonably be expected to have a Material Adverse Effect.

(g) Any Authorization necessary for the execution, delivery or performance of
any Loan Document or for the validity or enforceability of any of the
Obligations is not given or is withdrawn or ceases to remain in full force or
effect.

(h) There is a failure to perform under any agreement to which any Credit Party
is a party resulting in the acceleration by a third party of the maturity of any
Indebtedness in an amount in excess of $3,000,000.

 

30

--------------------------------------------------------------------------------

(i) The validity of any Loan Document shall be contested by any Credit Party, or
any Applicable Law shall purport to render any material provision of any Loan
Document invalid or unenforceable or shall purport to prevent or materially
delay the performance or observance by any Credit Party of the Obligations.

(j) The shares of Common Stock of Borrower cease to be listed on the Principal
Trading Markets or the shares of Common Stock cease to be registered under
Section 12 of the Exchange Act.

(k) The occurrence of a Conversion Failure.

(l) The occurrence of any Change of Control.

Section 5.5 Automatic Acceleration on Dissolution or Bankruptcy. Notwithstanding
any other provisions of this Agreement, if an Event of Default under
Section 5.4(d) shall occur, the principal of the Notes (together with any other
amounts accrued or payable under this Agreement) shall thereupon become
immediately due and payable without any presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived by the Borrower.

Section 5.6 Recovery of Amounts Due. If any amount payable hereunder is not paid
as and when due, the Borrower hereby authorizes the Lenders to proceed, to the
fullest extent permitted by applicable law, without prior notice, by right of
set-off, banker’s lien or counterclaim, against any moneys or other assets of
any Credit Party to the full extent of all amounts payable to the Lenders.

ARTICLE 6

MISCELLANEOUS

Section 6.1 Notices. Any notices required or permitted to be given under the
terms hereof shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile or by electronic mail and shall be
effective five (5) days after being placed in the mail, if mailed by regular
United States mail, or upon receipt, if delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile, or when
received by electronic mail in each case addressed to a party. The addresses for
such communications shall be the following (or such other addresses provided by
written notice to the parties hereto from time to time):

If to Credit Parties:

AAC Holdings, Inc.

115 East Park Drive, Second Floor

Brentwood, Tennessee 37037

Fax: (615) 649-4737

E-mail: kmanz@contactaac.com

Attention: Kirk R. Manz, Chief Financial Officer

 

31

--------------------------------------------------------------------------------

and

E-mail: amcwilliams@contactaac.com

Attention: Andrew W. McWilliams, Chief Accounting Officer

and

E-mail: ksphillips@contactaac.com

Attention: Kathryn Sevier Phillips, General Counsel and Secretary

With a copy to:

Bass, Berry & Sims PLC

150 Third Avenue South, Suite 2800

Nashville, Tennessee 37201

Fax: (615) 742-0409

Email: csellers@bassberry.com

Attn: Cynthia N. Sellers, Esq.

If to the Lenders (and which constitutes effective notice as to all Lenders):

Deerfield Management Company, L.P.

780 Third Avenue, 37th Floor

New York, NY 10017

Fax: (212) 599-3075

Email: dclark@deerfield.com

Attn: David J. Clark

With a copy to:

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022

Fax: (212) 940-8776

Email: mark.fisher@kattenlaw.com

Attn: Mark I. Fisher, Esq.

Section 6.2 Waiver of Notice. Whenever any notice is required to be given to the
Lenders or the Borrower under any of the Loan Documents, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.

Section 6.3 Reimbursement of Legal and Other Expenses. If any amount owing to
the Lenders under any Loan Document shall be collected through enforcement of
this Agreement, any Loan Document or restructuring of the Loan in the nature of
a work-out, settlement, negotiation, or any process of law, or shall be placed
in the hands of third Persons for collection, the Borrower shall pay (in
addition to all monies then due in respect of the Loan or otherwise payable
under any Loan Document) all reasonable and documented external attorneys’ and
other fees and out-of-pocket expenses incurred in respect of such collection.

 

32

--------------------------------------------------------------------------------

Section 6.4 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to contracts made and to be performed in such State. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York, borough of Manhattan. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the state
and federal courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

Section 6.5 Successors and Assigns. This Agreement shall bind and inure to the
respective successors and assigns of the Parties, except that (a) a Credit Party
may not assign or otherwise transfer all or any part of its rights under the
Loan Documents without the prior written consent of the Required Lenders, and
(b) a Lender may assign or otherwise transfer all or any part of its Notes upon
three (3) days prior notice to Borrower; provided, that, absent the occurrence
of an Event of Default which is continuing, Lenders shall not assign or
otherwise transfer all or any part of their Notes to an Ineligible Transferee
without the prior written consent of Borrower, which consent may be withheld in
Borrower’s discretion. Upon a Lender’s assignment of a Note such Lender shall
provide notice of the transfer to Borrower for recordation in the Register
pursuant to Section 1.4. Upon receipt of a notice of a transfer of an interest
in a Note, Borrower shall record the identity of the transferee and other
relevant information in the Register and the transferee shall (to the extent of
the interests transferred to such transferee) have all the rights and
obligations of, and shall be deemed, a Lender hereunder.

Section 6.6 Entire Agreement. The Loan Documents contain the entire
understanding of the Parties with respect to the matters covered thereby and
supersede any and all other written and oral communications, negotiations,
commitments and writings with respect thereto. The provisions of this Agreement
may be waived, modified, supplemented or amended only by an instrument in
writing signed by the authorized officer of each Party.

 

33

--------------------------------------------------------------------------------

Section 6.7 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

Section 6.8 Counterparts. This Agreement may be executed in several
counterparts, and by each Party on separate counterparts, each of which and any
photocopies and facsimile copies thereof shall be deemed an original, but all of
which together shall constitute one and the same agreement.

Section 6.9 Survival.

(a) This Agreement and all agreements, representations and warranties made in
the Loan Documents, and in any document, certificate or statement delivered
pursuant thereto or in connection therewith shall be considered to have been
relied upon by the other Parties and shall survive the execution and delivery of
this Agreement and the making of the Loan hereunder regardless of any
investigation made by any such other Party or on its behalf, and this Agreement
shall continue in force until all amounts payable under the Loan Documents shall
have been fully paid in accordance with the provisions thereof, and the Lenders
shall not be deemed to have waived, by reason of making the Loans, any Event of
Default that may arise by reason of any such representation or warranty proving
to have been false or misleading, notwithstanding that the Lenders may have had
notice or knowledge of any such Event of Default or may have had notice or
knowledge that such representation or warranty was false or misleading at the
time the Loans were made.

(b) The obligations of the Borrower under Sections 1.4 and 2.6 and the
obligations of the Borrower and the Lenders under this Article 6 shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, or the termination
of this Agreement or any provision hereof.

Section 6.10 No Waiver. Neither the failure of, nor any delay on the part of,
any Party in exercising any right, power or privilege hereunder, or under any
agreement, document or instrument mentioned herein, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder, or under any agreement, document or instrument mentioned
herein, preclude other or further exercise thereof or the exercise of any other
right, power or privilege; nor shall any waiver of any right, power, privilege
or default hereunder, or under any agreement, document or instrument mentioned
herein, constitute a waiver of any other right, power, privilege or default or
constitute a waiver of any default of the same or of any other term or
provision. No course of dealing and no delay in exercising, or omission to
exercise, any right, power or remedy accruing to the Lenders upon any default
under this Agreement, or any other agreement shall impair any such right, power
or remedy or be construed to be a waiver thereof or an acquiescence therein; nor
shall the action of the Lenders in respect of any such default, or any
acquiescence by it therein, affect or impair any right, power or remedy of the
Lenders in respect of any other default. All rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies otherwise provided by
law.

 

34

--------------------------------------------------------------------------------

Section 6.11 Indemnity.

(a) Borrower shall, at all times, indemnify and hold each Lender harmless (the
“Indemnity”) and each of their respective directors, partners, officers,
employees, agents, counsel and advisors (each, an “Indemnified Person”) in
connection with any losses, claims (including the reasonable attorneys’ fees
incurred in defending against such claims), damages, liabilities, penalties, or
other expenses arising out of, or relating to, the Loan Documents, the extension
of credit hereunder or the Loans or the use or intended use of the Loans, which
an Indemnified Person may incur or to which an Indemnified Person may become
subject (each, a “Loss”). The Indemnity shall not apply to the extent that a
court or arbitral tribunal of competent jurisdiction issues a final judgment
that such Loss resulted from the gross negligence or willful misconduct of the
Indemnified Person. The Indemnity is independent of and in addition to any other
agreement of any Credit Party under any Loan Document to pay any amount to the
Lenders, and any exclusion of any obligation to pay any amount under this
subsection shall not affect the requirement to pay such amount under any other
section hereof or under any other agreement. This Section 6.11 shall not apply
with respect to Taxes (which are governed by Section 2.6) other than any Taxes
that represent losses, claims or damages arising from any non-Tax claim.

(b) Promptly after receipt by an Indemnified Person under this Section 6.11 of
notice of the commencement of any action (including any governmental action),
such Indemnified Person shall, if a Loss in respect thereof is to be made
against the indemnifying person under this Section 6.11, deliver to Borrower a
written notice of the commencement thereof, and Borrower shall have the right to
participate in, and, to the extent Borrower so desires, to assume control of the
defense thereof with counsel mutually satisfactory to Borrower and the
Indemnified Person, as the case may be.

(c) An Indemnified Person shall have the right to retain its own counsel with
the documented reasonable fees and out-of-pocket expenses to be paid by the
indemnifying person, if, in the reasonable opinion of counsel for the
Indemnified Person, the representation by such counsel of the Indemnified Person
and Borrower would be inappropriate due to actual or potential differing
interests between such Indemnified Person and any other party represented by
such counsel in such proceeding. Credit Parties shall pay for only one separate
legal counsel for the Indemnified Persons. The failure of an Indemnified Person
to deliver written notice to the Borrower within a reasonable time of the
commencement of any such action shall not relieve Credit Parties of any
liability to the Indemnified Person under this Section 6.11, except to the
extent that Credit Parties are actually prejudiced in its ability to defend such
action. The indemnification required by this Section 6.11 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.

Section 6.12 No Usury. The Loan Documents are hereby expressly limited so that
in no contingency or event whatsoever, whether by reason of acceleration or
otherwise, shall the amount paid or agreed to be paid to the Lenders for the
Loan exceed the maximum amount permissible under applicable law. If from any
circumstance whatsoever fulfillment of any

 

35

--------------------------------------------------------------------------------

provision hereof, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if from any such circumstance the Lenders shall ever receive anything which
might be deemed interest under applicable law, that would exceed the highest
lawful rate, such amount that would be deemed excessive interest shall be
applied to the reduction of the principal amount owing on account of the Loans,
or if such deemed excessive interest exceeds the unpaid balance of principal of
the Loans, such deemed excess shall be refunded to the Borrower. All sums paid
or agreed to be paid to the Lenders for the Loan shall, to the extent permitted
by applicable law, be deemed to be amortized, prorated, allocated and spread
throughout the full term of the Loans until payment in full so that the deemed
rate of interest on account of the Loans is uniform throughout the term thereof.
The terms and provisions of this Section shall control and supersede every other
provision of this Agreement and the Notes.

Section 6.13 Several Obligations. The obligations of the Lenders under the Loan
Documents shall be several and not joint.

Section 6.14 Further Assurances. Borrower covenants and agrees to take all
necessary action to consummate the transactions contemplated by this Agreement
and to fulfill all requirements to the Initial Loans set forth in Section 4.1,
including the execution and delivery of the Conversion Notes, contemporaneous
with the closing of the Transactions. From time to time, the Borrower shall
perform any and all acts and execute and deliver to the Lenders such additional
documents as may be necessary or as requested by the Lenders to carry out the
purposes of any Loan Document or any or to preserve and protect the Lenders’
rights as contemplated therein.

[SIGNATURE PAGE FOLLOWS]

 

36

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Lenders and Borrower have caused this Agreement to be
duly executed as of the 2nd day of October, 2015.

 

BORROWER: AAC HOLDINGS, INC. By:  

/s/ Michael T. Cartwright

Name:   Michael T. Cartwright Title:   Chairman and Chief Executive Officer
LENDERS: DEERFIELD PRIVATE DESIGN FUND III, L.P. By:   Deerfield Mgmt III, L.P.,
General Partner By:   J.E. Flynn Capital III, LLC, General Partner By:  

/s/ Jonathan Isler

Name:   Jonathan Isler Title:   Authorized Signatory DEERFIELD PARTNERS, L.P.
By:   Deerfield Mgmt, L.P., General Partner By:   J.E. Flynn Capital, LLC,
General Partner By:  

/s/ Jonathan Isler

Name:   Jonathan Isler Title:   Authorized Signatory DEERFIELD INTERNATIONAL
MASTER FUND, L.P. By:   Deerfield Mgmt, L.P., General Partner By:   J.E. Flynn
Capital, LLC, General Partner By:  

/s/ Jonathan Isler

Name:   Jonathan Isler Title:   Authorized Signatory

 

37

--------------------------------------------------------------------------------

SCHEDULE 1

 

LENDER

   ALLOCATION OF LOANS,
PREPAYMENTS*  

Deerfield Private Design Fund III, L.P.

     50 % 

Deerfield Partners, L.P.

     22 % 

Deerfield International Master Fund, L.P.

     28 % 

 

* Lenders may, from time to time reallocate the percentages among themselves
without the consent of Credit Parties.

--------------------------------------------------------------------------------

Exhibit A-1

See Attached

--------------------------------------------------------------------------------

FORM OF NOTE

THIS NOTE MAY BE ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR U.S. FEDERAL
INCOME TAX PURPOSES. THE AMOUNT OF OID SHALL BE MUTUALLY DETERMINED BY THE
ORIGINAL HOLDER AND THE COMPANY IN GOOD FAITH AND IN ACCORDANCE WITH THE
APPLICABLE PROVISIONS OF SECTIONS 1271 THROUGH 1275 OF THE U.S. INTERNAL REVENUE
CODE. THE ISSUE PRICE, AMOUNT OF OID, ISSUE DATE AND YIELD TO MATURITY WITH
RESPECT TO THIS NOTE MAY BE OBTAINED BY WRITING TO THE BORROWER AT THE FOLLOWING
ADDRESS: 115 EAST PARK DRIVE, SECOND FLOOR, BRENTWOOD, TN 37027; ATTENTION: KIRK
R. MANZ, CHIEF FINANCIAL OFFICER, FAX NUMBER: (615) 309-6009; ELECTRONIC MAIL:
kmanz@contactaac.com

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT, INCLUDING, WITHOUT LIMITATION,
PURSUANT TO RULES 144 OR 144A UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE
EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE,
SUCH AS A SO-CALLED “4(a)(1 1⁄2)” SALE.

THIS NOTE IS SUBORDINATED TO THE PRIOR PAYMENT AND SATISFACTION IN CASH OF
SENIOR INDEBTEDNESS, AS DEFINED IN THE SUBORDINATION AGREEMENT, DATED AS OF
OCTOBER 2, 2015, 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.

--------------------------------------------------------------------------------

CONVERTIBLE NOTE

 

Issuance Date:

     Principal: U.S.$                

FOR VALUE RECEIVED, AAC HOLDINGS, INC., a Nevada corporation (the “Company”),
hereby promises to pay to                      or its registered assigns (the
“Holder”) the principal amount of                      ($        ) (the
“Principal”) pursuant to, and in accordance with, the terms of that certain
Facility Agreement, dated as of                     , by and among the Company
and the Lenders party thereto (together with all exhibits and schedules thereto
and as may be amended, restated, modified and supplemented from time to time,
the “Facility Agreement”). The Company hereby promises to pay accrued and unpaid
Interest (as defined below) and premium, if any, on the Principal on the dates,
at the rates and in the manner provided for in the Facility Agreement. This
Convertible Note (including all Convertible Notes issued in exchange, transfer
or replacement hereof, and as any of the foregoing may be amended, restated,
supplemented or otherwise modified from time to time, this “Note”) is one of the
Convertible Notes issued pursuant to the Facility Agreement (collectively,
including all Convertible Notes issued in exchange, transfer or replacement
thereof, and as any of the foregoing may be amended, restated, supplemented or
otherwise modified from time to time, the “Notes”). All capitalized terms used
and not otherwise defined herein shall have the respective meanings set forth in
the Facility Agreement.

Except as expressly provided in the Facility Agreement, the Company has no
right, but under certain circumstances may have an obligation, to make payments
of Principal prior to the sixth anniversary of the Initial Funding Date (as
defined in the Facility Agreement). At any time an Event of Default exists, the
Principal of this Note, together with all accrued and unpaid Interest and any
applicable premium due, if any, may be declared, or shall otherwise become, due
and payable in the manner, at the price and with the effect provided in the
Facility Agreement.

1. Definitions.

2. Certain Defined Terms. For purposes of this Note, the following terms shall
have the following meanings:

3. “Affiliate” means any person or entity that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with a person or entity, as such terms are used in and construed under
Rule 144 under the Securities Act. With respect to a Holder, any investment fund
or managed account that is managed on a discretionary basis by the same
investment manager as such Holder will be deemed to be an Affiliate of such
Holder. As used in this definition of “Affiliate,” the term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting powers, by contract, or otherwise.

--------------------------------------------------------------------------------

4. “Asset Sale” means a transaction described in clause (B)(i) of the definition
of Major Transaction in connection with which the Company has announced its
intention to liquidate and distribute its assets to shareholders.

5. Capital Stock” means, for any entity, any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) stock issued by that entity, but for the
avoidance of doubt, excluding any debt securities convertible into such stock.

6. “Common Equity” of any Person means Capital Stock of such Person that is
generally entitled (a) to vote in the election of directors of such person or
(b) if such Person is not a corporation, to vote or otherwise participate in the
election of the governing body, partners, managers or others that will control
the management or policies of such person.

7. “Common Stock” means the common stock, par value $0.001 per share, of the
Company.

8. “Conversion Amount” means the Principal to be converted, redeemed or
otherwise with respect to which this determination is being made.

9. “Conversion Price” means, as of any Conversion Date or other date of
determination, $30 per Share, subject to adjustment as provided herein and
subject to appropriate adjustment to reflect any subdivision of outstanding
Common Stock (by any stock split, stock dividend, recapitalization or otherwise)
or combination of outstanding Common Stock (by combination, reverse stock split
or otherwise).

10. “Dollars” or “$” means United States Dollars.

11. “Eligible Market” means the NASDAQ Global Market, the NASDAQ Global Select
Market, the New York Stock Exchange, the NYSE Alternext or the Nasdaq Capital
Market.

12. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

13. “Interest” means any interest (including any default interest) accrued on
the Principal pursuant to the terms of this Note and the Facility Agreement.

14. “Issuance Date” means                     , regardless of any exchange or
replacement hereof.

15. “Major Transaction” means any of the following events:

16. a consolidation, merger, exchange of shares, recapitalization,
reorganization, business combination or other similar event, (1) following which
the holders of Common Stock immediately preceding such consolidation, merger,
exchange,

--------------------------------------------------------------------------------

recapitalization, reorganization, combination or event either (a) no longer hold
a majority of the shares of Common Stock or (b) no longer have the ability to
elect a majority of the board of directors of the Company or (2) as a result of
which shares of Common Stock shall be changed into (or the shares of Common
Stock become entitled to receive) the same or a different number of shares of
the same or another class or classes of stock or securities of the Company or
another entity;

17. the sale or transfer (other than to a direct or indirect wholly-owned
subsidiary of the Company) of (i) all or substantially all of the assets of the
Company or (ii) assets of the Company for a purchase price equal to more than
50% of the Enterprise Value (as defined below) of the Company. For purposes of
this clause (B), “Enterprise Value” shall mean (I) the product of (x) the number
of issued and outstanding shares of Common Stock on the date the Company
delivers the Major Transaction Notice (as defined below in Section 3(c))
multiplied by (y) the per share closing price of the Common Stock on such date
plus (II) the amount of the Company’s debt as shown on the latest financial
statements filed with the SEC (the “Current Financial Statements”) less (III)
the amount of cash and cash equivalents of the Company as shown on the Current
Financial Statements; or

18. a “person” or “group” within the meaning of Section 13(d) of the Exchange
Act, other than the Company, Michael T. Cartwright or Jerrod N. Menz files a
Schedule TO or any schedule, form or report under the Exchange Act disclosing
that such person or group has become the direct or indirect “beneficial owner”
as defined in Rule 13d-3 under the Exchange Act of the Company’s Common Equity
representing more than 50% of the voting power of the Company’s Common Equity.

19. “Major Transaction Conversion Period” means the period beginning upon
receipt by the Holder of a Major Transaction Notice (as defined below) and
ending (1) in the case of a Successor Major Transaction (as defined below), five
(5) Trading Days prior to consummation of the Successor Major Transaction and
(2) in the case of a Company Share Major Transaction (as defined below), any
time until the six (6) year anniversary of the Initial Funding Date or the
earlier termination of this Note.

20. “Person” means an individual, a corporation, a limited liability company, an
association, a partnership, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or agency or a political subdivision
thereof.

21. “Principal” means the outstanding principal amount of this Note as of any
date of determination.

22. “Registration Failure” means that (A) the Company fails to file with the SEC
on or before the Filing Deadline (as defined in the Registration Rights
Agreement) any Registration Statement required to be filed pursuant to
Section 2(a) of the Registration Rights Agreement registering Conversion Shares
(as defined below), (B) the Company fails to use its commercially reasonable
efforts to obtain effectiveness with the SEC, prior to the Registration Deadline
(as defined in the Registration Rights Agreement), of any Registration
Statements (as defined in the Registration Rights Agreement) that are required
to be

--------------------------------------------------------------------------------

filed pursuant to Section 2(a) of the Registration Rights Agreement registering
Conversion Shares, or fails to use commercially reasonable efforts to keep such
Registration Statement current and effective as required in Section 3 of the
Registration Rights Agreement, (C) the Company fails to file any additional
Registration Statements required to be filed pursuant to Section 2(a)(ii) of the
Registration Rights Agreement registering Conversion Shares on or before the
Additional Filing Deadline or fails to use its commercially reasonable efforts
to cause such new Registration Statement to become effective on or before the
Additional Registration Deadline, (D) the Company fails to file any amendment to
any Registration Statement registering Conversion Shares, or any additional
Registration Statement required to be filed pursuant to Section 3(b) of the
Registration Rights Agreement registering Conversion Shares within thirty
(30) days of the applicable Registration Trigger Date (as defined in the
Registration Rights Agreement), or fails to use its commercially reasonable
efforts to cause such amendment and/or new Registration Statement to become
effective within thirty (30) days of the applicable Registration Trigger Date,
(E) any Registration Statement required to be filed under the Registration
Rights Agreement registering Conversion Shares, after its initial effectiveness
and during the Registration Period (as defined in the Registration Rights
Agreement), lapses in effect or sales of any Conversion Shares constituting
Registrable Securities (as defined in the Registration Rights Agreement) cannot
otherwise be made thereunder or under another registration statement (whether by
reason of the Company’s failure to amend or supplement the prospectus included
therein in accordance with the Registration Rights Agreement, the Company’s
failure to file and to obtain effectiveness with the SEC of an additional
Registration Statement registering Conversion Shares or amended Registration
Statement required pursuant to Sections 2(a)(ii) or 3(b) of the Registration
Rights Agreement, as applicable, or otherwise), or (F) the Company fails to
provide a commercially reasonable written response to any comments to the
foregoing Registration Statements submitted by the SEC within twenty (20) days
of the date that such SEC comments are received by the Company.

23. “Registration Rights Agreement” means that certain Registration Rights
Agreement, dated as of October 2, 2015, by and among the Company and the
investors party to the Facility Agreement.

24. “Required Note Holders” means Holders of at least 50.1% of the aggregate
principal amount of the Notes outstanding.

25. “SEC” means the Securities and Exchange Commission.

26. “Securities Act” means the Securities Act of 1933, as amended.

27. “Shares” means shares of Common Stock.

28. “Successor Entity” means any Person purchasing the Company’s assets or
Common Stock in a Major Transaction, or any successor entity resulting from such
Major Transaction.

29. “Trading Day” means any day on which the Common Stock is traded for any
period on the Eligible Market or the other principal securities exchange or
other securities market or quotation system on which the Common Stock is then
being traded.

--------------------------------------------------------------------------------

30. “Volume Weighted Average Price” for any security as of any date means the
volume weighted average sale price of such security on the principal securities
exchange, trading market or quotation system where such security is listed or
traded as reported by Bloomberg Financial Markets or an equivalent, reliable
reporting service mutually acceptable to and hereinafter designated by the
Required Note Holders and the Company (“Bloomberg”) or, if no volume weighted
average sale price is reported for such security, then the last closing trade
price of such security as reported by Bloomberg, or, if no last closing trade
price is reported for such security by Bloomberg, the average of the bid prices
of any market makers for such security that are listed in the over the counter
market by the Financial Industry Regulatory Authority, Inc. or on the “over the
counter” Bulletin Board (or any successor) or in the “pink sheets” (or any
successor) by the OTC Markets Group, Inc. If the Volume Weighted Average Price
cannot be calculated for such security on such date in the manner provided
above, the Volume Weighted Average Price shall be the fair market value as
mutually determined by the Company and the Holders of a majority in interest of
the Notes being converted for which the calculation of the Volume Weighted
Average Price is required in order to determine the Conversion Price of such
Notes.

31. Conversion Rights. This Note may be converted into Shares on the terms and
conditions set forth in this Section 2 and, where applicable, Section 3.

32. Conversion at Option of the Holder. On or after the date hereof, the Holder
shall be entitled to convert all or any part of the Principal into fully paid
and nonassessable Shares (the “Conversion Shares”) in accordance with this
Section 2 and, if applicable, Section 3, at the Conversion Rate (as defined in
Section 2(b)); provided that the Company will not be required to issue
Conversion Shares with respect to a Conversion Notice with respect to less than
the lesser of (i) the principal amount outstanding under this Note and (ii) an
amount which, when aggregated with all conversions of Notes on the same day,
represents $1,000,000 principal amount of this Note. The Company shall not issue
any fraction of a Share upon any conversion. If the issuance would result in the
issuance of a fraction of a Share, then the Company shall round such fraction of
a Share up or down to the nearest whole share (with 0.5 rounded up).
Notwithstanding anything herein to the contrary, the Company shall not issue to
the Holder, and the Holder may not acquire, a number of Shares upon conversion
of this Note or otherwise issue any shares of Common Stock pursuant hereto or
the Facility Agreement to the extent that, upon such conversion, the number of
Shares then beneficially owned by the Holder and its Affiliates and any other
persons or entities whose beneficial ownership of Common Stock would be
aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act
(including shares held by any “group” of which the Holder is a member, but
excluding shares beneficially owned by virtue of the ownership of securities or
rights to acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) would exceed
9.98% of the total number of shares of Common Stock then issued and outstanding
(the “9.98% Cap”); provided, however, that the 9.98% Cap shall only apply to the
extent that

--------------------------------------------------------------------------------

the Common Stock is deemed to constitute an “equity security” pursuant to Rule
13d-1(i) promulgated under the Exchange Act. For purposes hereof, “group” has
the meaning set forth in Section 13(d) of the Exchange Act and applicable
regulations of the SEC, and the percentage held by the Holder shall be
determined in a manner consistent with the provisions of Section 13(d) of the
Exchange Act. Upon the written request of the Holder, the Company shall, within
two (2) Trading Days, confirm orally and in writing to the Holder the number of
Shares then outstanding.

33. Conversion Rate. The number of Conversion Shares issuable upon a conversion
of any portion of this Note pursuant to Section 2 shall be determined according
to the following formula (the “Conversion Rate”):

            Conversion Amount            

Conversion Price

The Conversion Rate shall be subject to adjustment in connection with a Major
Transaction Conversion (as defined below) in accordance with and subject to the
provisions of Section 3 hereof.

34. Mechanics of Conversion. The conversion of this Note shall be conducted in
the following manner:

35. Holder’s Delivery Requirements. To convert a Conversion Amount into
Conversion Shares on any date (the “Conversion Date”), the Holder shall
(A) transmit by facsimile or electronic mail (or otherwise deliver), for receipt
on or prior to 5:00 p.m. New York City time on such date, a copy of an executed
conversion notice in the form attached hereto as Exhibit A or, in the case of a
Major Transaction Conversion for Major Transaction Company Shares (as defined
below), a Major Transaction Conversion Notice (such applicable notice, the
“Conversion Notice”) to the Company (Attention: Kathryn Sevier Phillips, 115
East Park Drive, Second Floor, Brentwood, TN 37027, Fax: (615) 691-7130, Email:
ksphillips@contactaac.com), and (B) if required by Section 2(c)(vi), surrender
to a common carrier for delivery to the Company, no later than three
(3) Business Days after the Conversion Date, the original Note being converted
(or an indemnification undertaking in customary form with respect to this Note
in the case of its loss, theft or destruction).

36. Company’s Response. Upon receipt or deemed receipt by the Company of a copy
of a Conversion Notice, the Company (I) shall promptly send, via facsimile or
electronic mail, a confirmation of receipt of such Conversion Notice to the
Holder and the Company’s designated transfer agent (the “Transfer Agent”), which
confirmation shall constitute an instruction to the Transfer Agent to process
such Conversion Notice in accordance with the terms herein and (II) on or before
the third (3rd) Business Day following the date of receipt or deemed receipt by
the Company of such Conversion Notice or, in the case of Major Transaction
Company Shares, within the period provided in Section 3(d) (the “Share Delivery
Date”); (A) provided that the Transfer Agent is participating in The Depository
Trust Company (“DTC”) Fast Automated Securities Transfer Program and provided
that the Holder is eligible to receive Shares through DTC, credit such aggregate
number of Conversion Shares to which the

--------------------------------------------------------------------------------

Holder shall be entitled to the Holder’s or its designee’s balance account with
DTC through its Deposit Withdrawal Agent Commission system, or (B) if the
foregoing shall not apply, issue and deliver to the address as specified in the
Conversion Notice, a stock certificate, registered in the name of the Holder or
its designee, for the number of Conversion Shares to which the Holder shall be
entitled. If notwithstanding the provisions of Section 2(c)(vi), the Holder
elects to physically surrender this Note for conversion, and the Principal
represented by this Note is greater than the Principal being converted, then the
Company shall, as soon as practicable and in no event later than five
(5) Business Days after receipt of this Note (the “Note Delivery Date”) and at
its own expense, issue and deliver to the Holder a new Note representing the
Principal not converted and cancel this Note. This Note and the Conversion
Shares will be freely tradable, and freely transferable, and will not contain a
legend restricting the resale or transferability of the Conversion Shares if the
Unrestricted Conditions (as defined below) are met.

37. Dispute Resolution. In the case of a dispute as to the determination of the
Conversion Price or the arithmetic calculation of the Conversion Rate, the
Company shall instruct the Transfer Agent to issue to the Holder the number of
Conversion Shares that is not disputed and shall transmit an explanation of the
disputed determinations or arithmetic calculations to the Holder via facsimile
or electronic mail within two (2) Business Days of receipt or deemed receipt of
the Holder’s Conversion Notice or other date of determination. If the Holder and
the Company are unable to agree upon the determination of the Conversion Price
or arithmetic calculation of the Conversion Rate within one (1) Business Day of
such disputed determination or arithmetic calculation being transmitted to the
Holder, then the Company shall promptly (and in any event within two
(2) Business Days) submit via facsimile or electronic mail (A) the disputed
determination of the Conversion Price to an independent, reputable investment
banking firm agreed to by the Company and the Required Note Holders, or (B) the
disputed arithmetic calculation of the Conversion Rate to the Company’s
independent registered public accounting firm. The Company shall direct the
investment bank or the accounting firm, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than four (4) Business Days from the time it receives the
disputed determinations or calculations. Such investment bank’s or accounting
firm’s determination or calculation, as the case may be, shall be binding upon
all parties absent manifest error. Notwithstanding anything herein to the
contrary, any such final determination in respect of a dispute in connection
with a Major Transaction in which the Company is not the surviving parent
entity, shall be made prior to consummation of such Major Transaction.

38. Record Holder. The person or persons entitled to receive the Conversion
Shares issuable upon a conversion of this Note shall be treated for all purposes
as the legal and record holder or holders of such Shares upon delivery of the
Conversion Notice via facsimile, electronic mail, or otherwise in accordance
with the terms hereof.

39. Company’s Failure to Timely Convert.

40. Cash Damages. If within five (5) Business Days after the Company’s receipt
of the facsimile or electronic mail copy of a Conversion Notice or deemed
receipt of a Conversion Notice the Company shall fail to issue and deliver a
certificate to the Holder for, or credit the Holder’s or its designee’s balance
account with DTC with, the

--------------------------------------------------------------------------------

number of Conversion Shares (free of any restrictive legend if the Unrestricted
Conditions (as defined below) are met) to which the Holder is entitled upon the
Holder’s conversion of any Conversion Amount (subject to Section 2(c)(iii)),
then in addition to all other available remedies that the Holder may pursue
hereunder and under the Facility Agreement, the Company shall pay additional
damages to the Holder for each 30-day period (such additional damages to be
prorated for any partial period) after the Share Delivery Date such conversion
is not timely effected in an amount equal to one percent (1%) of the product of
(I) the number of Conversion Shares not issued to the Holder or its designee on
or prior to the Share Delivery Date and to which the Holder is entitled and (II)
the Volume Weighted Average Price of the Common Stock on the Share Delivery Date
(such product is referred to herein as the “Share Product Amount”).
Alternatively, subject to Section 2(c)(iii), at the election of the Holder made
in the Holder’s sole discretion, the Company shall pay to the Holder, in lieu of
the additional damages referred to in the preceding sentence (but in addition to
all other available remedies that the Holder may pursue hereunder and under the
Facility Agreement), 105% of the amount by which (A) the Holder’s total purchase
price (including brokerage commissions, if any) for the Shares purchased to make
delivery in satisfaction of a sale by the Holder of the Conversion Shares to
which the Holder is entitled but has not received upon a conversion exceeds
(B) the net proceeds received by the Holder from the sale of the Shares to which
the Holder is entitled but has not received upon such conversion. If the Company
fails to pay the additional damages set forth in this Section 2(c)(v)(A) within
five (5) Business Days of the date incurred, then the Holder entitled to such
payments shall have the right at any time, so long as the Company continues to
fail to make such payments, to require the Company, upon written notice, to
immediately issue, in lieu of such cash damages, the number of Shares equal to
the quotient of (X) the aggregate amount of the damages payments described
herein divided by (Y) the Conversion Price in effect on such Conversion Date as
specified by the Holder in the Conversion Notice.

41. Void Conversion Notice. If for any reason the Holder has not received all of
the Conversion Shares prior to the tenth (10th) Business Day after the Share
Delivery Date with respect to a conversion of this Note (a “Conversion
Failure”), then the Holder, upon written notice to the Company (a “Void
Conversion Notice”), may void its Conversion Notice with respect to, and retain
or have returned, as the case may be, any portion of this Note that has not been
converted pursuant to the Holder’s Conversion Notice; provided, that the voiding
of the Holder’s Conversion Notice shall not affect the Company’s obligations to
make any payments that have accrued prior to the date of such notice pursuant to
Section 2(c)(v)(A).

42. Event of Default. A Conversion Failure shall constitute an Event of Default
under the Facility Agreement and entitle the Purchasers to all payments and
remedies provided under the Facility Agreement upon the occurrence of an Event
of Default.

43. Book-Entry. Notwithstanding anything to the contrary set forth herein, upon
conversion or redemption of this Note in accordance with the terms hereof, the
Holder shall not be required to physically surrender this Note to the Company
unless all of the Principal is being converted or redeemed. The Holder and the
Company shall maintain records showing the Principal converted or redeemed and
the dates of such conversions or redemptions

--------------------------------------------------------------------------------

or shall use such other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this Note upon any such
partial conversion or redemption. Notwithstanding the foregoing, if this Note is
converted or redeemed as aforesaid, the Holder may not transfer this Note unless
the Holder first physically surrenders this Note to the Company, whereupon the
Company will forthwith issue and deliver upon the order of the Holder a new Note
of like tenor, registered as the Holder may request, representing in the
aggregate the remaining Principal represented by this Note. The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following conversion or redemption of any
portion of this Note, the Principal of this Note may be less than the principal
amount stated on the face hereof.

44. Taxes. The Company shall pay any and all taxes (excluding income taxes,
franchise taxes or other taxes levied on gross earnings, profits or the like of
the Holder) that may be payable with respect to the issuance and delivery of
Conversion Shares upon the conversion of this Note.

45. Legends.

46. Restrictive Legend. The Holder understands that until such time as the
Conversion Shares have been registered under the Securities Act and applicable
state securities laws as contemplated by the Registration Rights Agreement or
otherwise may be sold pursuant to Rule 144 under the Securities Act or an
exemption from registration under the Securities Act without any restriction as
to the number of securities as of a particular date that can then be immediately
sold, this Note and the Conversion Shares, as applicable, may bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates or on Holder’s or its designees
balance account with DTC for such securities):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR ON HOLDER’S OR ITS DESIGNEE’S
BALANCE ACCOUNT WITH DTC, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT, INCLUDING, WITHOUT LIMITATION,
PURSUANT TO RULES 144 OR 144A UNDER SAID ACT OR PURSUANT TO A PRIVATE SALE
EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE,
SUCH AS A SO-CALLED “4(a)(1 1⁄2)” SALE.”

47. Removal of Restrictive Legends. Certificates evidencing the Conversion
Shares or Conversion Shares in a Holder’s or its designee’s balance account with
DTC (including any Major Transaction Company Shares), as applicable, shall not
contain any legend restricting the transfer thereof (including the legend set
forth above in subsection 2(e)(i)): (A) while a registration statement
(including a Registration Statement, as defined in the Registration Rights
Agreement) covering the sale or resale of the Conversion Shares is effective

--------------------------------------------------------------------------------

under the Securities Act, or (B) following any sale of such Conversion Shares
pursuant to Rule 144, or (C) if such Conversion Shares are eligible for sale
under Rule 144(b)(1), or (D) if the holder of the Conversion Shares certifies,
on or after the date that is six (6) months after the Funding Date, that such
holder is not an “affiliate” of the Company (and has not been an affiliate
during the preceding three (3) months) (as defined in Rule 144), or (E) if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the SEC) (collectively, the “Unrestricted Conditions”). The Company shall cause
its counsel to issue a legal opinion to the Transfer Agent promptly after the
date that a registration statement covering the resale of the Conversion Shares
has been declared effective by the SEC (the “Effective Date”), or at such other
time as any of the Unrestricted Conditions have been satisfied, if required by
the Transfer Agent to effect the issuance of the Conversion Shares without a
restrictive legend or removal of the legend hereunder. If any of the
Unrestricted Conditions are met at the time of issuance of any of the Conversion
Shares, then such Conversion Shares shall be issued free of all legends. The
Company agrees that following the Effective Date or at such time as any of the
Unrestricted Conditions are met or such legend is otherwise no longer required
under this Section 2(e), it will, no later than three (3) Trading Days following
the delivery (the “Unlegended Shares Delivery Deadline”) by the Holder to the
Company or the Transfer Agent of a certificate representing Conversion Shares
issued with a restrictive legend (such third Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Holder a certificate (or
electronic transfer) representing such shares that is free from all restrictive
and other legends.

48. Sale of Unlegended Shares. Holder agrees that the removal of the restrictive
legend from any certificates (or from Conversion Shares in a Holder’s or its
designee’s balance account with DTC) representing securities as set forth in
Section 2(e) above is predicated upon the Company’s reliance that the Holder
will sell any Conversion Shares pursuant to either the registration requirements
of the Securities Act and applicable state securities laws, including any
applicable prospectus delivery requirements, or an exemption therefrom, and that
if such securities are sold pursuant to a Registration Statement, they will be
sold in compliance with the plan of distribution set forth therein.

49. Dividend, Subdivision, Combination or Reclassification. If the Company
shall, at any time or from time to time, (A) declare a dividend on the Common
Stock payable in shares of its capital stock (including Common Stock) (other
than a dividend for which the Holder would be entitled to participate pursuant
to Section 6 hereof), (B) subdivide the outstanding Common Stock into a larger
number of shares of Common Stock, (C) combine the outstanding Common Stock into
a smaller number of shares of its Common Stock, or (D) issue any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each such case, the Conversion
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be
adjusted so that the Holder of this Note upon conversion after such date shall
be entitled to receive the aggregate number and kind of shares of capital stock
which, if this Note had been converted immediately prior to such date, such
holder would have owned upon such conversion and been entitled to receive by
virtue of such dividend,

--------------------------------------------------------------------------------

subdivision, combination or reclassification. Any such adjustment shall become
effective immediately after the record date of such dividend or the effective
date of such subdivision, combination or reclassification. Such adjustment shall
be made successively whenever any event listed above shall occur. If a dividend
on the Common Stock payable in shares of its capital stock (including Common
Stock) is declared and such dividend is not paid, the Conversion Price shall
again be adjusted to be the Conversion Price, in effect immediately prior to
such record date (giving effect to all adjustments that otherwise would be
required to be made pursuant to this Section 2 from and after such record date).

50. Rights Upon Major Transaction. In the event that a Major Transaction occurs,
then the Holder may convert all or a portion of the principal amount outstanding
in accordance with the provisions of this Section 3 (a “Major Transaction
Conversion”) and cause the Company to pay to the Holder in cash all accrued and
unpaid Interest under this Note. The Holder shall have the right to waive its
rights under this Section 3 with respect to such Major Transaction.

51. Major Transaction Conversion. In the event that a Major Transaction occurs,
then (1) in the case of a transaction covered by the provisions of clause (A) of
the definition of “Major Transaction” (a “Takeout Major Transaction”) or an
Asset Sale, in either case, in or in connection with which the shares of Common
Stock of the Company are converted into the right, or the holders thereof will
become entitled (including, in the case of an Asset Sale, in connection with the
liquidation of the Company), to receive cash, securities of another entity
and/or other assets (a “Successor Major Transaction”), the Holder, at its
option, may convert, in whole or in part, the outstanding principal amount under
this Note into the right to receive upon consummation of the Major Transaction
the following consideration (the “Successor Consideration”) (i) in the case of a
Takeout Major Transaction, the amount of cash and other assets and the number of
securities or other property of the Successor Entity or other entity that the
Holder would have received had such Holder converted the Major Transaction
Conversion Amount (as defined below) into Base Conversion Shares and Additional
Conversion Shares (as defined below and without regard to the 9.98% Cap)
immediately prior to the consummation of such Major Transaction and (ii) in the
case of an Asset Sale, an amount in cash equal to the product of (x) the number
of Base Conversion Shares and Additional Conversion Shares that the Holder would
have received had such Holder converted the Major Transaction Conversion Amount
into Base Conversion Shares and Additional Conversion Shares (without regard to
the 9.98% Cap) immediately prior to such Asset Sale and (y) the Closing Market
Price (as defined on Schedule 1 hereto), and (2) in the case of all other Major
Transactions (a “Company Share Major Transaction”), the Holder shall have the
right to convert, in whole or in part, and from time to time, the outstanding
principal amount under this Note into Base Conversion Shares and Additional
Conversion Shares (“Major Transaction Company Shares”).

52. Base Conversion Shares and Additional Conversion Shares. Notwithstanding
anything herein to the contrary, with respect to any conversion or

--------------------------------------------------------------------------------

deemed conversion effected in connection with a Major Transaction pursuant to
this Section 3, the aggregate total number of Major Transaction Company Shares
into which all or any portion of the principal amount of this Note may be
converted or, the aggregate number of Conversion Shares to be used for
calculating the Successor Consideration, as applicable, shall be calculated to
be the sum of (a) the number of shares of the Common Stock into which the
principal amount of this Note then being converted would otherwise be converted
as calculated under Section 2 hereof (such number of shares, the “Base
Conversion Shares”), plus (b) the number of shares of Common Stock equal to the
product of (x) the Additional Share Coefficient (as such term is defined and
determined for each $1,000 of principal amount of this Note on Schedule 1
attached hereto and made a part hereof) for such Major Transaction and (y) a
fraction the numerator of which is the amount of the principal amount of this
Note then being converted and the denominator of which is $1,000 (such number of
shares of Common Stock calculated in accordance with this clause (b), the
“Additional Conversion Shares”).

53. Notice; Major Transaction Conversion Election. At least thirty (30) days
prior to the consummation of any Major Transaction (other than a transaction
described in clause (C) of the definition of “Major Transaction”), if possible,
but, in any event, within five (5) Business Days following the first to occur of
(x) the date of the public announcement of such Major Transaction if such
announcement is made before 4:00 p.m., New York City time, or (y) the day
following the public announcement of such Major Transaction if such announcement
is made on and after 4:00 p.m., New York City time, the Company shall deliver
written notice thereof via facsimile, electronic mail or overnight courier to
the Holder (a “Major Transaction Notice”). At any time during the Major
Transaction Conversion Period, the Holder may elect to effect a Major
Transaction Conversion by delivering written notice thereof (“Major Transaction
Conversion Notice”) to the Company, which Major Transaction Conversion Notice
shall indicate the portion of the Note (the “Major Transaction Conversion
Amount”), calculated with reference to the principal amount outstanding, that
the Holder is electing to treat as a Major Transaction Conversion. For the
avoidance of doubt, the Holder shall be permitted to make successive conversions
and send successive Major Transaction Conversion Notices in respect of a Company
Share Major Transaction from time to time at any time during the Major
Transaction Conversion Period; provided that the Company will not be required to
issue Conversion Shares with respect to a Major Transaction Conversion Notice
with respect to less than the lesser of (i) the principal amount outstanding
under the Note and (ii) an amount which, when aggregated with all conversions of
Notes on the same day, represents $1,000,000 principal amount of this Note.

54. Settlement of Major Transaction Conversion. Following the receipt of a Major
Transaction Conversion Notice from the Holder, the Company shall not effect a
Successor Major Transaction that is being treated as a Major Transaction
Conversion unless at the time of the execution of the definitive documentation
relating to such Major Transaction it obtains the written agreement of the
Successor Entity that payment or issuance of the Successor Consideration, plus
accrued and unpaid interest through the date of payment, shall be made to the
Holder upon consummation of such

--------------------------------------------------------------------------------

Major Transaction and such payment or issuance, as the case may be, shall be a
condition to consummation of such Major Transaction. Concurrently upon closing
of such Successor Major Transaction, the Company shall pay or issue, as the case
may be, or shall instruct any escrow agent for the transaction to pay or issue,
or will cause the Successor Entity to issue and/or pay, the applicable Successor
Consideration, plus accrued and unpaid interest through the date of payment. The
Major Transaction Company Shares issuable in respect of a Company Share Major
Transaction shall be issued or paid, as applicable, to the Holder within three
(3) Trading Days following the date of each Major Transaction Conversion Notice.

55. Injunction. Following the receipt of a Major Transaction Conversion Notice
from the Holder, in the event that the Company attempts to consummate a
Successor Major Transaction without obtaining the written agreement of the
Successor Entity described in subsection (d) above, the Holder shall have the
right to apply for an injunction in any state or federal courts sitting in the
City of New York, borough of Manhattan to prevent the closing of such Major
Transaction until the Successor Consideration is satisfied to the Holder, in
full.

Notwithstanding anything to the contrary contained herein and without derogating
any obligations or rights herein, until the Holder receives its appropriate
payment or securities, plus any accrued and unpaid interest under this Note, in
accordance with the provisions of this Section 3, this Note may be converted, in
whole or in part, by the Holder into Shares, or in the event that such payments
and/or shares have not been delivered prior to the consummation of the Successor
Major Transaction in which the Company is not the surviving parent entity,
shares of common stock (or their equivalent) of the Successor Entity at an
appropriate conversion price based upon the prevailing Conversion Rate (as
adjusted hereunder) at the time of such Major Transaction and price per share or
conversion ratio received by holders of Common Stock in the Major Transaction.

56. Registration Failures. Upon any Registration Failure, in addition to all
other available remedies that the Holder may pursue under the Facility
Agreement, the Registration Rights Agreement and this Note, the Company shall
pay additional damages to the Holder for such 30-day period (prorated for any
partial period) after the date of such Registration Failure in an amount in cash
equal to one and one-half percent (1.5%) of such Holder’s original principal
amount of this Note on the date of such Registration Failure. Such payments
shall accrue until the earlier of (i) such time as the Registration Failure has
been cured and (ii) the date on which all of the Conversion Shares may be sold
without restriction under Rule 144 (including, without limitation, volume
restrictions and without the need for the availability of current public
information under Rule 144). All such payments that accrue under this Section 4
shall be payable no later than five (5) Business Days following such date of
accrual.

57. Voting Rights. Except as required by law, the Holder shall have no voting
rights with respect to any of the Conversion Shares until delivery of the
Conversion Notice relating to the conversion of this Note upon which such
Conversion Shares are issuable.

--------------------------------------------------------------------------------

58. Participation. The Holder, as the holder of this Note, shall be entitled to
receive as additional interest such dividends paid and distributions of any kind
(whether in cash or otherwise) made to the holders of Common Stock of the
Company to the same extent as if the Holder had converted this Note into Common
Stock (without regard to any limitations on exercise herein or elsewhere and
without regard to whether or not a sufficient number of shares are authorized
and reserved to effect any such exercise and issuance) and had held such shares
of Common Stock on the record date for such dividends and distributions.
Payments under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of Common Stock.

59. Amendment; Waiver. The terms and provisions of this Note shall not be
amended or waived except in a writing signed by the Company and the Holder.

60. Remedies, Characterizations, Other Obligations, Breaches and Injunctive
Relief. The remedies provided in this Note shall be cumulative and in addition
to all other remedies available under this Note, the Facility Agreement, at law
or in equity (including a decree of specific performance and/or other injunctive
relief). No remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy, and nothing herein shall limit the
Holder’s right to pursue actual damages for any failure by the Company to comply
with the terms of this Note. The Company covenants to the Holder that there
shall be no characterization concerning this instrument other than as expressly
provided herein. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the Holder shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.

61. Specific Shall Not Limit General; Construction. No specific provision
contained in this Note shall limit or modify any more general provision
contained herein, unless stated otherwise in this Agreement. This Note shall be
deemed to be jointly drafted by the Company and all purchasers of Notes pursuant
to the Facility Agreement and shall not be construed against any Person as the
drafter hereof.

62. Failure or Indulgence Not Waiver. No failure or delay on the part of the
Holder in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

63. Notices. Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with
Section 6.1 of the Facility Agreement.

--------------------------------------------------------------------------------

64. Restrictions on Transfer.

65. Registration or Exemption Required. This Note has been issued in a
transaction exempt from the registration requirements of the Securities Act by
virtue of Regulation D. None of the Note or the Conversion Shares may be
pledged, transferred, sold, assigned, hypothecated or otherwise disposed of
except pursuant to an effective registration statement or an exemption to the
registration requirements of the Securities Act and applicable state laws
including, without limitation, a so-called “4(a)(1 1⁄2)” transaction.

66. Assignment. Subject to Section 12(a) above and Section 6.5 of the Facility
Agreement, the Holder may sell, transfer, assign or otherwise dispose of this
Note, in whole or in part, provided that the Holder shall deliver three
(3) days’ prior written notice to the Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the Person or Persons to
whom the Note shall be assigned and the respective principal amount of the Note
to be assigned to each assignee. The Company shall effect the assignment within
three (3) Business Days (the “Transfer Delivery Period”), and shall deliver to
the assignee(s) designated by Holder a Note or Notes of like tenor and terms for
the appropriate principal amount. This Note and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the Holder. The provisions of this Note are intended to be for the
benefit of all Holders from time to time of this Note, and shall be enforceable
by any such Holder. For avoidance of doubt, in the event Holder notifies the
Company that such sale or transfer is a so called “4(a)(1 1⁄2)” transaction, the
parties hereto agree that a legal opinion from outside counsel for the Holder
delivered to counsel for the Company substantially in the form attached hereto
as Exhibit C shall be the only requirement to satisfy an exemption from
registration under the Securities Act to effectuate such “4(a)(1 1⁄2)”
transaction.

67. Payment of Collection, Enforcement and Other Costs. If (a) this Note is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding; or (b) an attorney is retained to
represent the Holder in any bankruptcy, reorganization, receivership of the
Company or other proceedings affecting Company creditors’ rights and involving a
claim under this Note, then the Company shall pay the costs incurred by the
Holder for such collection, enforcement or action, including reasonable
attorneys’ fees and disbursements.

68. Cancellation. After all Principal, Interest and other amounts at any time
owed under, or on account of, this Note have been paid in full or converted into
Shares in accordance with the terms hereof, this Note shall automatically be
deemed cancelled, shall be surrendered to the Company for cancellation and shall
not be reissued.

69. [RESERVED]

70. Waiver of Notice. To the extent permitted by law, the Company hereby waives
demand, notice, presentment, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note and the Facility Agreement.

--------------------------------------------------------------------------------

71. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed in such State. The Company agrees that all
legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Note shall be commenced exclusively in the
state and federal courts sitting in the City of New York. The Company hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or other proceeding, any
claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is improper or is an inconvenient venue for
such proceeding. The Company hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or other
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under the Facility Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law. THE COMPANY HEREBY WAIVES
ALL RIGHTS TO A TRIAL BY JURY.

72. Interpretative Matters. Unless the context otherwise requires, (a) all
references to Sections or Exhibits are to Sections or Exhibits contained in or
attached to this Note, (b) each accounting term not otherwise defined in this
Note has the meaning assigned to it in accordance with GAAP, (c) words in the
singular or plural include the singular and plural and pronouns stated in either
the masculine, the feminine or neuter gender shall include the masculine,
feminine and neuter and (d) the use of the word “including” in this Note shall
be by way of example rather than limitation. If a stock split, stock dividend,
stock combination or other similar event occurs during any period over which an
average price is being determined, then an appropriate adjustment will be made
to such average to reflect such event.

73. Execution. A facsimile, telecopy, PDF or other reproduction of this Note may
be delivered by the Company, and an executed copy of this Note may be delivered
by the Company by facsimile, e-mail or other similar electronic transmission
device pursuant to which the signature of or on behalf of the Company can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. The Company hereby agrees that it shall not raise
the execution of facsimile, PDF or other reproduction of this Note, or the fact
that any signature was transmitted by facsimile, e-mail or other similar
electronic transmission device, as a defense to the Company’s execution of this
Note. Notwithstanding the foregoing, the Company shall be required to deliver an
originally executed Note to the Holder.

--------------------------------------------------------------------------------

[Signature page follows]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of
the date first set forth above.

 

COMPANY: AAC HOLDINGS, INC. By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

Exhibit A

CONVERSION NOTICE

Reference is made to the Convertible Note (the “Note”) of AAC HOLDINGS, INC., a
Nevada corporation (the “Company”), in the original principal amount of
$[        ]. In accordance with and pursuant to the Note, the undersigned hereby
elects to convert the Conversion Amount (as defined in the Note) of the Note
indicated below into Shares of Common Stock, par value $0.001 per share (the
“Common Stock”), of the Company, as of the date specified below.

 

Date of Conversion:                    

 

  Aggregate Conversion Amount to be converted at the Conversion Price (as
defined in the Note):  

 

 

 

Principal, applicable thereto, to be converted:

 

 

Please confirm the following information:

 

Conversion Price:

 

 

 

Number of shares of Common Stock to be issued:

 

 

Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:

 

Issue to:

 

 

 

Facsimile Number:

 

 

 

Authorization:

 

 

 

 

By:

 

 

 

 

Title:

 

 

 

 

Dated:

 

 

 

 

DTC Participant Number and Name (if electronic book entry transfer):

 

 

 

Account Number (if electronic book entry transfer):

 

 

--------------------------------------------------------------------------------

Exhibit B

ASSIGNMENT

(To be executed by the registered holder

desiring to transfer the Note)

FOR VALUE RECEIVED, the undersigned holder of the attached Convertible Note (the
“Note”) hereby sells, assigns and transfers unto the person or persons below
named the right to receive the principal amount of $        from AAC Holdings,
Inc., a Nevada corporation, evidenced by the attached Note and does hereby
irrevocably constitute and appoint                      attorney to transfer the
said Note on the books of the Company, with full power of substitution in the
premises.

 

Dated:  

 

   

 

      Signature

Fill in for new registration of Note:

 

 

  Name  

 

  Address  

 

 

Please print name and address of assignee

(including zip code number)

 

NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Note in every particular, without alteration or
enlargement or any change whatsoever.

--------------------------------------------------------------------------------

Exhibit C

FORM OF OPINION

            , 20    

[                    ]

 

Re: AAC Holdings, Inc. (the “Company”)

Dear Sir:

[                    ] (“[                    ]”) intends to transfer its
Convertible Note in the principal amount of $         (the “Note”) of the
Company to                      (“                    ”) without registration
under the Securities Act of 1933, as amended (the “Securities Act”). In
connection herewith, we have examined such documents and issues of law as we
have deemed relevant.

Based on and subject to the foregoing, we are of the opinion that the transfer
of the Note by                      to                      may be effected
without registration under the Securities Act, provided, however, that the Note
to be transferred to                      contain a legend restricting its
transferability pursuant to the Securities Act and that transfer of the Note is
subject to a stop order.

The foregoing opinion is furnished only to                      and may not be
used, circulated, quoted or otherwise referred to or relied upon by you for any
purposes other than the purpose for which furnished or by any other person for
any purpose, without our prior written consent.

Very truly yours,

--------------------------------------------------------------------------------

Schedule 1

Additional Share Coefficient

The “Additional Share Coefficient” shall mean the number of additional shares of
Common Stock issuable per $1,000 of principal amount of the Note in connection
with a Major Transaction and shall be the additional share number set forth on
the chart with respect to the “Share Price Result” on the “y” axis and the
corresponding “Remaining Note Life” on the “x” axis; provided, however, that to
the extent the actual Share Price Result (as defined below) falls between two
data points on the “y” axis and/or the actual date of the Major Transaction
falls between two data points on the “x” axis, the “Additional Share
Coefficient” shall be determined by calculating the arithmetic mean between
(i) the result obtained for the Share Price Result based on the linear
interpolation between the additional share numbers corresponding to the two
Share Price Result data points and (ii) the result obtained for the Remaining
Note Life based on the linear interpolation between the two additional share
numbers corresponding to the two Remaining Note Life data points; and provided
further, however, that in the event of any adjustment to the Conversion Price
pursuant to Section 2 of this Note, the numbers of additional shares of Common
Stock issuable per $1,000 of principal amount of this Note as set forth in the
chart below shall be deemed adjusted pro rata with any adjustment resulting from
the adjustment to the Conversion Price that would be made to the number of
shares of Common Stock then convertible with respect to $1,000 of principal
amount of this Note as calculated under Section 2 of this Note. For purposes of
the chart below, the “Share Price Result” shall be, in the case of a Major
Transaction (excluding an Asset Sale) in which holders of Common Stock receive
solely cash consideration in connection with such Major Transaction, the greater
of (x) and (y) below and, in the case of all other Major Transactions, shall be
solely the amount set forth in (x) below, where (x) is the last closing sales
price per share of the Common Stock on the New York Stock Exchange, or, if that
is not the principal trading market for the Common Stock, such principal market
on which the Common Stock is traded or listed (the “Closing Market Price”)
immediately prior to the consummation of the Major Transaction and (y) is the
cash amount payable per share of Common Stock in such Major Transaction. If the
actual Share Price Result is greater than $100 per share (subject to adjustment
in the same manner as the Conversion Price as provided in Section 2 of this
Note), or if the actual Share Price Result is less than $10 per share (subject
to adjustment in the same manner as the Conversion Price as provided in
Section 2 of this Note), then the Additional Share Coefficient shall be equal to
the amount applicable to $100 and $10, respectively.

--------------------------------------------------------------------------------

Additional Shares

Remaining Note Life (Yrs)

 

Share Price Result ($) Y   6     5     4     3     2     1     0     X 10.00    
4.014        2.975        1.972        1.064        0.361        0.024        0
     15.00     6.902        5.647        4.320        2.932        1.538       
0.345        0      20.00     9.477        8.190        6.772        5.194     
  3.414        1.408        0      25.00     11.695        10.460        9.076
       7.494        5.620        3.243        0      30.00     13.583       
12.434        11.141        9.651        7.862        5.519        0      35.00
    10.450        9.398        8.215        6.857        5.237        3.155     
  0      40.00     8.285        7.328        6.258        5.042        3.619   
    1.872        0      45.00     6.728        5.861        4.899        3.820
       2.588        1.168        0      50.00     5.574        4.788       
3.926        2.972        1.914        0.775        0      55.00     4.697     
  3.984        3.210        2.368        1.462        0.551        0      60.00
    4.015        3.368        2.672        1.928        1.152        0.418     
  0      65.00     3.476        2.886        2.260        1.601        0.933   
    0.337        0      70.00     3.043        2.504        1.938        1.353
       0.776        0.285        0      75.00     2.690        2.197       
1.684        1.163        0.661        0.250        0      80.00     2.398     
  1.946        1.480        1.013        0.574        0.225        0      85.00
    2.155        1.739        1.314        0.895        0.508        0.206     
  0      90.00     1.950        1.566        1.178        0.799        0.456   
    0.192        0      95.00     1.776        1.420        1.064        0.721
       0.415        0.180        0      100.00     1.627        1.297       
0.969        0.657        0.381        0.169        0     

--------------------------------------------------------------------------------

Exhibit A-2

See Attached

--------------------------------------------------------------------------------

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

$        

             , 2015

FOR VALUE RECEIVED, ACC Holdings, Inc., a Nevada corporation (the “Maker”)
hereby unconditionally promises to pay to                      (the “Payee”),
the principal amount of                      Dollars ($        ), 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.

 

AAC HOLDINGS, INC. By:  

 

Name:   Title:  

 

3

--------------------------------------------------------------------------------

Exhibit B

See Attached

--------------------------------------------------------------------------------

GUARANTY

GUARANTY, dated as of October 2, 2015, made by each of the undersigned
(individually and collectively, “Guarantors”), in favor of Deerfield Private
Design Fund III, L.P., Deerfield Partners, L.P. and Deerfield International
Master Fund, L.P. (each individually a “Guaranteed Party” and collectively, the
“Guaranteed Parties”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Facility Agreement (the “Facilities
Agreement”) dated as of October 2, 2015 between AAC Holdings, Inc. (the
“Borrower”), and the Guaranteed Parties, the Guaranteed Parties have agreed to
make Loans to Borrower;

WHEREAS, Borrower directly or indirectly holds all of the equity interests in
Guarantor;

WHEREAS, in order to induce the Guaranteed Parties to enter into the Facility
Agreement and to make the Loans to Borrower, Guarantors have agreed to guaranty
the Obligations (as defined below) in accordance with the terms set forth in
this Guaranty,

NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantors hereby agree with the Guaranteed Parties as follows:

SECTION 1. DEFINED TERMS

1.1 Definitions

(a) Capitalized terms used herein and not otherwise defined herein shall have
the meanings given to them in the Facility Agreement.

(b) The following terms shall have the following meanings:

“Event of Default” means (i) an “Event of Default” as such term is defined in
the Facility Agreement, or (ii) the failure of any Guarantor to observe the
provisions of this Guaranty.

“Guaranty” means this guaranty, as the same may be amended or supplemented from
time to time.

“Obligations” mean the collective reference to all obligations and liabilities
of the Borrower to the Guaranteed Parties under the Facility Agreement and the
other Loan Documents, as amended from time to time, respectively (including,
without limitation, default interest accruing at the then applicable rate
provided in the Facility Agreement and interest accruing at the then applicable
rate after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to Borrower, and
post-filing or post-petition interest), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Facility Agreement and the
other Loan Documents, or any other document executed and delivered in connection
therewith, in each case whether on account of principal, interest, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel to the Guaranteed Parties that are
required to be paid by Borrower pursuant to the terms of any of the foregoing
agreements).

--------------------------------------------------------------------------------

“Person” shall mean and include an individual, a partnership, a corporation, a
limited liability company, an unincorporated association, a joint venture or
other entity or a governmental authority.

1.2 Other Definitional Provisions.

The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar
import when used in this Guaranty shall refer to this Guaranty as a whole and
not to any particular provision of this Guaranty, and Section references are to
this Guaranty unless otherwise specified. The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of such
terms.

SECTION 2. GUARANTY

2.1 Guaranty. Each Guarantor, jointly and severally, hereby absolutely,
unconditionally and irrevocably guarantees to the Guaranteed Parties, the prompt
and complete payment and performance by Borrower of the Obligations.

2.2 Nature of Guaranty. Each Guarantor’s liability under this Guaranty shall be
unlimited, open and continuous as to the Obligations until the Obligations are
paid and performed in full and the Facility Agreement is terminated. Each
Guarantor intends to guaranty the performance and prompt payment of the
Obligations when due, whether at maturity or earlier by reason of acceleration
or otherwise. Accordingly, no payments made upon the Obligations will discharge
or diminish the continuing liability of Guarantors in connection with any
remaining portions of the Obligations which subsequently arise or is thereafter
incurred. No payment made by Borrower, or any other Person or received or
collected by the Guaranteed Parties from Borrower, or any other Person by virtue
of any action or other proceeding or any set-off or appropriation or application
at any time or from time to time in reduction of or in payment of the
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of any Guarantor hereunder and each Guarantor shall, notwithstanding
any such payment (other than payment and performance in full of the
Obligations), remain liable for the Obligations until the Obligations are paid
and performed in full and the Facility Agreement is terminated.

--------------------------------------------------------------------------------

2.3 Duration of Guaranty. This Guaranty will take effect when received by the
Guaranteed Parties without the necessity of any acceptance by the Guaranteed
Parties, or any notice to Guarantors, and will continue in full force until the
Obligations shall have been fully paid and satisfied and the Facility Agreement
has been terminated and all other obligations of Guarantors under this Guaranty
shall have been performed in full. All renewals, extensions, substitutions, and
modifications of the Obligations, release of any other guarantor or termination
of any other guaranty of the Obligations shall not affect the liability of
Guarantors under this Guaranty. This Guaranty is irrevocable and is binding upon
Guarantors and Guarantors’ successors and assigns so long as any of the
Obligations remain unpaid.

2.4 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder
or any set-off or application of funds of any Guarantor by the Guaranteed
Parties, no Guarantor shall be entitled to be subrogated to any of the rights of
the Guaranteed Parties against Borrower or any other guarantor or guaranty or
right of offset held by the Guaranteed Parties for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from Borrower or any other guarantor in respect of
payments made by such Guarantor hereunder, until all amounts owing to the
Guaranteed Parties by Borrower on account of the Obligations are paid in full
and the Facility Agreement has been terminated. If any amount shall be paid to
any Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held in trust
for the benefit of the Guaranteed Parties, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Guaranteed Parties in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Guaranteed Parties, if required), to be
applied against the Obligations, whether matured or unmatured, in such order as
the Guaranteed Parties may determine.

2.5 Amendments, Etc. With Respect to The Obligations. Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of
rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment or performance of any of the Obligations made
by the Guaranteed Parties may be rescinded by the Guaranteed Parties and any of
the Obligations continued, and the Obligations, or the liability of any other
Person upon or for any part thereof, or guaranty therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Guaranteed Parties, and the Facility Agreement and the other
Loan Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in
part, as the Guaranteed Parties may deem advisable from time to time, and any
guaranty or right of offset at any time held by the Guaranteed Parties for the
payment of the Obligations may be sold, exchanged, waived, surrendered or
released.

2.6 Guaranty Absolute and Unconditional. Each Guarantor hereby waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Guaranteed Parties upon
the guaranty contained in this Section 2 or acceptance of the guaranty contained
in this Section 2; the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guaranty contained in this Section 2;
and all dealings between Borrower and Guarantors, on the one hand, and the
Guaranteed Parties, on the other

--------------------------------------------------------------------------------

hand, likewise shall be conclusively presumed to have been had or consummated in
reliance upon the guaranty contained in this Section 2. Each Guarantor hereby
waives, to the extent permitted by law, diligence, presentment, protest, demand
for payment and notice of default or nonpayment to or upon Borrower or Guarantor
with respect to the Obligations. Each Guarantor understands that the guaranty
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guaranty of payment and performance without regard to (a) the
validity or enforceability of the Facility Agreement and the other Loan
Documents, any of the Obligations or any other guaranty or right of offset with
respect thereto at any time or from time to time held by the Guaranteed Parties,
(b) any defense, set-off or counterclaim (other than a defense of actual payment
and performance of all Obligations) which may at any time be available to or be
asserted by Borrower or any other Person against the Guaranteed Parties, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of
any Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of Borrower for the Obligations, or of Guarantors
under the guaranty contained in this Section 2, in bankruptcy or in any other
instance (other than a defense of actual payment and performance of the
Obligations). When making any demand hereunder or otherwise pursuing its rights
and remedies hereunder against Guarantors, the Guaranteed Parties may, but shall
be under no obligation to, make a similar demand on or otherwise pursue such
rights and remedies as they may have against Borrower or any other Person or
against any other guaranty for the Obligations or any right of offset with
respect thereto, and any failure by the Guaranteed Parties to make any such
demand, to pursue such other rights or remedies or to collect any payments from
Borrower or any other Person or to realize upon any such other guaranty or to
exercise any such right of offset, or any release of Borrowers or any other
Person or any such other guaranty or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Guaranteed Parties against any Guarantor.

The obligations of the Guarantors are principal and independent obligations from
the obligations of the parties to the Facility Agreement and the other Loan
Documents or any other agreement. The Guarantors shall not, in order to delay or
to avoid the unconditional and immediate performance of its obligations under
this Guaranty, invoke any defense or exception relating to or resulting from any
current or future relationships (including legal relationships) nor any
contentious or non-contentious claims, between Borrower and the Guaranteed
Parties or any other third party, or any other challenge of Borrower or of a
third party (other than a defense of actual payment and performance of the
Obligations).

2.7 Reinstatement. The guaranty contained in this Section 2 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by the Guaranteed Parties upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Borrower, Guarantor or any other
guarantor of the Obligations, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for
Borrower, any Guarantor or any other guarantor of the Obligations or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

2.8 Payments. Each Guarantor hereby guarantees that payments hereunder will be
paid to the Guaranteed Parties without set-off or counterclaim in U.S. dollars
at the address set forth in the Facility Agreement and the other Loan Documents
or by wire transfer pursuant to instructions provided to Guarantors by the
Guaranteed Parties.

--------------------------------------------------------------------------------

SECTION 3. REPRESENTATIONS AND WARRANTIES

Each Guarantor represents and warrants to the Guaranteed Parties that as of the
date hereof and subject in all respects to the information set forth on Schedule
3.1 attached to the Facility Agreement and incorporated herein by reference:

3.1 Organization and Subsidiaries. Each Guarantor is a legal entity duly
organized and validly existing under the laws of its jurisdiction of formation
set forth on the signature page of this Guaranty and has all requisite power and
authority to carry on its business as now conducted and own its properties.

3.2 Authorization. Each Guarantor has full power and authority and has taken all
requisite action necessary for (i) the authorization, execution and delivery of
this Guaranty and (ii) authorization of the performance of all obligations of
each Guarantor hereunder. This Guaranty constitutes legal, valid and binding
obligations of each Guarantor, enforceable against each Guarantor in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’
rights generally.

3.3 Consents. The execution, delivery and performance by any Guarantor of this
Guaranty require no consent of, action by or in respect of, or filing with, any
Person other than those that have been made or obtained.

3.4 No Conflict, Breach, Violation or Default; Compliance with Law. The
execution, delivery and performance of this Guaranty by each Guarantor will not
conflict with or result in a breach or violation of any of the provisions of, or
constitute a default under, any Guarantor’s organizational documents as in
effect on the date hereof. Except for any violation or breach that would not
reasonably be expected to have a Material Adverse Effect, each Guarantor (i) is
not in violation of any statute, rule or regulation applicable to it or its
assets, (ii) is not in violation of any judgment, order or decree applicable to
it or its assets, and (iii) is not in breach or violation of any agreement to
which it or its assets are a party or are bound or subject. No Guarantor has
received notice from any Person of any claim or investigation that, if adversely
determined, would render the preceding sentence untrue or incomplete.

3.5 No Limitation of Guaranty. No representations, warranties or agreements of
any kind have been made to or with any Guarantor that would limit or qualify in
any way the terms of this Guaranty.

3.6 Request. This Guaranty is executed at request of Borrower and not at the
request of the Guaranteed Parties.

--------------------------------------------------------------------------------

3.7 Obtaining Information. Each Guarantor has established adequate means of
obtaining from Borrower on a continuing basis information regarding Borrower’s
financial condition.

3.8 Solvency. Each Guarantor (i) is capable of paying its debts as they fall
due, has not admitted in writing its inability to pay its debts as they fall
due, (ii) is not bankrupt or insolvent or deemed to be bankrupt or insolvent
under applicable law and (iii) has not taken action, and no such action has been
taken by a third party, for its winding up, dissolution, or liquidation,
examinership or similar executory or judicial proceeding or for the appointment
of a liquidator, custodian, receiver, trustee, administrator, examinership or
other similar officer for it or any or all of its assets or revenues.

3.9 Litigation Matters. There are no actions, suits or other proceedings by or
before any arbitrator or governmental authority pending against or threatened
against or affecting any Guarantor which would have a Material Adverse Effect.

3.10 Compliance with Laws and Agreements. Each Guarantor is in compliance with
all laws applicable to it or its property and all agreements binding upon it or
its property except where such noncompliance would not reasonably be expected to
have a Material Adverse Effect.

3.11 Taxes. Each Guarantor has timely filed or caused to be filed all tax
returns and reports required to have been filed and has paid or caused to be
paid all taxes required to have been paid, except taxes that are being contested
in good faith by appropriate proceedings and for which it has set aside on its
books adequate reserves.

3.12 Disclosure. None of the written reports on financial or other information,
in each case furnished by any Guarantor to Guaranteed Parties in connection with
the negotiation of this Guaranty (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not materially misleading.

The provisions of Section 3.1 of the Facility Agreement applicable to Guarantors
are incorporated herein by reference, mutatis mutandis, such incorporation to
continue after the termination of the Facility Agreement until the Obligations
are repaid in full.

SECTION 4. COVENANTS

The provisions of Sections 5.1 and 5.2 of the Facility Agreement applicable to
Guarantors are incorporated herein by reference, mutatis mutandis, such
incorporation to continue after the termination of the Facility Agreement until
the Obligations are repaid in full.

--------------------------------------------------------------------------------

SECTION 5. WAIVERS; SUBORDINATION

5.1 Guarantor’s Waivers.

(a) Guaranteed Parties’ Actions. Each Guarantor waives any right to require the
Guaranteed Parties to resort for payment from, or to proceed directly or at once
against, any Person, including Borrower or any other guarantor.

(b) Guarantor’s Rights and Defenses. Each Guarantor also waives any and all
rights or defenses arising by reason of (i) any law that may prevent the
Guaranteed Parties from bringing any action, including a claim for deficiency,
against any Guarantor, before or after the commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale,
(ii) any election of remedies by the Guaranteed Parties which destroys or
otherwise adversely affects any Guarantor’s subrogation rights or any
Guarantor’s rights to proceed against Borrower for reimbursement, including
without limitation, any loss of rights any Guarantor may suffer by reason of any
law limiting, qualifying, or discharging the Obligations, (iii) any disability
or other defense of Borrower, of any other guarantor, or of any other Person, or
by reason of the cessation of Borrower’s liability from any cause whatsoever,
other than payment and performance in full of the Obligations, (iv) any statute
of limitations, if at the time any action or other suit brought by the
Guaranteed Parties against any Guarantor is commenced there are outstanding
Obligations which are not barred by any applicable statute of limitations, or
(v) any defenses given to guarantors at law or in equity other than actual
payment and performance of the Obligations.

(c) No Set-off, Counterclaim, Etc. Each Guarantor further waives and shall not
assert or claim at any time any deductions to the amount guaranteed under this
Guaranty for any claim of set-off, counterclaim, counter demand, recoupment or
similar right.

5.2 Guarantors’ Understanding With Respect to Waivers. Each of the waivers set
forth herein is made with Guarantors’ full knowledge of its significance and
consequences and that, under the circumstances, the waivers are reasonable and
not contrary to public policy or law. If any such waiver is determined to be
contrary to any applicable law or public policy, such waiver shall be effective
only to the extent permitted by law or public policy.

5.3 Subordination of Debts to Guarantors. The Obligations shall be prior to any
claim that any Guarantor may now have or hereafter acquire against Borrower,
whether or not Borrower becomes insolvent. Each Guarantor hereby expressly
subordinates to the Obligations any claim any Guarantor may have against
Borrower, upon any account whatsoever (including without limitation all
intercompany obligations owing to any Guarantor from Borrower), to any claim
that the Guaranteed Parties may now or hereafter have against Borrower;
provided, however, that Borrower may make payments on, and each Guarantor may
receive payments with respect to, such claims that represent bona fide claims
for money lent to, property transferred to, or services performed for, Borrower
in the ordinary course of the business of such Guarantor. In the event of any
dissolution, winding up, liquidation, readjustment, reorganization or similar
proceedings, through bankruptcy, by an assignment for the benefit of creditors,
by voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both the Guaranteed Parties and any Guarantor shall be
paid to the Guaranteed Parties until payment in full of the Obligations.

--------------------------------------------------------------------------------

SECTION 6. MISCELLANEOUS

6.1 Amendments In Writing. None of the terms or provisions of this Guaranty may
be amended, supplemented or otherwise modified except by an instrument in
writing signed by Guarantors and the Guaranteed Parties, and no provision hereof
may be waived other than by an instrument in writing signed by the party against
whom enforcement is sought.

6.2 Notices. All notices, requests and demands to or upon the Guarantors and the
Guaranteed Parties shall be effected in the manner provided for in the Facility
Agreement with respect to the Guaranteed Parties, and with respect to Guarantor
on the signature page of this Guaranty.

6.3 No Waiver By Course Of Conduct; Cumulative Remedies. The Guaranteed Parties
shall not by any act (except by a written instrument pursuant to Section 6.1),
be deemed to have waived any right, power or privilege hereunder or to have
acquiesced in any Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Guaranteed Parties, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Guaranteed Parties of any right, power or privilege hereunder on
any one occasion shall not be construed as a bar to any right, power or
privilege that the Guaranteed Parties would otherwise have on any future
occasion. The rights, powers and privileges hereunder provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights and remedies provided by law.

6.4 Enforcement Expenses; Indemnification

(a) If any amount owing to the Guaranteed Parties under this Guaranty shall be
collected through enforcement thereof, any refinancing or restructuring in the
nature of a work-out, settlement, negotiation, or any process of law, or shall
be placed in the hands of third Persons for collection, Guarantors shall pay (in
addition to all monies then due or otherwise payable under this Guaranty) all
reasonable and documented out-of-pocket attorneys’ and other fees and expenses
incurred in respect of such collection.

(b) Guarantors shall pay, and save the Guaranteed Parties harmless from, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Guaranty except for those arising from any Guaranteed Party’s gross
negligence or willful misconduct.

(c) The agreements in this Section shall survive repayment of the Obligations
and termination of the Facility Agreement.

6.5 Successors And Assigns. This Guaranty shall be binding upon the successors
of Guarantors and shall inure to the benefit of the Guaranteed Parties; provided
that no Guarantor may assign, transfer or delegate any of its rights or
obligations under this Guaranty without the written consent of the Guaranteed
Parties and their successors and assigns.

--------------------------------------------------------------------------------

6.6 Set-Off. Each Guarantor hereby irrevocably authorizes the Guaranteed Parties
at any time and from time to time while an Event of Default shall have occurred
and be continuing, without notice to any Guarantor or any other guarantor of the
Obligations, any such notice being expressly waived by each Guarantor, to
set-off and appropriate and apply any and all amounts, credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Guaranteed
Parties to or for the credit or the account of any Guarantor, or any part
thereof, in such amounts as the Guaranteed Parties may elect, against and on
account of the Obligations, whether or not the Guaranteed Parties has made any
demand for payment and although the Obligations may be contingent or unmatured.
The Guaranteed Parties shall notify Guarantors promptly of any such set-off and
the application made by the Guaranteed Parties of the proceeds thereof, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Guaranteed Parties under this Section
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Guaranteed Parties may have.

6.7 Facsimile. This Guaranty may be executed by facsimile.

6.8 Severability. Any provision of this Guaranty which is unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such unenforceability without invalidating the remaining provisions hereof, and
any such unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

6.9 Section Headings. The Section headings used in this Guaranty are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

6.10 Integration. This Guaranty represents the agreement of Guarantors and the
Guaranteed Parties with respect to the subject matter hereof.

6.11 Acknowledgements. Each Guarantor hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Guaranty;

(b) the Guaranteed Parties have no fiduciary relationship with or duty to
Guarantor arising out of or in connection with this Guaranty or otherwise, and
the relationship between any Guarantor, on the one hand, and the Guaranteed
Parties, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and

(c) no joint venture is created hereby or otherwise exists by virtue of the
transactions contemplated hereby among any Guarantor and the Guaranteed Parties.

--------------------------------------------------------------------------------

6.12 Applicable Law and Consent to Non-Exclusive Delaware Jurisdiction.

(a) This Guaranty shall be governed by and construed in accordance with the laws
of the State of New York, without giving effect to the conflicts of laws
principles thereof.

(b) Guarantors and the Guaranteed Parties hereby irrevocably agree that any
legal action, suit or other proceeding arising out of this Guaranty may be
brought in the state and federal courts sitting in the City of New York, borough
of Manhattan. Each Guarantor irrevocably consents to the service of any process
in any such legal action, suit or other proceeding by the mailing of copies of
such process to it at its address specified in Section 6.2 by registered mail,
return receipt requested. By the execution and delivery of this Guaranty, each
Guarantor hereby irrevocably consents and submits to the jurisdiction of any
such court in any such action, suit or other proceeding. Final judgment against
any Guarantor in any such action, suit or other proceeding shall be conclusive
and may be enforced in any other jurisdiction by suit on the judgment. Nothing
contained in this Guaranty shall affect the right of the Guaranteed Parties to
commence legal proceedings in any court having jurisdiction, or concurrently in
more than one jurisdiction, or to serve process, pleadings and other legal
papers upon any Guarantor in any manner authorized by the laws of any such
jurisdiction.

(c) Each Guarantor irrevocably waives, to the fullest extent permitted by
applicable law, any objection which it may now or hereafter have to the laying
of venue of any action, suit or other proceeding arising out of or relating to
this Guaranty, brought in the state and federal courts sitting in the City of
New York, borough of Manhattan, and any claim that any such action, suit or
other proceeding brought in any such court has been brought in an inconvenient
forum.

(d) GUARANTORS AND THE GUARANTEED PARTIES HEREBY WAIVE ANY AND ALL RIGHTS TO
DEMAND A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(e) To the extent that any Guarantor, in any suit, action or other proceeding
brought in any court arising out of or in connection with this Guaranty shall be
entitled to the benefit of any provision of law requiring any party in such
suit, action or other proceeding to post security for the costs of another
party, or to post a bond or to take similar action, such Guarantor hereby
irrevocably waives such benefit, in each case to the fullest extent now or
hereafter permitted under any applicable law.

6.13 Currency. All amounts owing under this Guaranty shall be paid in United
States Dollars.

6.14 Taxes, Duties and Fees. The provisions of Section 2.6 of the Facility
Agreement are incorporated herein with respect to payments by the Guarantors
under this Guaranty, mutatis mutandis, such incorporation to continue after
termination of the Facility Agreement.

[SIGNATURE PAGE FOLLOWS]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be duly
executed and delivered as of the date first above written.

 

  GUARANTORS:     AMERICAN ADDICTION CENTERS, INC., a Nevada corporation     By:
 

 

    Name:   Michael T. Cartwright     Title:   Chairman and Chief Executive
Officer     FORTERUS HEALTH CARE SERVICES, INC., a Delaware corporation     SAN
DIEGO ADDICTION TREATMENT CENTER, INC., a Delaware corporation     By:  

 

    Name:   Michael T. Cartwright     Title:   Chairman

--------------------------------------------------------------------------------

    B&B HOLDINGS INTL LLC, a Florida limited liability company     GREENHOUSE
TREATMENT CENTER, LLC, a Texas limited liability company     CONCORDE TREATMENT
CENTER, LLC, a Nevada limited liability company     SINGER ISLAND RECOVERY
CENTER, LLC, a Florida limited liability company     RECOVERY FIRST OF FLORIDA,
LLC, a Delaware limited liability company     RI – CLINICAL SERVICES, LLC, a
Delaware limited liability company     NEW JERSEY ADDICTION TREATMENT CENTER,
LLC, a Delaware limited liability company     LAGUNA TREATMENT HOSPITAL, LLC, a
Delaware limited liability company     OXFORD TREATMENT CENTER, LLC, a Delaware
limited liability company     RIVER OAKS TREATMENT CENTER, LLC, a Delaware
limited liability company     SOBER MEDIA GROUP, LLC, a Delaware limited
liability company     By:  

 

    Name:   Michael T. Cartwright     Title:   Manager     REFERRAL SOLUTIONS
GROUP, LLC, a California limited liability company     TAJ MEDIA LLC, a
California limited liability company       By: Sober Media Group, LLC, its sole
member     By:  

 

    Name:   Michael T. Cartwright     Title:   Manager

--------------------------------------------------------------------------------

    RECOVERY BRANDS, LLC, a California limited liability company       By:
Referral Solutions Group, LLC, its sole member     By:  

 

    Name:   Michael T. Cartwright     Title:   Chairman     SUBSTANCE.COM, LLC,
a New York limited liability company       By: Recovery Brands, LLC, its sole
member     By:  

 

    Name:   Michael T. Cartwright     Title:   Chairman     FITRX, LLC, a
Tennessee limited liability company     AAC LAS VEGAS OUTPATIENT CENTER, LLC, a
Delaware limited liability company     AAC DALLAS OUTPATIENT CENTER, LLC, a
Delaware limited liability company     ADDICTION LABS OF AMERICA, LLC, a
Delaware limited liability company     CLINICAL REVENUE MANAGEMENT SERVICES,
LLC, a Tennessee limited liability company

 

      By: American Addiction Centers, Inc., its sole member       By:  

 

      Name:   Michael T. Cartwright       Title:   Chairman and Chief Executive
Officer

--------------------------------------------------------------------------------

    BEHAVIORAL HEALTHCARE REALTY, LLC, a Delaware limited liability company    
CONCORDE REAL ESTATE, LLC, a Nevada limited liability company     GREENHOUSE
REAL ESTATE, LLC, a Texas limited liability company     BHR ALISO VIEJO REAL
ESTATE, LLC, a Delaware limited liability company     BHR RINGWOOD REAL ESTATE,
LLC, a Delaware limited liability company     BHR OXFORD REAL ESTATE, LLC, a
Delaware limited liability company     By:  

 

    Name:   Michael T. Cartwright     Title:   Manager     THE ACADEMY REAL
ESTATE, LLC, a Delaware limited liability company

      By: Behavioral Healthcare Realty, LLC, its sole member       By:  

 

      Name:   Michael T. Cartwright       Title:   Manager

    PALM BEACH PROFESSIONAL GROUP, PROFESSIONAL CORPORATION, a Florida
professional corporation     LAS VEGAS PROFESSIONAL GROUP – CALARCO, P.C., a
Nevada professional corporation     GRAND PRAIRIE PROFESSIONAL GROUP, P.A., a
Texas professional association     OXFORD PROFESSIONAL GROUP, P.C., a
Mississippi professional corporation     By:  

 

    Name:   Mark A. Calarco     Title:   President, Secretary and Treasurer

--------------------------------------------------------------------------------

    BRENTWOOD PROFESSIONAL GROUP, P.C., a Tennessee professional corporation    
By:  

 

    Name:   Mark A. Calarco     Title:   President and Secretary     SAN DIEGO
PROFESSIONAL GROUP, P.C., a California professional corporation     By:  

 

    Name:   Mark A. Calarco     Title:   President, Secretary and Chief
Financial Officer

  Address: c/o AAC Holdings, Inc.     115 East Park Drive, Second Floor    
Brentwood, Tennessee 37037   Attention: Kirk M. Manz, Chief Financial Officer  
Fax: (615) 649-4737   Email: Kmanz@contactacc.com

--------------------------------------------------------------------------------

Schedule 3.1(h)

On July 29, 2015, the Superior Court of the State of California court unsealed a
criminal indictment returned by a grand jury against Borrower’s subsidiaries
ABTTC, Inc. dba A Better Tomorrow Treatment Centers, American Addiction Centers,
Inc., f/k/a Forterus, Inc. and Forterus Health Care Services, Inc., Jerrod N.
Menz, the former President of Borrower and former member of Borrower’s Board of
Directors, as well as a current facility-level employee and three former
employees. The indictment was returned in connection with a criminal
investigation by the California Department of Justice and charged the corporate
defendants and four of the individual defendants with second-degree murder and
charged all defendants with dependent adult abuse in connection with the death
of a client in 2010 at a former location operated by ABTTC, Inc. prior to the
existence of Borrower.

--------------------------------------------------------------------------------

Schedule 3.1(j)

On June 1, 2015, Borrower filed a Current Report on Form 8-K disclosing the
results of its 2015 annual meeting of stockholders (the “Form 8-K”). The Form
8-K was due on or before May 26, 2015.

--------------------------------------------------------------------------------

Schedule 3.1(n)

The following trademark applications are pending with the USPTO:

 

DATE FILED

  

MARK UNDER REVIEW

   APPLICATION
NUMBER

04/02/15

   I CALLED    86585140

07/21/15

   HOPE FOR HEROES    86699914

07/21/15

   DON’T JUST DREAM ABOUT A BETTER LIFE, LIVE IT    86699936

07/21/15

   RIVEROAKS    86699966

--------------------------------------------------------------------------------

Schedule 3.1(q)

None

--------------------------------------------------------------------------------

Schedule 3.1(u)

 

Loan Party

 

Subsidiary

AAC Holdings, Inc.   American Addiction Centers, Inc. American Addiction
Centers, Inc.   ABTTC, Inc.   Addiction Labs of America, LLC   Behavioral
Healthcare Realty, LLC   Clinical Revenue Management Services, LLC   Concorde
Treatment Center, LLC   FitRx, LLC   Forterus Health Care Services, Inc.  
Greenhouse Treatment Center, LLC   San Diego Addiction Treatment Center, Inc.  
AAC Dallas Outpatient Center, LLC   AAC Las Vegas Outpatient Center, LLC  
Recovery First of Florida, LLC   RI – Clinical Services, LLC   New Jersey
Addiction Treatment Center, LLC   Laguna Treatment Hospital, LLC   Oxford
Treatment Center, LLC   River Oaks Treatment Center, LLC   Sober Media Group,
LLC   B&B Holdings Intl LLC Sober Media Group, LLC   Referral Solutions Group,
LLC   Taj Media LLC Referral Solutions Group, LLC   Recovery Brands, LLC
Recovery Brands, LLC   Substance.com, LLC B&B Holdings Intl LLC   Singer Island
Recovery Center LLC   Hamilton Medically Assisted Treatment Associates, LLC  
Leading Edge Recovery Center, LLC   The Heights Supportive Housing, LLC
Behavioral Healthcare Realty, LLC   Concorde Real Estate, LLC   Greenhouse Real
Estate, LLC   The Academy Real Estate, LLC   BHR Aliso Viejo Real Estate, LLC  
BHR Ringwood Real Estate, LLC   BHR Oxford Real Estate, LLC

The following Professional Corporations are 100% owned by Mark A. Calarco, D.O.

 

•   San Diego Professional Group, P.C.

 

•   Palm Beach Professional Group, Professional Corporation

 

•   Las Vegas Professional Group – Calarco, P.C.

 

•   Brentwood Professional Group, P.C.

 

•   Grand Prairie Professional Group, P.A.

 

•   Oxford Professional Group, P.C.

--------------------------------------------------------------------------------

Schedule 3.1(v)

As of the date of the Agreement, Borrower has 22,409,311 shares of common stock,
$0.001 par value per share, outstanding.

As of the date of the Agreement, there are no outstanding options, warrants,
agreements, contracts or other rights to purchase or acquire from Borrower or
any Subsidiary of Borrower any shares of capital stock of Borrower or any
Subsidiary of Borrower. Notwithstanding the foregoing, Borrower intends to grant
equity awards pursuant to the AAC Holdings, Inc. 2014 Equity Incentive Plan and
equity purchases will continue in the ordinary course through participation in
the AAC Holdings, Inc. Employee Stock Purchase Plan.