8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 8, 2005 (July 1, 2005)

Psychiatric Solutions, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other
Jurisdiction of
Incorporation) 0-20488
(Commission File Number) 23-2491707
(IRS Employer
Identification No.)

840 Crescent Centre Drive, Suite 460, Franklin, Tennessee 37067
(Address of Principal Executive Offices)

(615) 312-5700
(Registrant’s Telephone Number, including Area Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Ex-2.1 Amended and Restated Stock Purchase Agreement

Ex-4.1 Indenture, dated as of July 6, 2005

Ex-4.3 Purchase Agreement, dated as of June 30, 2005

Ex-4.4 Exchange and Registraion Rights Agreement, dated as of July 6, 2005

Ex-10.1 Second Amended and Restated Credit Agreement, dated as of July 1, 2005

Ex-10.2 Senior Unsecured Term Loan Agreement, dated as of July 1, 2005

Ex-99.1 Press Release of Psychiatric Solutions, Inc., dated July 1, 2005

Item 1.01. Entry into a Material Definitive Agreement.

A. Second Amended and Restated Credit Agreement

     On July 1, 2005, Psychiatric Solutions, Inc. (the “Company”) and certain of its subsidiaries named as guarantors therein (the “Guarantors”) entered into a Second Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with Citicorp North America, Inc., as term loan facility administrative agent, co-syndication agent and documentation agent (“Citicorp”), Bank of America, N.A., as revolving loan facility administrative agent, collateral agent, swing line lender and co-syndication agent (“Bank of America”), and the various other agents and lenders party thereto whereby Citicorp and the lenders party thereto provided a revolving loan facility of up to $150 million and a term loan facility of up to $325 million (the “Amended and Restated Credit Facility”). The proceeds of the term loan facility were used to consummate the Acquisition (as defined below) and the proceeds of the revolving loan facility will be used for various permitted purposes.

     The revolving loans and the term loan under the Amended and Restated Credit Facility accrue interest at the Company’s choice of the “Base Rate” or the “Eurodollar Rate” plus an applicable margin (as defined in the Amended and Restated Credit Agreement). The “Base Rate” and “Eurodollar Rate” fluctuate based upon market rates and certain leverage ratios, as defined in the Amended and Restated Credit Agreement. The Company must pay various fees set forth in the Amended and Restated Credit Agreement.

     The revolving loans made under the Amended and Restated Credit Facility mature on December 21, 2009 and the term loan made under the Amended and Restated Credit Facility matures on July 1, 2012.

     The obligations of the Company are guaranteed by the Guarantors and are secured by a security interest in substantially all of the real and personal property of the Company and the Guarantors. The Amended and Restated Credit Agreement contains customary covenants that, subject to certain exceptions, include: (1) a limitation on capital expenditures and investments, sales of assets, mergers, changes of ownership, new principal lines of business, indebtedness, liens, transactions with affiliates, dividends and redemptions; (2) various financial covenants; and (3) cross-default covenants triggered by a default of any other indebtedness of at least $5 million.

     The Company and the Guarantors are subject to customary defaults (subject in certain cases to customary grace and cure periods) under the Amended and Restated Credit Agreement, including, among other things, payment defaults, the failure to meet financial tests, material inaccuracies of representations and warranties, breach of covenants, cross-defaults to other indebtedness, bankruptcy and insolvency defaults, and the occurrence of certain change of control events. A default under the Amended and Restated Credit Agreement would permit the lenders to restrict the Company’s ability to borrow under the Amended and Restated Credit Agreement and to require the immediate repayment of any unpaid principal and interest thereon outstanding under the Amended and Restated Credit Agreement.

B. Bridge Loan Facility

     On July 1, 2005, the Company and the Guarantors entered into a Senior Unsecured Term Loan Agreement (the “Bridge Loan Agreement”) with Citicorp, as administrative agent, Citigroup Global Markets Inc., as sole lead arranger, sole book manager, syndication agent and documentation agent, and the other various agents and lenders party thereto whereby Citicorp and the lenders party thereto provided a term loan facility of $150 million (the “Senior Bridge Credit Facility” and together with the Amended and Restated Credit Facility, the “Credit Facilities”). The proceeds of the Bridge Loan Agreement were used to consummate the Acquisition. On July 6, 2005, the Company repaid the indebtedness under the Bridge Loan Agreement with the proceeds of the Notes (as defined below). The Bridge Loan Agreement contains representations and warranties, covenants and events of default that are substantially similar to the Amended and Restated Credit Agreement.

C. High Yield Offering

     On July 6, 2005, the Company completed the private placement of $220 million in senior subordinated notes in accordance with Rule 144A and Regulation S under the Securities Act of 1933 (the “Notes”). The Notes are fully and unconditionally guaranteed on a senior subordinated basis by substantially all of the Company’s existing domestic restricted subsidiaries. Interest on the Notes accrues at the rate of 7.75% per annum and is payable semi-annually in arrears on July 15 and January 15, commencing on January 15, 2006. The Notes will mature on July 15, 2015. Proceeds from the issuance of the Notes were used to (1) repay the indebtedness under the Bridge Loan Agreement and (2) repurchase approximately $61 million of the Company’s 10 5/8% senior subordinated notes plus pay the related premium and all accrued interest related to such notes. Along with the issuance of the Notes, the Company and certain of its subsidiaries named as guarantors therein entered into an Indenture, dated as of July 6, 2005, with Wachovia Bank, National Association, as trustee (the “Indenture”), a copy of which is included as Exhibit 4.1 hereto and incorporated herein by reference.

     The Indenture contains customary covenants that include: (1) limitations on capital expenditures and investments, sales of assets, mergers, changes of ownership, new principal lines of business, indebtedness, transactions with affiliates, dividends and redemptions and (2) cross-default covenants triggered by a default of any other indebtedness of at least $5 million.

     The Company and the guarantor subsidiaries thereto are subject to customary defaults (subject in certain cases to customary grace and cure periods) under the Indenture, including, among other things, payment defaults, material inaccuracies of representations and warranties, breach of covenants, cross-defaults to other indebtedness, and bankruptcy and insolvency defaults. A default under the Indenture would permit the trustee and/or the holders of at least 25% in principal amount of the outstanding Notes to require immediate repayment of all principal together with all accrued and unpaid interest and premium, if any, on the Notes.

     In addition to the Credit Facilities and the high yield offering described above, Citigroup, Bank of America and certain of the other lenders and their affiliates have provided investment and commercial banking and financial advisory services to the Company from time to time in the ordinary course of business for which they have received customary fees. Any of the lenders or their respective affiliates may in the future engage in investment banking or other transactions of a financial nature with the Company or its affiliates, including the provision of advisory services and the making of loans, for which they would receive customary fees or other payments.

     See Item 2.01 for description of the Purchase Agreement (as defined below). Such description is incorporated into this Item 1.01 by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

     On July 1, 2005, pursuant to an Amended and Restated Stock Purchase Agreement dated as of June 30, 2005 (the “Purchase Agreement”) by and among the Company, Ardent Health Services LLC (“Seller”) and Ardent Health Services, Inc. (“AHS”), the Company acquired all of the outstanding capital stock of AHS for $500 million in cash and the issuance of 1,362,760 shares of the Company’s common stock (the “Acquisition”). AHS owns and operates through its subsidiaries 20 inpatient behavioral health care facilities that have approximately 2,000 beds. The Company financed the cash portion of the acquisition price through the Credit Facilities. On July 1, 2005, the Company issued a press release announcing the consummation of the Acquisition, the pricing of the Notes and the execution of the Credit Facilities. The press release is filed as Exhibit 99.1 hereto and incorporated herein by reference.

     The description of the Purchase Agreement and the Acquisition set forth herein does not purport to be complete and is subject to and qualified in its entirety by reference to the text of the Purchase Agreement, a copy of which is included as Exhibit 2.1 hereto and incorporated herein by reference.

Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

     The information provided under Item 1.01 is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a)	Financial statements of businesses acquired.
	None required
(b)	Pro forma financial information.
	None required
(c)	Exhibits.

2.1	Amended and Restated Stock Purchase Agreement dated as of June 30, 2005 by and among Ardent Health Services LLC, Ardent Health Services, Inc., and Psychiatric Solutions, Inc.
4.1	Indenture, dated as of July 6, 2005, by and among Psychiatric Solutions, Inc., the subsidiaries named as guarantors thereto, and Wachovia Bank, National Association.
4.2	Form of Notes (included in Exhibit 4.1).
4.3	Purchase Agreement, dated as of June 30, 2005, among Psychiatric Solutions, Inc., the subsidiaries named as guarantors

	thereto, and Citigroup Global Markets Inc., as representative of the initial purchasers named therein.
4.4	Exchange and Registration Rights Agreement, dated as of July 6, 2005, among Psychiatric Solutions, Inc., the subsidiary guarantors from time to time party thereto, and Citigroup Global Markets Inc. on behalf of Banc of America Securities LLC, Merrill, Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and Lehman Brothers Inc.
10.1	Second Amended and Restated Credit Agreement, dated as of July 1, 2005, by and among Psychiatric Solutions, Inc., the subsidiaries named as guarantors thereto, Citicorp North America, Inc., as term loan facility administrative agent, co-syndication agent and documentation agent , Bank of America, N.A., as revolving loan facility administrative agent, collateral agent, swing line lender and co-syndication agent, and the various other agents and lenders party thereto.
10.2	Senior Unsecured Term Loan Agreement, dated as of July 1, 2005, by and among Citicorp North America, Inc., as administrative agent, Citigroup Global Markets Inc., as sole lead arranger, sole book manager, syndication agent and documentation agent, and Psychiatric Solutions, Inc.
99.1	Press Release of Psychiatric Solutions, Inc., dated July 1, 2005.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PSYCHIATRIC SOLUTIONS, INC.
By:	/s/ Jack E. Polson
	Jack E. Polson
	Chief Accounting Officer

Date: July 8, 2005

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibits
2.1	Amended and Restated Stock Purchase Agreement dated as of June 30, 2005 by and among Ardent Health Services LLC, Ardent Health Services, Inc., and Psychiatric Solutions, Inc.
4.1	Indenture, dated as of July 6, 2005, by and among Psychiatric Solutions, Inc., the subsidiaries named as guarantors thereto, and Wachovia Bank, National Association.
4.2	Form of Notes (included in Exhibit 4.1).
4.3	Purchase Agreement, dated as of June 30, 2005, among Psychiatric Solutions, Inc., the subsidiaries named as guarantors thereto, and Citigroup Global Markets Inc., as representative of the initial purchasers named therein.
4.4	Exchange and Registration Rights Agreement, dated as of July 6, 2005, among Psychiatric Solutions, Inc., the subsidiary guarantors from time to time party thereto, and Citigroup Global Markets Inc. on behalf of Banc of America Securities LLC, Merrill, Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and Lehman Brothers Inc.
10.1	Second Amended and Restated Credit Agreement, dated as of July 1, 2005, by and among Psychiatric Solutions, Inc., the subsidiaries named as guarantors thereto, Citicorp North America, Inc., as term loan facility administrative agent, co-syndication agent and documentation agent , Bank of America, N.A., as revolving loan facility administrative agent, collateral agent, swing line lender and co-syndication agent, and the various other agents and lenders party thereto.
10.2	Senior Unsecured Term Loan Agreement, dated as of July 1, 2005, by and among Citicorp North America, Inc., as administrative agent, Citigroup Global Markets Inc., as sole lead arranger, sole book manager, syndication agent and documentation agent, and Psychiatric Solutions, Inc.
99.1	Press Release of Psychiatric Solutions, Inc., dated July 1, 2005.

EX-2.1

                                                                     Exhibit 2.1

                  AMENDED AND RESTATED STOCK PURCHASE AGREEMENT

      THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (this "Agreement") is
made and entered into as of June 30, 2005, by and among Ardent Health Services
LLC, a Delaware limited liability company ("Seller"), Ardent Health Services,
Inc., a Delaware corporation ("AHS"), and Psychiatric Solutions, Inc., a
Delaware corporation ("Purchaser").

                                    RECITALS:

      WHEREAS, Seller, AHS and Purchaser (i) previously entered into a Stock
Purchase Agreement dated as of March 10, 2005 (as amended, the "Original
Agreement") and (ii) desire to amend and restate the Original Agreement;

      WHEREAS, Seller owns 100% of the AHS Shares (as defined below);

      WHEREAS, AHS owns 100% of the issued and outstanding equity securities of
each of the AHS Subsidiaries (as defined below);

      WHEREAS, prior to the consummation of the Seller Stock Sale (as defined
below), AHS will sell the stock of each of the Excluded Subsidiaries (as defined
below) to Seller pursuant to the Excluded Subsidiaries Sale Transaction (as
defined below);

      WHEREAS, at the Closing (as defined below), Purchaser wishes to loan to
AHS the Loan Amount (as defined below); and

      WHEREAS, Seller wishes to sell the AHS Shares to Purchaser, and Purchaser
wishes to purchase the AHS Shares from Seller (the "Seller Stock Sale") on the
terms, subject to the conditions and for the consideration set forth in this
Agreement.

      NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and other agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto covenant and agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

      As used in this Agreement, the following defined terms shall have the
meanings indicated below and, where appropriate, shall include the singular and
plural of the term defined:

      "Acquired Entities" shall mean AHS and the AHS Subsidiaries.

      "Acquired Entity Employee" shall have the meaning ascribed to it in
Section 6.5.

      "Acquisition Proposal" shall mean any inquiries or proposals that
constitute, or are likely to result in, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of shares
of capital stock or other securities (including by way of a tender offer) or
similar transaction involving any of the Acquired Entities.

      "Affiliate" shall mean any Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified.



      "Agreement" shall mean this Amended and Restated Stock Purchase Agreement,
including the exhibits and schedules attached hereto.

      "AHS" shall mean Ardent Health Services, Inc., a Delaware corporation.

      "AHS Shares" shall have the meaning ascribed to it in Section 3.2(b).

      "AHS Subsidiaries" shall have the meaning ascribed to it in Section
3.3(a).

      "AHS Subsidiary Shares" shall have the meaning ascribed to it in Section
3.3(d).

      "AMS" shall mean Ardent Medical Services, Inc., a Delaware corporation.

      "Applicable Premium" means, with respect to an Untendered Note the excess
of (i) the present value at the Redemption Date of (A) the redemption price of
such Untendered Note at August 15, 2008 (105% of the principal value) plus (B)
all remaining required interest payments due on such Untendered Note through
August 15, 2008 (excluding accrued but unpaid interest to the Redemption Date),
computed using the Treasury Rate plus one-half of one percent (0.50%), over (ii)
the principal amount of such Untendered Note.

      "Applicable Tender Offer Premium" means, with respect to a Senior
Subordinated Note the excess of (i) the present value at the Closing Date of (A)
the redemption price of such Senior Subordinated Note at August 15, 2008 (105%
of the principal value) plus (B) all remaining required interest payments due on
such Senior Subordinated Note through August 15, 2008 (excluding accrued but
unpaid interest to the Closing Date), computed using the Treasury Rate plus
one-half of one percent (0.50%), over (ii) the principal amount of such Senior
Subordinated Note.

      "Applications" shall have the meaning ascribed to it in Section 3.24.

      "Bank Indebtedness" shall mean the amount of indebtedness outstanding as
of the Closing under the Credit Agreement.

      "Balance Sheet Date" shall mean December 31, 2004.

      "Bank Refinancing" shall mean the assignment by AHS of a portion of the
indebtedness outstanding under the Credit Agreement to AMS.

      "BHC" shall mean Behavioral Healthcare Corporation, a Delaware
corporation.

      "Books and Records" shall mean all existing accounting, business,
marketing, corporate, and other files, documents, instruments, papers, books and
records, including without limitation, financial statements, budgets, ledgers,
journals, deeds, titles, policies, manuals, organizational documents, operating
agreements, minute books, stock certificates and books, stock transfer ledgers,
contracts, franchises, permits, supplier lists, reports, computer files and
data, retrieval programs and operating data or plans.

      "Business Associate Agreements" shall have the meaning ascribed to it in
Section 3.22(c).

      "Business Day" shall mean a day other than Saturday, Sunday, or any day on
which the principal commercial banks located in the State of Tennessee or the
State of New York are authorized or obligated to close under the Laws of such
states.

      "Certificate of Need" shall have the meaning ascribed to it in Section
3.24.

                                        2



      "Claim" shall have the meaning ascribed to it in Section 9.3.

      "Closing" shall mean the consummation of the transactions contemplated by
this Agreement as provided in Article II; provided that the Excluded
Subsidiaries Sale Transaction shall occur prior to the consummation of the
Seller Stock Sale.

      "Closing Date" shall have the meaning ascribed to it in Section 2.5.

      "COBRA" shall have the meaning ascribed to it in Section 3.12(i).

      "Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

      "Commitment Letter" shall have the meaning ascribed to it in Section 4.9.

      "Company" shall mean the Acquired Entities on a consolidated basis.

      "Company Financial Statements" shall have the meaning ascribed to it in
Section 3.6.

      "Company Permits" shall have the meaning ascribed to it in Section 3.17.

      "Company Plans" shall mean each "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) and each stock purchase, stock option, other
stock-based, severance, change-in-control, disability, vacation, holiday, sick
leave, fringe benefit, bonus, incentive, deferred compensation, welfare and
other employee benefit plan, program, policy or other arrangement; and any
employment (including severance and change of control) agreement; whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transactions contemplated by this
Agreement or otherwise); whether formal or informal, oral or written; under
which any employee or former employee or director (or dependent or beneficiary
thereof) of any Acquired Entity or any employee of AHS Management Company, Inc.
listed on Schedule 6.5 has any present or future right to benefits or which has
been sponsored, contributed to or maintained by Seller, any Acquired Entity or a
Controlled Group Member during the past three (3) years.

      "Confidentiality Agreement" shall mean that certain Confidentiality
Agreement, dated as of October 28, 2004, between AHS and Purchaser.

      "Constituent Documents" shall mean the certificate of formation,
certificate of incorporation, articles of incorporation, bylaws, articles of
organization, operating agreement, limited liability company agreement,
partnership agreement, limited partnership agreement, minute books and such
other organizational or governance documents, as amended to the relevant date,
of a given entity.

      "Contract" shall mean any agreement, lease, sublease, license, sublicense,
promissory note, evidence of indebtedness, or other contract to which any of the
Acquired Entities is a party or by which assets of any of the Acquired Entities
are bound.

      "Controlled Group Member" shall mean any entity (whether or not
incorporated) other than Seller and the Acquired Entities that, together with
Seller and Acquired Entities, is considered under common control and treated as
one employer under Section 414(b), (c), (m) or (o) of the Code.

      "Court Order" shall mean any judgment, order, award or decree of any
federal, state, local or other court or judicial or quasi-judicial tribunal and
any award in any binding arbitration proceeding.

                                        3



      "Covered Entities" shall have the meaning ascribed to it in Section
3.22(a).

      "Credit Agreement" shall mean that certain Credit Agreement, dated as of
August 19, 2003, among AHS, as borrower, the subsidiaries of Seller named
guarantors therein, the lenders party thereto and Citicorp North America, Inc.,
as Administrative Agent (as successor to Bank One, NA), as amended.

      "Damages" shall mean any and all losses, damages, claims, costs, fines,
fees, Taxes, penalties, interest obligations and deficiencies (including,
without limitation, reasonable attorneys fees and other expenses of litigation).

      "Destruction Notice" shall have the meaning ascribed to it in Section 6.3.

      "Effective Time" shall have the meaning ascribed to it in Section 2.5.

      "Environmental Claim" means any claim, action, cause of action,
investigation or notice by any Person alleging potential liability (including
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from: (i) the presence or
release or threat of release into the environment of any Materials of
Environmental Concern at any location, whether or not owned or operated by any
of the Acquired Entities; or (ii) circumstances forming the basis of any
violation or alleged violation of any Environmental Law.

      "Environmental Laws" means, as they exist on the date of the Original
Agreement and as of the Effective Time, all applicable United States federal,
state, local and non-U.S. Laws relating to pollution or protection of the
environment (including ambient air, surface water, ground water, land surface or
sub-surface strata), including laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern, including, but not
limited to Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et seq., Resource Conservation and Recovery
Act ("RCRA"), 42 U.S.C. Section 6901 et seq., Toxic Substances Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq., the Clean Air Act, 42 U.S.C. Section
7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., each as may
have been amended or supplemented, and any applicable environmental transfer
statutes or laws.

      "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

      "Excluded Assets" shall have the meaning ascribed to it in Section 2.2.

      "Excluded Liabilities" shall have the meaning ascribed to it in Section
2.2.

      "Excluded Subsidiaries Sale Transaction" shall mean (i) the transfer of
the assets and liabilities set forth on Schedule 1(a) from AMS and its
subsidiaries to BHC, (ii) the transfer of the assets and liabilities set forth
on Schedule 1(b) from BHC and its subsidiaries to AMS and (iii) the sale of all
the issued and outstanding stock of the Excluded Subsidiaries by AHS to Seller
in consideration of a note issued by Seller payable to the order of AHS in the
principal amount of $374,483,240.32 and due immediately following the Closing
(the "Seller Promissory Note").

      "Excluded Subsidiaries" shall have the meaning ascribed to it in Section
3.3(a).

                                        4



      "Exemption Certificate" shall have the meaning ascribed to it in Section
3.24.

      "Federal Privacy Regulations" shall have the meaning ascribed to it in
Section 3.22(c).

      "Federal Transaction Regulations" shall have the meaning ascribed to it in
Section 3.22(c).

      "GAAP" shall mean generally accepted accounting principles in the United
States of America, consistently applied during the periods involved.

      "Governmental Authority" shall mean any national, state or local
government, any political subdivision thereof or any other governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
body, agency, department, bureau, commission or entity, or any arbitrator with
authority to bind a party at law.

      "Hazardous Substances" shall mean any toxic or hazardous waste, pollutants
or substances, including, without limitations, friable asbestos, polychlorinated
biphenyls, petroleum products, byproducts, or other hydrocarbon substances,
substances defined or listed as a "hazardous substance," "toxic substance,"
"toxic pollutant" or similarly identified substance or mixture, in or pursuant
to any Environmental Law.

      "HIPAA" shall have the meaning ascribed to it in Section 3.22(d).

      "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.

      "Indemnifying Party" shall have the meaning ascribed to it in Section 9.3.

      "Indemnitee" shall have the meaning ascribed to it in Section 9.3.

      "Intellectual Property" shall have the meaning ascribed to it in Section
3.16.

      "JCAHO" shall have the meaning ascribed to it in Section 3.25.

      "Knowledge" means (i) in the case of a natural Person, the actual
knowledge of such Person based upon a reasonable investigation regarding the
accuracy of any representation or warranty contained in this Agreement and (ii)
in the case of any other Person, the actual knowledge of the executive officers,
division presidents, division vice presidents of financial operations, division
vice presidents of operations, general partner or other natural Person
fulfilling similar duties on behalf of or with respect to such Person based upon
a reasonable investigation regarding the accuracy of any representation or
warranty contained in this Agreement.

      "Laws" shall mean all statutes, laws, ordinances, rules, regulations and
other pronouncements of any Governmental Authority having the effect of law in
the United States, any state or commonwealth of the United States, or any city,
county, municipality, department, commission, board, bureau, agency or
instrumentality thereof.

      "Leases" shall have the meaning ascribed to it in Section 3.11(c).

      "Lender" shall mean Citigroup North America, Inc. or an affiliate thereof.

      "Liability Threshold" shall have the meaning ascribed to it in Section
9.4(a).

                                       5



      "Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale contract, title retention contract, or other
contract to give or to refrain from giving any of the foregoing.

      "Loan Amount" shall have the meaning ascribed to it in Section 2.4.

      "Material Adverse Effect" means any event, change, or occurrence that has
or would reasonably be expected to have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of operations of
the Acquired Entities taken as a whole, other than events, changes, or
occurrences that are generally applicable in the behavioral health care industry
of the United States (provided that such events, changes or occurrences do not
adversely affect the Acquired Entities in a materially disproportionate manner).

      "Material Contracts" shall have the meaning ascribed to it in Section
3.10.

      "Materials of Environmental Concern" means chemicals, pollutants,
contaminants, hazardous materials, hazardous substances and hazardous wastes,
medical waste, toxic substances, petroleum and petroleum products and
by-products, asbestos-containing materials, PCBs, and any other chemicals,
pollutants, substances or wastes, in each case so defined, identified, or
regulated under any Environmental Law.

      "Medical Waste" includes, but is not limited to, (a) pathological waste,
(b) blood, (c) sharps, (d) wastes from surgery or autopsy, (e) dialysis waste,
including contaminated disposable equipment and supplies, (f) cultures and
stocks of infectious agents and associated biological agents, (g) contaminated
animals, (h) isolation wastes, (i) contaminated equipment, (j) laboratory waste
and (k) various other biological waste and discarded materials contaminated with
or exposed to blood, excretion, or secretions from human beings or animals.
"Medical Waste" also includes any substance, pollutant, material, or contaminant
listed or regulated under the Medical Waste Tracking Act of 1988, 42 U.S.C.
"6992, et seq. ("MWTA"), and applicable state Law.

      "Medical Waste Law" means the following, including regulations promulgated
and orders issued thereunder, all as may be amended from time to time: the MWTA,
the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33 USCA "2501 et
seq., the Marine Protection, Research, and Sanctuaries Act of 1972, 33 USCA
"1401 et seq., The Occupational Safety and Health Act, 29 USCA "651 et seq., the
United States Department of Health and Human Services, National Institute for
Occupations Self-Safety and Health Infectious Waste Disposal Guidelines,
Publication No. 88-119, and any other federal, state, regional, county,
municipal, or other local Laws insofar as they purport to regulate Medical
Waste, or impose requirements relating to Medical Waste.

      "Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 3(37) or Section 4001(a)(3) of ERISA.

      "Non-Competition Agreement" shall have the meaning ascribed to it in
Section 5.15.

      "PBGC" shall mean the Pension Benefit Guaranty Corporation.

      "PCBs" shall have the meaning ascribed to it in Section 3.18(f).

      "Permits" shall mean all licenses, permits, franchises, rights,
registrations, approvals, authorizations, consents, waivers, exemptions,
clearances, releases, variances or orders of, or filings with, or otherwise
issued by, any Governmental Authority.

                                       6



      "Permitted Liens" shall mean (i) Liens for Taxes not yet due and payable
as of the Closing Date, (ii) landlords', carriers, warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business consistent with past practice, none of which is overdue for a period of
more than 30 days, (iii) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation, (iv)
any lease obligations under the Contracts, (v) with respect to any leased Real
Property, Liens which encumber the fee interest in such property, (vi) all
matters shown on the title insurance policies or surveys supplied to Purchaser
by Seller pursuant to Section 3.11 hereof and (vii) such minor defects,
irregularities, encumbrances, easements, rights-of-way, restrictions,
encroachments and other similar encumbrances which, individually or in the
aggregate, do not materially interfere with the present use and operation of
such property subject thereto. Notwithstanding the foregoing, any liens arising
from the Credit Agreement shall not be considered Permitted Liens and will be
released at Closing.

      "Person" shall mean any natural person, corporation, general partnership,
limited partnership, limited liability company, union, association, court,
Governmental Authority or other entity or authority.

      "Pre-Closing Period" shall have the meaning ascribed to it in Section
6.7(a)(i).

      "Pre-Closing Period Tax Returns" shall have the meaning ascribed to it in
Section 6.7(a)(i).

      "Programs" shall have the meaning ascribed to it in Section 3.25.

      "Promissory Note" shall have the meaning ascribed to it in Section 2.4.

      "Provider Agreements" shall have the meaning ascribed to it in Section
3.25.

      "Provider Numbers" shall have the meaning ascribed to it in Section 3.25.

      "Purchaser" shall mean Psychiatric Solutions, Inc., a Delaware
corporation.

      "Purchaser Common Stock" shall have the meaning ascribed to it in Section
4.3.

      "Purchaser Financial Statements" shall have the meaning ascribed to it in
Section 4.8.

      "Purchaser Indemnitee" shall have the meaning ascribed to it in Section
9.1.

      "Purchaser Material Breach" shall have the meaning ascribed to it in
Section 10.1(e).

      "Purchaser SEC Filings" shall have the meaning ascribed to it in Section
4.8.

      "Purchaser Shares" shall mean 1,362,760 unregistered shares of Purchaser
Common Stock.

      "Real Property" shall have the meaning ascribed to it in Section 3.11(b).

      "Redemption Date" shall mean the 35th day following the Closing Date (or
45th day following the Closing Date in the event the trustee under the Indenture
requires 15 days prior notice pursuant to the terms of the Indenture).

      "Redemption Price" means, with respect to an Untendered Note, an amount
equal to the sum of (i) 100% of the principal amount of the Untendered Note,
plus (ii) the Applicable Premium, plus (iii) accrued and unpaid interest
thereon, if any, to the applicable Redemption Date.

                                       7



      "Registration Rights Agreement" shall have the meaning ascribed to it in
Section 6.9.

      "Registration Statement" shall have the meaning ascribed to it in Section
6.9.

      "SEC" shall mean the Securities and Exchange Commission of the United
States of America.

      "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

      "Securities Laws" shall mean the Securities Act and the Exchange Act.

      "Seller" shall mean Ardent Health Services LLC, a Delaware limited
liability company.

      "Seller Cash Payment" shall have the meaning ascribed to it in Section
2.3.

      "Seller Indemnitee" shall have the meaning ascribed to it in Section 9.2.

      "Seller Material Breach" shall have the meaning ascribed to it in Section
10.1(d).

      "Seller Stock Sale" shall have the meaning ascribed to it in the recitals.

      "Straddle Period" shall have the meaning ascribed to it in Section
6.7(a)(ii).

      "Straddle Period Tax Returns" shall have the meaning ascribed to it in
Section 6.7(a)(ii).

      "Tax" or "Taxes" means any and all taxes and other governmental charges of
the same or of a similar nature (including, but not limited to, taxes on or with
respect to net or gross income, franchise, profits, gross receipts, capital,
sales, use, ad valorem, value added, transfer, real property transfer, transfer
gains, inventory, capital stock, license, payroll, employment, social security,
unemployment, severance, occupation, real or personal property, estimated taxes,
rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative
minimum, doing business, withholding and stamp), together with any interest
thereon, penalties (or other governmental charges of the same or of a similar
nature), additions to tax or additional amounts with respect thereto, imposed by
any Governmental Authority or other applicable jurisdiction.

      "Tax Indemnification Agreement" shall have the meaning ascribed to it in
Section 3.14(e).

      "Tax Proceeding" shall have the meaning ascribed to it in Section
6.7(c)(ii).

      "Tax Return" means any return, declaration, report, statement, information
statement and other document (including any related or supporting information)
filed or required to be filed with respect to Taxes, including any claims for
refunds of Taxes and any amendments or supplements of any of the foregoing.

      "Tender Offer" means the (i) cash tender offer at a price not less than
the Tender Offer Price (as defined below) to purchase all of AHS' outstanding
10% Senior Subordinated Notes due 2013 (the "Senior Subordinated Notes") and
(ii) the solicitation of the consent of the holders of the Senior Subordinated
Notes regarding amendments (the "Indenture Amendments") to the Indenture dated
as of August 19, 2003, as amended (the "Indenture"), among AHS, certain
subsidiaries of AHS, as guarantors, Seller, as a guarantor (collectively with
such subsidiaries, the "Guarantors"), and U.S. Bank Trust National Association,
as Trustee.

                                       8



      "Tender Offer Price" means the cash tender price equal to the outstanding
principal of the Senior Subordinated Notes, plus (i) accrued interest to the
date of purchase pursuant to the Tender Offer and (ii) the Applicable Tender
Offer Premium, less the applicable payment for consents from the holders of the
Senior Subordinated Notes.

      "Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two Business Days prior to, in the
case of calculating the Applicable Premium, the date fixed for prepayment or, in
the case of calculating the Applicable Tender Offer Premium, the tenth Business
Day immediately preceding the expiration time of the Tender Offer (or, if such
Statistical Release is no longer published, any publicly available source for
similar market data)) most nearly equal to the then remaining term of the Senior
Subordinated Notes to August 15, 2008; provided, however, that if the then
remaining term of the Senior Subordinated Notes to August 15, 2008 is not equal
to the constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the then remaining term of the Senior Subordinated Notes
to August 15, 2008 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.

      "Untendered Notes" shall mean the Senior Subordinated Notes outstanding
after the consummation of the Tender Offer.

      "Untendered Note Amount" shall mean $37,714.80.

      "WARN Act" shall mean the Workers Adjustment and Retraining Notification
Act, 29 U.S.C. Section 2101-2109.

                                   ARTICLE II
                           PURCHASE AND SALE; CLOSING

      2.1 Sale of the AHS Shares. On and subject to the terms and conditions set
forth in this Agreement, at the Closing, Seller shall sell, assign, transfer and
deliver to Purchaser, free and clear of all Liens, the AHS Shares, and Purchaser
shall purchase from Seller, the AHS Shares. Upon receipt by Seller of the
consideration described in Section 2.3 title to the AHS Shares shall pass to
Purchaser, free and clear of all Liens, other than Liens arising from the acts
of Purchaser and its Affiliates.

      2.2 Excluded Assets and Liabilities; Certain Included Liabilities.
Notwithstanding anything, express or implied, to the contrary contained in
Section 2.1 or elsewhere herein, the assets of the Acquired Entities set forth
in Schedule 2.2 that are transferred in the Excluded Subsidiaries Sale
Transaction are to be excluded from the assets of the Acquired Entities being
acquired by or transferred to Purchaser at the Closing through Purchaser's
acquisition of the AHS Shares. With the exception of the above-described assets
(the "Excluded Assets") and the excluded liabilities described on Schedule 2.2
(the "Excluded Liabilities"), the Acquired Entities shall retain all of the
assets and liabilities of the Acquired Entities, including, without limitation,
their respective trade payables, operating liabilities, accrued expenses,
contingent liabilities and other obligations. Prior to the Closing, Seller shall
cause the Excluded Assets to be transferred to AMS or another Person designated
by Seller by means of dividend or otherwise.

                                       9



      2.3 Purchase Price. The consideration to be paid by Purchaser to Seller
for the AHS Shares shall be (i) an amount in cash equal to $425,934,216.46 (the
"Seller Cash Payment") and (ii) the Purchaser Shares.

      2.4 Purchaser Loan. At the Closing, Purchaser shall loan to AHS an
aggregate of $74,028,068.74 (the "Loan Amount") and AHS shall issue to Purchaser
a Promissory Note in the form attached hereto as Exhibit 2.4 (the "Promissory
Note") evidencing such loan.

      2.5 Closing. The Closing will take place at the offices of Waller Lansden
Dortch & Davis, PLLC, 511 Union Street, Suite 2700, Nashville, Tennessee, or
such other place as shall be mutually agreed upon in writing by the parties
hereto, at 10:00 a.m. Central Time, on July 1, 2005. The date on which the
Closing takes place is referred to herein as the "Closing Date." The Closing
shall be deemed to occur at 12:01 a.m., Central Time, on the Closing Date or
such other time as shall be mutually agreed upon in writing by the parties
hereto (the "Effective Time").

      2.6 Closing Deliveries. At the Closing, the following events will occur:

            (a) AHS Share Stock Certificates. Seller shall deliver to Purchaser
certificates representing the AHS Shares duly endorsed or accompanied by duly
executed blank stock powers, as appropriate.

            (b) Promissory Note. AHS shall deliver to Purchaser an executed copy
of the Promissory Note.

            (c) Payment for the AHS Shares. Purchaser shall deliver the Seller
Cash Payment in immediately available funds by electronic wire transfer to an
account designated by Seller and shall deliver to Seller certificates
representing the Purchaser Shares.

            (d) Loan Amount. Purchaser shall deliver the Loan Amount in
immediately available funds by electronic wire transfer in the amounts and to
the accounts designated by AHS on the Closing Date for purposes of repaying the
Bank Indebtedness and consummating the Tender Offer.

            (e) Legal Opinions.

                  (i) Seller shall cause an original opinion of Boult, Cummings,
Conners & Berry, PLC, counsel for Seller, to be delivered to Purchaser as
contemplated by Section 7.5; and

                  (ii) Purchaser shall cause an original opinion of Waller
Lansden Dortch & Davis, PLLC, counsel for Purchaser, to be delivered to Seller
as contemplated by Section 8.5.

            (f) Closing Certificates and Documents.

                  (i) Seller shall deliver the other certificates and documents
required to be delivered by Seller pursuant to Article VII; and

                  (ii) Purchaser shall deliver the other certificates and
documents required to be delivered by Purchaser pursuant to Article VIII.

      2.7 Repayment of Seller Promissory Note. Immediately following the
Closing, Seller shall pay in full the Seller Promissory Note and shall deliver
to Purchaser reasonably satisfactory evidence of such payment and cancellation
of the Seller Promissory Note. Purchaser shall cause

                                       10



AHS to use such funds from the repayment of the Seller Promissory Note for
purposes of repaying the Bank Indebtedness and consummating the Tender Offer.

                                   ARTICLE III
                    REPRESENTATIONS AND WARRANTIES OF SELLER

      Seller represents and warrants to Purchaser as of the date of the Original
Agreement (and with respect to the representations and warranties set forth in
Sections 3.1. 3.4 and 3.5 as of the date hereof) as follows:

      3.1 Organization of Seller. Seller is a limited liability company duly
formed, validly existing and in good standing under the Laws of the State of
Delaware. Seller is duly qualified or licensed to transact business and is in
good standing in all jurisdictions in which it conducts business. Seller has the
limited liability company power and full authority and legal capacity to execute
and deliver this Agreement and all other documents or agreements to be executed
and delivered by it and to consummate the transactions contemplated hereby or
thereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
limited liability company action on the part of Seller.

      3.2 Organization and Capitalization of AHS.

            (a) AHS (i) is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware, (ii) has the corporate
power and authority to own or lease and to operate its assets and to conduct its
business as currently conducted, and (iii) is duly qualified to transact
business as a foreign corporation and is in good standing in each of the
jurisdictions listed in Schedule 3.2(a) and is not required to be so qualified
by the requirement of any Laws in any other jurisdiction except where the
failure to be so qualified would not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

            (b) The authorized capital stock of AHS consists of 10,000 shares of
common stock, $.01 par value per share, of which 1,000 shares (the "AHS Shares")
are issued and outstanding. The AHS Shares have been duly authorized and validly
issued and are fully paid and non-assessable.

            (c) Except as set forth in Schedule 3.2(c), (i) Seller has good and
marketable title to, and owns, the AHS Shares, beneficially and of record, (ii)
the AHS Shares are free and clear of all Liens of any nature whatsoever, (iii)
Seller has full voting power over the AHS Shares, subject to no proxy,
shareholders' agreement, voting trust or other agreement relating to the voting
of any of the AHS Shares, and (iv) other than this Agreement, there is no
agreement between Seller or any of its subsidiaries and any other Person with
respect to the disposition of the AHS Shares or otherwise relating to the AHS
Shares.

            (d) Except as set forth in Schedule 3.2(d), (i) no Person has any
preemptive right to purchase any stock or other securities of AHS, (ii) there
are no outstanding securities or other instruments of AHS that are convertible
into or exchangeable for any shares of its capital stock, (iii) other than the
AHS Shares, there are no outstanding securities or other instruments of AHS
giving the owner or holder thereof the right to vote on any matters on which
AHS' stockholders may vote, (iv) there are no contracts, arrangements,
commitments or restrictions relating to the issuance, sale, transfer, purchase
or obtaining of capital stock or other securities or instruments of AHS, and (v)
there is no existing option, warrant, right, call or commitment of any character
granted or issued by AHS governing the issuance of shares of its capital stock.

      3.3 Organization and Capitalization of the AHS Subsidiaries.

                                       11



            (a) Schedule 3.3(a)(i) contains a true, complete and correct list of
all subsidiaries, direct or indirect, of AHS (the "AHS Subsidiaries"), other
than the subsidiaries, direct or indirect, of AHS listed on Schedule 3.3(a)(ii)
(the "Excluded Subsidiaries"). Except for the AHS Subsidiaries and the Excluded
Subsidiaries, AHS does not directly or indirectly own, of record or
beneficially, any outstanding equity interests in any other Person.

            (b) Each AHS Subsidiary (i) is a corporation, limited liability
company or general partnership, as the case may be, duly organized or formed,
validly existing and in good standing under the laws of the state of its
organization or formation, as identified on Schedule 3.3(b), (ii) has the
corporate, limited liability company or general partnership power and authority
to own or lease and to operate its assets and to conduct its business as
currently conducted, and (iii) is duly qualified to transact business as a
foreign corporation, limited liability company or general partnership and is in
good standing in each of the jurisdictions listed in Schedule 3.3(b) and is not
required to be so qualified by the requirement of any Laws in any other
jurisdiction except where the failure to be so qualified would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

            (c) Schedule 3.3(c) sets forth the authorized equity securities of
each AHS Subsidiary and indicates the number of issued and outstanding equity
securities of such AHS Subsidiary. Except as set forth in Schedule 3.3(c), the
equity securities of each AHS Subsidiary have been duly authorized and validly
issued and are fully paid and non-assessable.

            (d) Except as set forth in Schedule 3.3(d), (i) AHS has good and
marketable title to, and owns, directly or indirectly, all of the outstanding
shares of capital stock or other outstanding equity securities of each AHS
Subsidiary (the "AHS Subsidiary Shares"), beneficially and of record; (ii) the
AHS Subsidiary Shares are free and clear of all Liens of any nature whatsoever,
(iii) AHS has full voting power over the AHS Subsidiary Shares, subject to no
proxy, shareholders' agreement, voting trust or other agreement relating to the
voting of any of the AHS Subsidiary Shares, and (iv) other than this Agreement,
there is no agreement between Seller or any of its subsidiaries and any other
Person with respect to the disposition of the AHS Subsidiary Shares or otherwise
relating to the AHS Subsidiary Shares.

            (e) (i) No Person has any preemptive right to purchase any stock,
equity interests or other securities of any AHS Subsidiary, (ii) there are no
outstanding securities or other instruments of any AHS Subsidiary that are
convertible into or exchangeable for any shares of its capital stock or any
other equity securities, (iii) other than the AHS Subsidiary Shares, there are
no outstanding securities or other instruments of any of the AHS Subsidiaries
giving the owner or holder thereof the right to vote on any matters on which AHS
Subsidiary shareholders may vote, (iv) there are no contracts, arrangements,
commitments or restrictions relating to the issuance, sale, transfer, purchase
or obtaining of capital stock or other securities or instruments of any AHS
Subsidiary, and (v) there is no existing option, warrant, right, call or
commitment of any character granted or issued by any AHS Subsidiary governing
the issuance of shares of its capital stock.

      3.4 Authorization.

            (a) The execution, delivery and performance by Seller of this
Agreement and the other agreements to be entered into by it pursuant to the
terms of this Agreement, and the consummation by Seller of the transactions
contemplated hereby and thereby are within Seller's limited liability company
powers, are not in contravention of the terms of Seller's Constituent Documents,
and have been duly authorized and approved by the managers of Seller. No other
corporate, limited liability company or partnership, as the case may be,
proceedings on the part of Seller or any Acquired Entity are necessary to
authorize the execution, delivery and performance by

                                       12



Seller or any Acquired Entity of this Agreement or the other agreements to be
entered into by Seller or any Acquired Entity pursuant to the terms of this
Agreement.

            (b) This Agreement has been duly and validly executed and delivered
by Seller, and, as of the Closing, the other agreements to be entered into by
Seller or any Acquired Entity pursuant to the terms of this Agreement will have
been duly and validly executed and delivered by Seller or such Acquired Entity,
as the case may be. This Agreement constitutes, and upon their execution and
delivery, such other agreements will constitute, the legal, valid and binding
obligations of Seller and any Acquired Entity party thereto, enforceable against
Seller and any Acquired Entity party thereto in accordance with their respective
terms (assuming the valid authorization, execution and delivery hereof and
thereof by Purchaser and any other unaffiliated entity that is a party thereto).

      3.5 No Conflicting Agreements; Consents. Except as set forth in Schedule
3.5, neither the execution and delivery of this Agreement or any of the other
agreements to be entered into by Seller or any Acquired Entity pursuant to the
terms of this Agreement nor the consummation of any of the transactions
contemplated hereby or thereby will:

            (a) violate, conflict with, result in a breach or termination of the
terms, conditions or provisions of, constitute a default under, or entitle any
party to terminate or accelerate (i) the respective Constituent Documents of
Seller or any of the Acquired Entities, (ii) any Contract, except such
violations, conflicts, breaches, defaults, terminations or accelerations which,
either individually or in the aggregate, (A) would not materially impair the
ability of Seller and the Acquired Entities to perform their respective
obligations hereunder or under the other agreements contemplated hereby to be
entered into by any of them or would not prevent the consummation of the
transactions contemplated hereby or thereby, or (B) would not reasonably be
expected to have a Material Adverse Effect, (iii) any Court Order to which
Seller or any of the Acquired Entities is a party or by which Seller or any of
the Acquired Entities is bound, or (iv) any requirements of Law affecting Seller
or any of the Acquired Entities, except such violations, conflicts, breaches or
defaults of such requirements of Law which, either individually or in the
aggregate, (A) would not materially impair the ability of Seller and the
Acquired Entities to perform their respective obligations hereunder or under the
other agreements contemplated hereby to be entered into by any of them or would
not prevent the consummation of the transactions contemplated hereby or thereby
or (B) would not reasonably be expected to have a Material Adverse Effect;

            (b) result in the creation or imposition of any Lien upon any of the
assets of any Acquired Entity (except for Permitted Liens); or

            (c) require a permit from, the approval, consent or authorization
of, or the making by Seller or any of the Acquired Entities of any declaration,
filing or registration with, any Governmental Authority, except as provided in
Section 5.1 or Section 6.2 and except for such approvals, consents,
authorizations, declarations, filings or registrations, the failure of which to
be obtained or made (i) would not, individually or in the aggregate, materially
impair the ability of Seller to perform its respective obligations hereunder or
under the other agreements contemplated hereby to be entered into by it or
prevent the consummation of the transactions contemplated hereby or thereby or
(ii) would not reasonably be expected to have a Material Adverse Effect.

      3.6 Financial Statements.

            (a) Schedule 3.6 contains copies of the unaudited combined balance
sheet of the Company at December 31, 2004 and the unaudited combined statement
of income of the Company for the year ended December 31, 2004 (collectively, the
"Company Financial Statements"). The Company Financial Statements have been
prepared from and in accordance with the Books and Records of the Company,
fairly present in all material respects the financial position and results of

                                       13



operations of the Company as of the date and for the periods indicated, and have
been prepared in accordance with GAAP (subject to normal year-end audit
adjustments) applied on a consistent basis throughout the period involved,
except as may be indicated on Schedule 3.6.

            (b) The Company maintains internal accounting controls that provide
reasonable assurance that (i) transactions are executed in accordance with
management's authorization, (ii) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (iii) access to its assets is permitted only in accordance with
management's authorization and (iv) the reported accountability for its assets
is compared with existing assets at reasonable intervals.

      3.7 Absence of Undisclosed Liabilities. Except as disclosed in Schedule
3.7, the Company does not have any material liabilities or obligations required
by GAAP to be reflected on a consolidated balance sheet (whether accrued,
absolute, asserted or unasserted, contingent or otherwise) except for (a)
liabilities reflected or reserved against in the Company Financial Statements,
(b) liabilities incurred in the ordinary course of the Company's business since
the Balance Sheet Date, (c) Excluded Liabilities or (d) liabilities incurred in
connection with the transactions contemplated by this Agreement.

      3.8 Absence of Certain Changes. Except as disclosed in Schedule 3.8 or as
contemplated by the Excluded Subsidiaries Sale Transaction or elsewhere in this
Agreement, since the Balance Sheet Date, the Acquired Entities have conducted
their businesses only in the ordinary course of such businesses and:

            (a) AHS has not (i) declared, set aside or paid any dividend or made
or agreed to make any other distribution or payment in respect of its capital
stock or redeemed, purchased or otherwise acquired or agreed to redeem, purchase
or otherwise acquire any shares of its capital stock or (ii) amended its
Constituent Documents;

            (b) no Acquired Entity has incurred any liabilities that under GAAP
would be required to be reflected on a balance sheet for the Company (other than
liabilities incurred in the ordinary course of its business consistent with past
practice) in an aggregate amount in excess of $100,000;

            (c) no Acquired Entity has sold, assigned or transferred any of its
assets or properties except dispositions or sales of inventory in the ordinary
course of business;

            (d) no Acquired Entity has mortgaged, pledged or subjected to any
Lien, any of the assets or properties of such Acquired Entity other than (i)
Permitted Liens, (ii) Liens incurred in the ordinary course of business
consistent with past practice on assets and properties having a fair value not
exceeding $100,000 in the aggregate and (iii) Liens under the Credit Agreement;

            (e) no Acquired Entity has suffered any damage, destruction or loss,
whether or not covered by insurance, that has had or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;

            (f) except as contemplated by Schedule 3.12(h), no Acquired Entity
has entered into any employment, severance or termination agreement with any of
the employees of an Acquired Entity, other than employment contracts with
physicians entered into in the ordinary course of business;

            (g) neither Seller nor AHS has made any material change in its
accounting principles, practices or methodologies;

                                       14



            (h) no Acquired Entity has (A) made any increase in the rate of
compensation payable to any of its employees, other than normal and customary
increases consistent with past practice or increases that otherwise were
required by such Acquired Entity's obligations pursuant to applicable Law or
Contracts in effect on the Balance Sheet Date, or (B) increased severance or
termination obligations to any of its employees (except (i) increases that are
the result of increases to an employee's underlying compensation that either (A)
are not required to be disclosed pursuant to this Section 3.8(h) or (B) are
disclosed in Schedule 3.8, and (ii) increases described in or contemplated by
Schedule 3.12(h) hereto); and

            (i) neither Seller nor any Acquired Entity has entered into any
agreement or arrangement, or made any other commitment (whether oral or
written), to do any of the foregoing.

      3.9 Legal Proceedings, etc. There are no actions, suits or proceedings
pending, or to the Knowledge of Seller, threatened against Seller or any of its
subsidiaries (including AHS and any of the other Acquired Entities) which,
either individually or in the aggregate, if decided adversely, would reasonably
be expected to (a) materially impair the ability of Seller or any Acquired
Entity to perform their respective obligations hereunder or under the other
agreements contemplated hereby to be entered into by any of them or (b) prevent
the consummation of the transactions contemplated hereby or thereby. Except as
set forth in Schedule 3.9, there are no actions, suits or proceedings pending,
or to the Knowledge of Seller, threatened against any Acquired Entity which,
either individually or in the aggregate, if decided adversely, would reasonably
be expected to result in a Material Adverse Effect. Except as otherwise
disclosed in Schedule 3.9, neither Seller, AHS nor any other Acquired Entity has
received written notice from any Governmental Authority that any Acquired Entity
is the target of any investigation or proceeding by any Governmental Authority,
nor to the Knowledge of Seller is any such investigation or proceeding pending.

      3.10 Contracts; No Defaults. Seller has made or will make available to
Purchaser copies of the Material Contracts. Schedule 3.10 sets forth a complete
and accurate list of the following Contracts: (i) all Contracts that have an
aggregate annual value or result in an aggregate annual expense of at least
$250,000; (ii) any agreement that grants a right of first refusal with respect
to the purchase or sale of a capital asset of an Acquired Entity or an equity
interest in an Acquired Entity; (iii) any agreement relating to the borrowing or
lending of money other than advances to employees to cover business expenses in
the ordinary course of business; (iv) any joint venture contract, partnership
contract or similar contract evidencing an ownership interest or a participation
in or sharing of profits; (v) any guaranty, contribution agreement or other
agreement that includes any material indemnification or contribution obligation;
(vi) any agreement (including any non-competition agreement) limiting the
ability of any Acquired Entity to engage in any line of business or in business
with any Person or restricting the geographical area in which such Acquired
Entity may engage in any business; and (vii) any employment, consulting,
management, severance or indemnification contract or agreement with annual
obligations in excess of $100,000. Seller has provided or will provide Purchaser
true and correct copies of all agreements with any individual known by any
Acquired Entity to be a physician or an immediate family member of a physician,
or with an entity known by any Acquired Entity to be owned by a physician or an
immediate family member of a physician (together with the contracts referenced
in (i)-(vii) above, the "Material Contracts"). All of the Material Contracts are
with respect to the Acquired Entities, and, to Seller's Knowledge, with respect
to all other parties thereto, valid and binding obligations, are in full force
and effect in accordance with their terms. Except as set forth in Schedule 3.10,
there is not, under any of the Material Contracts, any existing default, event
of default or other event which, with or without due notice or lapse of time or
both, would constitute a default or event of default on the part of any Acquired
Entity, except such defaults, events of default and other events as to which
requisite waivers or consents have been obtained or would not reasonably be
expected to cause a Material Adverse Effect. To Seller's knowledge, no party to
any of the Material Contracts intends to cancel, terminate or exercise any
option under any of such Material Contracts.

                                       15



      3.11 Title to Property.

            (a) Each of the Acquired Entities is in possession of and has good
title to, or has valid leasehold interests in or valid rights under contract to
use, all of the personal property used in or reasonably necessary for the
conduct of its business; such personal properties include all personal
properties reflected on the Company Financial Statements and all of the personal
properties purchased or otherwise acquired by the Acquired Entities since the
Balance Sheet Date, other than (i) current assets or properties disposed of
since the Balance Sheet Date in the ordinary course of business consistent with
past practice, and (ii) the Excluded Assets. None of such personal properties
are subject to any Liens (other than Permitted Liens and Liens under the Credit
Agreement).

            (b) Each of the Acquired Entities has good and valid title to all
owned real property represented as being owned thereby, or a valid and binding
leasehold interest in all real property represented as being leased thereby,
used in connection with the operation of the business of such Acquired Entity,
together with (to the extent, with respect to the leased real property, provided
in the lease for such leased real property) all buildings, improvements and
fixtures located thereupon and all improvements and fixtures located thereupon
and all construction in progress (such real property is referred to herein as
the "Real Property"), subject to no Liens other than Permitted Liens and Liens
under the Credit Agreement. The address for the Real Property that each Acquired
Entity owns in fee simple is listed in Schedule 3.11(b).

            (c) Schedule 3.11(c) lists all leases to which an Acquired Entity is
a party involving rental of real property as a lessor, lessee, sublessor or
sublessee (the "Leases"). Seller has delivered to Purchaser true and correct
copies of all Leases. All of the Leases are valid and binding obligations of the
Acquired Entities, are in full force and effect, and are enforceable against the
Acquired Entities in accordance with their terms; and to the Knowledge of
Seller, no event has occurred (whether with or without notice, lapse of time or
both) would constitute a default by the applicable Acquired Entity thereunder.
To the Knowledge of Seller, none of the other parties to any of the Leases (i)
is in default under any such Lease or (ii) considers an Acquired Entity to be in
material default thereunder.

            (d) Seller has provided or will provide Purchaser true and correct
copies of rent rolls for each building in which an Acquired Entity leases or
subleases space to tenants, which rent rolls identify the space leased, and with
respect to each lease or sublease, identify (i) the tenant or subtenant, (ii)
the number of square feet leased, (iii) the term commencement date and
expiration date, (iv) any term renewal options, (v) the annual or monthly rent,
and (vi) amount of security deposit.

            (e) Seller has provided or will provide a true and correct list of
the most current owner's title policies issued to Seller or an Acquired Entity
with respect to any of the Real Property or any portion thereof, and copies
thereof have been supplied to Purchaser.

            (f) Seller has provided or will provide Purchaser a true and correct
list of the most current "as-built" surveys or boundary surveys obtained by
Seller or an Acquired Entity with respect to any of the Real Property or any
portion thereof, and copies thereof have been supplied to Purchaser.

            (g) Seller has provided or will provide Purchaser a true and correct
copy of all environmental site assessments obtained by Seller or an Acquired
Entity with respect to any of the Real Property or any portion thereof, and
copies thereof have been supplied to Purchaser.

                                       16



            (h) During the past three (3) years, no Acquired Entity has received
from any Governmental Authority any written notice of any violation of any
building codes, zoning regulations, or other Law in respect of the Real Property
or its use by such Acquired Entity, except for such violations as would not
reasonably be expected to have a Material Adverse Effect. To the Knowledge of
Seller, no portion of the Real Property is subject to a condemnation or similar
proceeding. Schedule 3.11(h) describes all construction work, if any, which any
Acquired Entity has contracted for that would require any capital expenditure
exceeding $100,000 and which is presently in progress in respect of the business
of such Acquired Entity and also contains a good faith estimate, as of the date
of the Original Agreement, of the cost to complete each such project and the
amounts paid by Seller or the Acquired Entities to date.

      3.12 Employees; Labor Matters; Employee Benefit Plans; ERISA.

            (a) Except as set forth on Schedule 3.12(a), (i) no Acquired Entity
is a party to, or bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, (ii)
there is no unfair labor practice or labor arbitration proceeding pending, or to
the Knowledge of Seller, threatened against an Acquired Entity relating to its
business, except for any such proceeding which has not had, or would not
reasonably be expected to have, a Material Adverse Effect, (iii) to the
Knowledge of Seller, there are no organization efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving employees of any Acquired Entity, (iv) there is no labor strike,
material slowdown or material work stoppage or lockout actually pending or, to
the Knowledge of Seller, threatened against or affecting any Acquired Entity,
and an Acquired Entity has not experienced any strike, material slowdown or
material work stoppage or lockout since January 1, 2002, (v) no Acquired Entity
is delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
it or amounts required to be reimbursed to such employees, (vi) each Acquired
Entity is in compliance with all applicable laws respecting labor, employment,
fair employment practices, terms and conditions of employment, workers'
compensation, occupational safety, plant closings, and wages and hours, except
where noncompliance, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, (vii) each Acquired
Entity has withheld all amounts required by Law or by agreement to be withheld
from the wages, salaries, and other payments to employees, and (viii) each
Acquired Entity is not liable for any arrears of wages or any Taxes or any
penalty for failure to comply with any of the foregoing.

            (b) Schedule 3.12(b) contains a list of each Company Plan that is
intended to be qualified within the meaning of Code Section 401(a) and each
other Company Plan.

            (c) With respect to each Company Plan, Seller has delivered to
Purchaser a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) of each such Company Plan and each of the
following, to the extent applicable to each such Company Plan: (i) any related
trust agreement or other funding instrument; (ii) the most recent IRS favorable
determination letter, if the Company Plan is a Code Section 401(a) plan for
which such a letter has been issued; (iii) any summary plan description, summary
of material modifications, employee handbooks and other material written
communications provided over the past three (3) years to participants in each
Company Plan; and (iv) for the three (3) most recent plan years for each such
Company Plan, any Form 5500 filed for each Company Plan and all attached
schedules, including audited financial statements, actuarial valuation reports
(if any), and the responses of any attorneys for the Company Plan to any request
for information underlying any such audited financial statements.

            (d) Except as disclosed in Schedule 3.12(d), (i) each Company Plan
has been established, drafted and administered in all material respects in
accordance with its terms and the

                                       17



applicable provisions of ERISA, the Code and other applicable Laws; (ii) each
Company Plan that is intended to be qualified within the meaning of Code Section
401(a) has been the subject of an IRS favorable determination letter as to its
qualification or the sponsor of the Company Plan may rely on the IRS
notification letter to the sponsor of any prototype plan used to document the
terms of such Company Plan as to the tax-qualified status of such Company Plan;
(iii) to the Knowledge of Seller, nothing has occurred, whether by action or
failure to act, that could reasonably be expected to adversely affect the
tax-qualified status of any Company Plan that is intended to be qualified within
the meaning of Code Section 401(a); (iv) no event has occurred and no condition
exists that would subject any Acquired Entity, either directly or by reason of
its affiliation with any Controlled Group Member, to any material Tax, fine,
Lien, penalty or other liability imposed by ERISA, the Code or other applicable
Laws with respect to each Company Plan that is intended to be qualified within
the meaning of Code Section 401(a); (v) there have been no reportable events
within the meaning of ERISA Section 4043, accumulated funding deficiencies
within the meaning of ERISA Section 302 or Code Section 412 (whether or not
waived), or PBGC liens imposed with respect to any Company Plan; (vi) for each
Company Plan with respect to which a Form 5500 has been filed, to the Knowledge
of Seller, no material change has occurred with respect to the matters covered
by the most recent Form 5500 since the date of filing thereof; (vii) neither
Seller, any of the Acquired Entities, nor, to the Knowledge of Seller, any other
party in interest or a disqualified person (as defined in Code Section
4975(e)(2)) has engaged in a "prohibited transaction" (within the meaning of
ERISA Section 406 and Code Section 4975) with respect to any Company Plan for
which there is no exemption under ERISA Section 408 or Code Section 4975; (viii)
except as required by Title I, Part 6 of ERISA, no Company Plan provides
post-employment or retiree welfare benefits and no Acquired Entity has any
obligations to provide any post-employment or retiree welfare benefits; (ix)
contributions required to be made under the terms of any of the Company Plans as
of the date of the Original Agreement have been timely made or have been
properly reflected on the Company's most recent consolidated balance sheet prior
to the date of the Original Agreement; (x) with respect to the Company Plans, no
event has occurred and, to the Knowledge of Seller, there exists no condition or
set of circumstances in connection with which an Acquired Entity would
reasonably be expected to be subject to any material liability (other than for
routine benefit liabilities) under the terms of, or with respect to, such
Company Plans, ERISA, the Code or any other applicable Law; (xi) in all material
respects, all tax, annual reporting and other governmental filings required by
ERISA and the Code for the Company Plans have been timely filed with the
appropriate governmental agency and all notices and disclosures have been timely
provided to participants of the Company Plans; (xii) with respect to the Company
Plans, to the Knowledge of Seller, no excise tax could be imposed upon the
Acquired Entities under Chapter 43 of the Code; and (xiii) the Acquired Entities
do not maintain, sponsor, contribute to or have any liability with respect to
any employee benefit plan, program or arrangement that provides benefits to
non-resident aliens with no U.S. source income outside of the United States.

            (e) None of the Company Plans and no other plan or arrangement
sponsored by, contributed to or maintained by Seller, any Acquired Entity or any
Controlled Group Member at any time during the past six (6) years, as of the
Closing Date or in the past, has been subject to Title IV of ERISA.

            (f) Except as disclosed on Schedule 3.12(f), there is no
Multiemployer Plan under which any employee or any former employee of any
Acquired Entity has any present or future right to benefits or under which any
Acquired Entity has any present or future liability for services rendered by
such employee to any Acquired Entity prior to the Closing Date. The Acquired
Entities and their Controlled Group Members have not sponsored or contributed to
or been required to contribute to a Multiemployer Plan.

            (g) With respect to any Company Plan, no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or,
to the Knowledge of Seller,

                                       18



threatened. Additionally, with respect to any Company Plan, to the Knowledge of
Seller, no facts or circumstances exist that reasonably could give rise to any
such actions, suits or claims that would reasonably be expected to have a
Material Adverse Effect. To the Knowledge of Seller, no Company Plan is
currently subject to an audit or other investigation by the IRS, the Department
of Labor, the PBGC or any other governmental authority.

            (h) Except as disclosed in Schedule 3.12(h), no Company Plan or
other agreement exists that could result in the payment to any present or former
employee or director of any Acquired Entity of any money or other property or
accelerate or provide any other rights or benefits to any present or former
employee of any Acquired Entity as a result of the transactions contemplated by
this Agreement, whether or not such payment would constitute a parachute payment
within the meaning of Code Section 280G.

            (i) The Acquired Entities and their Controlled Group Members have
complied with the continuation coverage provisions of Title I, Part 6, of ERISA
("COBRA") with respect to all current and former employees and their
beneficiaries. Seller has provided to Purchaser a list of all current and former
employees of the Company and their beneficiaries who are eligible for and/or
have elected continuation coverage under COBRA. Prior to the Closing, Seller
shall deliver to Purchaser a revised version of such list, updated through the
Closing Date.

            (j) The Acquired Entities and their Controlled Group Members and the
Company Plans have properly classified individuals providing services to the
Acquired Entities and their Controlled Group Members as independent contractors
or employees, as the case may be.

      3.13 Bank Accounts. Schedule 3.13 is a list of the names and locations of
all financial institutions at which any Acquired Entity maintains a checking
account, deposit account, securities account, safety deposit box or other
deposit or safekeeping arrangement, the name of the Acquired Entity that
maintains each such account or arrangement and the number or other means of
identification of each such account and arrangement.

      3.14 Taxes.

            (a) Except as set forth on Schedule 3.14 or as would not be
reasonably expected to have a Material Adverse Effect, (i) the Acquired Entities
have duly and timely filed all Tax Returns that they were required to file; (ii)
all Tax Returns filed by the Acquired Entities were correct and complete in all
respects; (iii) the Acquired Entities have timely paid all Taxes that have
become due and payable (whether or not shown on a Tax Return) and have
adequately reserved in the Company Financial Statements in accordance with GAAP
for all Taxes (whether or not shown on any Tax Return) that have accrued but are
not yet due or payable as of the dates thereof; and (iv) none of the Acquired
Entities has entered into any "reportable transaction" as defined in Treasury
Regulation Section 1.6011-4(b).

            (b) Except as set forth on Schedule 3.14 or as would not be
reasonably expected to have a Material Adverse Effect, (i) the Acquired Entities
have no present liability for Taxes, other than Taxes reflected on the Company
Financial Statements or incurred in the ordinary course of business since the
Balance Sheet Date in amounts consistent with prior years adjusted to reflect
changes in operating results of the Acquired Entities; and (ii) Seller has no
Knowledge of any basis for the assertion by a Governmental Authority of a Tax
deficiency against AHS or any of the AHS Subsidiaries.

            (c) Except as set forth on Schedule 3.14 or as would not be
reasonably expected to have a Material Adverse Effect, (i) there is no dispute
or claim concerning any Tax liability of the Acquired Entities either (A)
claimed or raised by any Governmental Authority in writing or (B) as to

                                       19



which Seller has Knowledge based upon personal contact with any agent of such
Governmental Authority; (ii) Schedule 3.14 lists all Tax Returns filed with
respect to the Acquired Entities that have been audited by a Governmental
Authority, and indicates those Tax Returns that currently are the subject of
audit by a Governmental Authority; (iii) no jurisdiction in which any of the
Acquired Entities do not file a Tax Return has made a claim in writing that any
of the Acquired Entities is required to file a Tax Return for such jurisdiction,
and Seller has no Knowledge that any such jurisdiction has otherwise made any
such claim; and (iv) neither AHS nor any of the AHS Subsidiaries is a party to
or bound by any closing or other agreement with any Governmental Authority with
respect to Taxes.

            (d) Except as would not be reasonably expected to have a Material
Adverse Effect, the Acquired Entities have complied in all respects with all
applicable Laws relating to the withholding and payment over of Taxes
(including, but not limited to, withholding in connection with payments to
employees, independent contractors, creditors, stockholders, partners or other
third parties) and have, within the time and manner prescribed by Law, withheld
and paid over to the proper Governmental Authorities all amounts required to be
withheld and paid over under all applicable Laws.

            (e) Except as set forth on Schedule 3.14 or as would not be
reasonably expected to have a Material Adverse Effect, (i) neither AHS nor any
of the AHS Subsidiaries has been a member of any affiliated group filing a
consolidated federal income Tax Return or a member of a combined, consolidated
or unitary group for state, local or foreign Tax purposes (other than a group
the common parent of which has at all times been AHS) or has any liability for
the Taxes of any other Person (other than an entity that is a member of the
consolidated group of corporations that has at all times had AHS as its common
parent until the Excluded Subsidiaries Sale Transaction) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign Law), as a transferee or successor, by contract, or otherwise; and (ii)
neither AHS nor any of the AHS Subsidiaries is a party to, is bound by, or has
any obligation under, any Tax sharing agreement, Tax indemnification agreement
or similar contract or arrangement, whether written or, to the Knowledge of
Seller, unwritten (a "Tax Indemnification Agreement"), and AHS and the AHS
Subsidiaries do not have any potential liability or obligation to any Person as
a result of, or pursuant to, any such Tax Indemnification Agreement.

            (f) Except as set forth on Schedule 3.14 or as would not be
reasonably expected to have a Material Adverse Effect, (i) Seller has no
Knowledge of any circumstances that would require either AHS or any of the AHS
Subsidiaries to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending on or
after the Closing Date as a result of any adjustment pursuant to Section 481(a)
of the Code by reason of a change in accounting method, and Seller has no
Knowledge that the IRS has proposed any such adjustment or a change in any
accounting method used by AHS or any of the AHS Subsidiaries; and (ii), neither
AHS nor any of the AHS Subsidiaries has taken any action inconsistent with its
practices in prior years that would have the effect of deferring a liability for
Taxes from a period prior to the Effective Time to a period following the
Effective Time.

            (g) Except as set forth on Schedule 3.14 or as would not be
reasonably expected to have a Material Adverse Effect, (i) none of the Acquired
Entities is subject to any waiver or extension of the statute of limitations
applicable to the assessment or collection of any Tax; and (ii) no power of
attorney or similar grant of authority is in place with respect to the Tax
matters of the Acquired Entities.

            (h) Except as would not be reasonably expected to have a Material
Adverse Effect, none of the Acquired Entities is a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately or
in the aggregate, in connection with this Agreement or

                                       20



any change of control of the Acquired Entities, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.

            (i) None of the Acquired Entities is or has been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.

            (j) Except as set forth on Schedule 3.14 or as would not be
reasonably expected to have a Material Adverse Effect, there are no Liens for
Taxes on any assets of the Acquired Entities, other than Liens for Taxes not yet
due and payable.

            (k) Neither AHS nor any of the AHS Subsidiaries has distributed
stock of another Person, or has had its stock distributed by another Person, in
a transaction purported or intended to be governed in whole or in part by
Section 355 or 361 of the Code.

            (l) Except as set forth on Schedule 3.14 or as would not be
reasonably expected to have a Material Adverse Effect, (i) neither AHS nor any
of the AHS Subsidiaries is a party to any joint venture, partnership or other
arrangement or contract that could be treated as a partnership for federal
income tax purposes; and (ii) no business entity in which AHS or any of the AHS
Subsidiaries owns an equity interest has made any election pursuant to Treasury
Regulation Section 301.7701-3.

      3.15 Insurance. Schedule 3.15 includes a list of all material insurance
policies maintained by or for the benefit of any Acquired Entity, including fire
and extended coverage and casualty, liability and other forms of insurance.
Seller shall keep such insurance or comparable insurance in full force and
effect until the Effective Time. To Seller's Knowledge, none of the Acquired
Entities has received notice from any insurance carrier that any insurance
policy will be canceled or that coverage thereunder will be reduced or
eliminated.

      3.16 Intellectual Property. Except as set forth in Schedule 3.16, each
Acquired Entity owns or has the right to use (and following the Closing will
continue to own or have the right to use) all patents, trademarks, trade names,
service marks, trade secrets, copyrights and other intellectual property rights
and licenses as are necessary to conduct its business as currently conducted
(the "Intellectual Property"), free of all Liens except Permitted Liens and
Liens under the Credit Agreement. Except as set forth in Schedule 3.16, (a) to
the Knowledge of Seller, no infringement exists by any of the Acquired Entities
on the intellectual property rights of any other Person that results in any way
from the operations of the businesses of the Acquired Entities, except such
infringements which, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, and (b) there has been
no notice for a Claim against any of the Acquired Entities that its operations,
activities or business infringe any intellectual property of any other Person.
Except as set forth in Schedule 3.16, (i) no Court Orders or proceedings are
pending, or to the Knowledge of Seller, threatened, against any of the Acquired
Entities that challenge the validity of, or such Acquired Entity's ownership of
or right to use, any of the Intellectual Property, and (ii) to the Knowledge of
Seller, there is no infringing use of any of the Intellectual Property owned by
any Acquired Entity by any other Person.

      3.17 Compliance with Laws. The Acquired Entities hold all material Permits
applicable to their respective businesses required by applicable Law (the
"Company Permits"). The Acquired Entities are in compliance with the terms of
the Company Permits, except for such failures to comply which, either
individually or in the aggregate, would not have a Material Adverse Effect.
Except as set forth in Schedule 3.17, the Acquired Entities are in compliance
with all Laws of any Governmental Authority, except where the failure to comply,
either individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. Except as set forth in Schedule

                                       21



3.17, to the Knowledge of Seller, there is no threatened suspension,
cancellation or termination of any Company Permits.

      3.18 Environmental Matters. Except for such matters as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect:

            (a) The operations of each of the Acquired Entities have been in
compliance with the Environmental Laws, which compliance includes but is not
limited to the possession by each of the Acquired Entities of all permits and
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof.

            (b) Each of the Acquired Entities has not treated, stored, managed,
disposed of, transported, handled, released, or used any Materials of
Environmental Concern except in the ordinary course of its business, and in
compliance with all Environmental Laws.

            (c) There are no Environmental Claims pending or, to the Knowledge
of Seller or any of the Acquired Entities, threatened against any of the
Acquired Entities.

            (d) There are no off-site locations where any of the Acquired
Entities has stored, disposed or arranged for the disposal of Materials of
Environmental Concern except as permitted by applicable law, and none of the
Acquired Entities has been notified in writing that it is a potentially
responsible party at any such location under any Environmental Laws.

            (e) None of the Acquired Entities has assumed or undertaken any
corrective, investigatory or remedial obligation of any other Person relating to
any Environmental Law.

            (f) Except as set forth in Schedule 3.18, (i) there are no
underground storage tanks located on property owned, leased or operated by any
of the Acquired Entities; (ii) to Seller's Knowledge, there is no
asbestos-containing material (as defined under Environmental Laws) contained in
or forming part of any building, building component, structure or office space
owned, leased or operated by any of the Acquired Entities; and (iii) to Seller's
Knowledge, there are no polychlorinated biphenyls ("PCBs") or PCB-containing
items contained in or forming part of any building, building component,
structure or office space owned, leased or operated by any of the Acquired
Entities, except as permitted by applicable Law.

      3.19 Books and Records. The Books and Records of the Acquired Entities are
complete and correct in all material respects and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The records contained in the minute books
of the Acquired Entities are accurate in all material respects.

      3.20 No Material Adverse Change. Since the Balance Sheet Date, there has
not been any change in the business, assets, condition (financial or otherwise)
or results of operations of the Acquired Entities that would reasonably be
expected to result in a Material Adverse Effect.

      3.21 Brokers. Except for Banc of America Securities LLC, neither Seller
nor any of its subsidiaries (including any of the Acquired Entities) has paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.

      3.22 HIPAA Matters.

            (a) Each entity (other than an Excluded Subsidiary) owned or
controlled by an Acquired Entity that is a health plan, healthcare clearinghouse
or healthcare provider that

                                       22



transmits any health information in electronic form in connection with a
Transaction (as defined in the Federal Transaction Regulations), as such terms
are defined in the Federal Privacy Regulations (collectively, the "Covered
Entities") is in compliance in all material respects with and has not violated
in any material respect the administrative simplification section of the Health
Insurance Portability and Accountability Act of 1996, as codified at 42 U.S.C.
Sections 1320d through d-8 (collectively, "HIPAA"), the regulations contained in
45 C.F.R. Parts 160 and 164, Subparts A and E, as amended (collectively, the
"Federal Privacy Regulations"), the regulations contained in 45 C.F.R. Parts 160
and 162, as amended (collectively, the "Federal Transaction Regulations") or
applicable state privacy laws.

            (b) A complete and accurate list of all Covered Entities and each
Organized Health Care Arrangement (as defined in the Federal Privacy
Regulations) in which a Covered Entity participates is attached hereto as
Schedule 3.22(b)(A). Complete and accurate copies of each Covered Entity's
policies relating to the privacy of its patients Protected Health Information
(as defined in the Federal Privacy Regulations) are attached hereto as Schedule
3.22(b)(B). Each such policy relating to the privacy of patients Protected
Health Information complies with the Federal Privacy Regulations and applicable
state privacy laws, except where noncompliance, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
An accurate copy of each Covered Entity's privacy notice and any policy relating
thereto, or the most recent draft thereof, has been furnished to Purchaser.

            (c) Complete and accurate copies of all agreements (collectively,
"Business Associate Agreements") between a Covered Entity and a Business
Associate (as defined in the Federal Privacy Regulations), together with a
complete and accurate summary of the terms and conditions of any oral
arrangements with Business Associates, have been furnished to Purchaser. Neither
Seller nor any Covered Entity is aware of any breach by a Business Associate of
any Business Associate Agreement or any violation by a Business Associate of
HIPAA, the Federal Transaction Regulations, or the Federal Privacy Regulations,
except such breaches or violations which, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

            (d) To Seller's Knowledge, no patient has filed a HIPAA related
complaint with Seller, any of the Acquired Entities or any Governmental
Authority.

      3.23 Medical Waste. Except as disclosed on Schedule 3.23, the operations
of the Acquired Entities have been in compliance with the Medical Waste Laws,
except where failure to be in compliance would not reasonably be expected to
have a Material Adverse Effect.

      3.24 Certificates of Need. Except as set forth on Schedule 3.24 hereto, no
application for any Certificate of Need, Exemption Certificate (each as defined
below) or declaratory ruling has been made by any Acquired Entity with the
appropriate state agency or other applicable agency that is currently pending or
open before such agency, and no such application (collectively, the
"Applications") filed by any Acquired Entity within the past three (3) years has
been ultimately denied by any Governmental Authority or withdrawn by any
Acquired Entity. Except as set forth on Schedule 3.24 hereto, no Acquired Entity
has had any Applications pending or any approved Applications that relate to
projects not yet completed. Each Acquired Entity has properly filed all required
Applications which are complete and correct in all material respects with
respect to any and all material improvements, projects, changes in services,
zoning requirements, construction and equipment purchases, and other changes for
which approval is required under any applicable federal or state Law. As used
herein "Certificate of Need" means a written statement issued by the appropriate
state agency evidencing community need for a new, converted, expanded or
otherwise significantly modified health care facility, health service or
hospice, and "Exemption Certificate"

                                       23



means a written statement from the appropriate state agency stating that a
health care project is not subject to the Certificate of Need requirements under
applicable state Law.

      3.25 Medicare Participation; Accreditation. Except as set forth on
Schedule 3.25, each facility of the Acquired Entities is certified for
participation and reimbursement in the Medicare, Medicaid and TRICARE programs
(the "Programs") and each Acquired Entity has a provider agreement with each
such Program (the "Provider Agreements"). Except as does not have a Material
Adverse Effect, each facility of the Acquired Entities is in compliance with the
conditions of participation of the Programs and with the terms, conditions and
provisions of the Provider Agreements. The Provider Agreements are each in full
force and effect, and Seller has no Knowledge of any fact or circumstance that
would cause any such Provider Agreement not to remain in force or be renewed on
and after Closing. Attached hereto as Schedule 3.25 is a complete list of all
Medicaid and Medicare provider numbers (the "Provider Numbers") in the name of
an Acquired Entity or a facility owned by an Acquired Entity or as otherwise
specified, which an Acquired Entity is currently using in its operations and
excluding any Medicaid and Medicare provider numbers for facilities that were
sold or closed by an Acquired Entity prior to the date of the Original
Agreement. Each facility of the Acquired Entities is duly accredited, with all
Type I recommendations removed, by the Joint Commission on Accreditation of
Healthcare Organizations ("JCAHO"). Copies of the two most recent accreditation
survey reports from JCAHO pertaining to each facility of the Acquired Entities
have been or will be made available to Purchaser. Except as set forth in
Schedule 3.25, since the date of its most recent JCAHO survey, none of the
Acquired Entities has made any changes in policy or operations that it believes
would cause any affected facility to lose such accreditation or to be denied
participation in the Programs. Except as set forth on Schedule 3.25, to Seller's
Knowledge, there is no proceeding, investigation or survey pending or
threatened, involving any of the Programs or any other third party payor
programs, with respect to the Acquired Entities and Seller has no reason to
believe that any such investigations or surveys are pending, threatened, or
imminent.

      3.26 Compliance Program. The Acquired Entities have provided to Purchaser
a copy of their current compliance program materials. Except as set forth on
Schedule 3.26, neither Seller nor any Acquired Entity (a) is a party to a
Corporate Integrity Agreement with the Office of Inspector General of the
Department of Health and Human Services, (b) has reporting obligations pursuant
to any settlement agreement entered into with any Governmental Authority, (c) to
Seller's Knowledge, has been the subject of any government payor program
investigation conducted by any Governmental Authority, (d) to Seller's
Knowledge, has been a defendant in any qui tam/False Claims Act or similar
litigation and (e) has been served with or received any search warrant,
subpoena, civil investigative demand, contact letter, or, to Seller's Knowledge,
telephone or personal contact by or from any federal or state enforcement
agency, except in connection with medical services provided to third parties who
may be defendants or the subject of investigation into conduct unrelated to the
operation of the facilities of the Acquired Entities or any other health care
businesses conducted by an Acquired Entity, or except where the receipt of such
would not reasonably be expected to have a Material Adverse Effect. For purposes
of this Agreement, the term "compliance program" refers to provider programs of
the type described in the Compliance Program Guidance published by the Office of
Inspector General of the Department of Health and Human Services.

      3.27 Regulatory Compliance. Except to the extent permitted by applicable
Law, no Acquired Entity, nor to Seller's Knowledge, any director, officer or
employee of an Acquired Entity, nor any agent acting on behalf of or for the
benefit of any of the foregoing, has directly or indirectly: (i) offered, paid
or received any remuneration, in cash or in kind, to, or made any financial
arrangements, with any past, present or potential customers, past or present
suppliers, patients, medical staff members, contractors or third party payors of
an Acquired Entity in exchange for business or payments from such Persons; (ii)
given or agreed to give, received or agreed to receive, or is aware that there
has been made or that there is any agreement to make, any gift or gratuitous

                                       24



payment of any kind, nature or description (whether in money, property or
services) to any customer or potential customer, supplier or potential supplier,
contractor, third party payor or any other Person in exchange for business or
payments; (iii) made or agreed to make, or is aware that there has been made or
that there is any agreement to make, any contribution, payment or gift of funds
or property to, or for the private use of, any governmental official, employee
or agent where either the contribution, payment or gift or the purpose of such
contribution, payment or gift is or was illegal under any Law of the United
States or under the Laws of any Governmental Authority having jurisdiction over
such payment, contribution or gift; (iv) established or maintained any
unrecorded fund or asset for any improper purpose or made any misleading, false,
or artificial entries on any of its books or records for any reason; (v) made,
or agreed to make, or is aware that there has been made or that there is any
agreement to make, any improper payment to any Person; (vi) made any payment for
or agreed to make any payment for any goods, services, or property in excess of
fair market value; or (vii) committed a violation of any Law, specifically
including, but not limited to, Medicare and Medicaid fraud and abuse provisions
of the Social Security Act, including any activity which is prohibited under (A)
the Federal Anti-kickback Statute, 42 U.S.C. Section 1320a-7b et seq.; (B) the
physician self-referred provisions of the Stark Law (42 U.S.C. Section 1395nn)
or the regulations thereunder; (C) the False Claims Act (31 U.S.C. Section
3729); (D) the Civil Monetary Penalties Law (42 U.S.C. Sections 1320a-7a); (E)
Mail and Wire Fraud (18 U.S.C. Sections 1341-1343); (F) False Statements
Relating to Health Care Matters (18 U.S.C. Section 1035); and (G) Health Care
Fraud (18 U.S.C. Section 1347) or regulations related to any of the above (or
related state and local fraud and abuse statutes or regulations), except for
such activities as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

      3.28 Medical Staff Matters. Seller has provided or will provide to
Purchaser true, correct, and complete copies of the bylaws and rules and
regulations of the medical staff of each facility of the Acquired Entities. With
regard to the medical staff of each facility of the Acquired Entities and except
as set forth on Schedule 3.28 hereto, there are no pending or, to Seller's
Knowledge, threatened disputes with applicants, staff members or health
professional affiliates and all appeal periods in respect of any medical staff
member or applicant against whom an adverse action has been taken have expired.
The Acquired Entities have delivered to Purchaser a written disclosure
containing a brief general description of all adverse actions taken in the six
(6) months prior to the date of the Original Agreement against medical staff
members or applicants which could result in claims or actions against an
Acquired Entity. Except as set forth on Schedule 3.28, (i) no employee or
independent contractor of an Acquired Entity (whether an individual or entity),
or any member of an Acquired Entity's medical staff has been excluded from
participating in any federal health care program (as defined in 42 U.S.C.
Section 1320a-7b(f)) during the last five (5) years, nor to Seller's Knowledge
is any such exclusion threatened or pending and (ii) none of the officers,
directors, agents or managing employees (as such term is defined in 42 U.S.C.
Section 1320a-5(b)) of an Acquired Entity, has been excluded from Medicare or
any federal health care program (as defined in 42 U.S.C. Section 1320a-7b(f)) or
been subject to sanction pursuant to 42 U.S.C. Section 1320a-7a or 1320a-8 or
been convicted of a crime described at 42 U.S.C. Section 1320a-7b, nor to
Seller's Knowledge is any such exclusion, sanction or conviction threatened or
pending. No Acquired Entity has been excluded from participating in any federal
health care program (as defined in 42 U.S.C. Section 1320a-7b(f)), nor to
Seller's Knowledge is any such exclusion threatened or pending. No Acquired
Entity has been convicted of a criminal offense related to the provision of
health care services.

      3.29 Third Party Payor Cost Reports. Each Acquired Entity duly filed in a
timely manner all required cost reports for all the fiscal years through and
including the fiscal year ended December 31, 2003. The required cost reports for
the fiscal year ended December 31, 2004 will be filed on or before their due
date, including any extensions thereof. Except as set forth on Schedule 3.29,
all of the cost reports filed by each Acquired Entity accurately reflect in the
information required to be included thereon and do not claim, and no Acquired
Entity has received, reimbursement in any amount in excess of the amounts
allowed by applicable Law or any applicable agreement, except

                                       25



where the receipt of such reimbursement would not reasonably be expected to
result in a Material Adverse Effect. Schedule 3.29 attached hereto accurately
indicates which cost reports have not been audited and finally settled and a
brief description of any and all notices of program reimbursement, proposed or
pending audit adjustments, disallowances, and any and all other unresolved
claims or disputes in respect of the cost reports. Except as set forth on
Schedule 3.29 and to the Knowledge of Seller, there are no facts or
circumstances which give rise to any disallowance under any such cost reports
which would reasonably be expected to result in a Material Adverse Effect.

      3.30 Reimbursement. Except as set forth on Schedule 3.30, all billing
practices of each Acquired Entity with respect to all third party payors,
including the Programs and private insurance companies, have been in compliance
with all applicable laws, regulations and policies of such third party payors,
private insurance companies, and the Programs, except as would not reasonably be
expected to have a Material Adverse Effect. To Seller's Knowledge, all claims,
returns, invoices and other forms made by the Acquired Entities to Medicare,
Medicaid or any other third party payor are true, complete, correct and accurate
in all material respects. No deficiency in any such claims, returns or other
filings, including claims for overpayments, setoff or recoupments, or
deficiencies for late filings, has been asserted or, to the Knowledge of Seller,
threatened by any Governmental Authority or any other third party payor, other
than medical or claim reviews arising in the ordinary course of business, and,
to the Knowledge of Seller, there is no basis for any such claims or
deficiencies. Except as set forth in Schedule 3.30, to Seller's Knowledge, no
Acquired Entity within the prior five (5) years has been subject to any audit,
investigation, monitoring or other form of review by any Governmental Authority
based upon an alleged improper activity. No Acquired Entity has billed or
received any payment or reimbursement in excess of amounts allowed by Law,
except where the receipt of such reimbursement would not reasonably be expected
to result in a Material Adverse Effect. There is no proceeding, investigation
(except for medical reviews or claim reviews in the ordinary course of
business), pending or, to the Knowledge of Seller, threatened against Seller or
the Acquired Entities, involving any of the Programs, or any other third party
payor programs. Except as set forth in Schedule 3.30, the Acquired Entities are
not currently under focused medical review or the subject of any probe audits by
the Centers for Medicare and Medicaid Services or its contractors and, to the
Knowledge of Seller, no such actions have been threatened.

      3.31 Statutory Funds. None of the assets of the Acquired Entities are
subject to any liability to which Purchaser may become obligated in respect of
amounts received by the Acquired Entities for the purchase or improvements of
the assets or any part thereof under restricted or conditioned grants or
donations, including monies received under the Public Health Laws.

      3.32 Investment Representations.

            (a) Seller is acquiring the Purchaser Shares for its own account.

            (b) Seller has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
purchasing the Purchaser Shares and to understand the risks of, and other
considerations relating to, its purchase of the Purchaser Shares.

            (c) Seller is aware that as of the Closing Date, the Purchaser
Shares will not have been registered under the Securities Act or any state's
securities laws. Seller further understands that the certificates representing
the Purchaser Shares will include an appropriate legend to the effect that such
securities have not been registered under the Securities Act or any state's
securities laws and that such securities may not be sold or transferred except
in compliance with the Securities Act and applicable state securities laws.

      3.33 Controlled Substances. To Seller's Knowledge, none of the employees,
or persons who provide professional services under agreements with Seller, has
engaged in any activities which

                                       26



are prohibited under the federal Controlled Substances Act, 21 U.S.C. Section
801 et seq. or the regulations promulgated pursuant to such statute or any
related state or local statutes or regulations concerning the dispensing and
sale of controlled substances.

                                   ARTICLE IV
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

      Purchaser represents and warrants to Seller as of the date of the Original
Agreement (and with respect to the representations and warranties set forth in
Sections 4.1. 4.2 and 4.4 as of the date hereof) as follows:

      4.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. Purchaser
is duly qualified or licensed to transact business and is in good standing in
all jurisdictions in which it conducts business. Purchaser has the corporate
power and full authority and legal capacity to execute and deliver this
Agreement and all other documents or agreements to be executed and delivered by
it and to consummate the transactions contemplated hereby or thereby.

      4.2 Corporate Authorization.

            (a) The execution, delivery and performance by Purchaser of this
Agreement and the other agreements to be entered into by Purchaser pursuant to
this Agreement, and the consummation by Purchaser of the transactions
contemplated hereby and thereby are within Purchaser's corporate powers, are not
in contravention of the terms of Purchaser's Constituent Documents, and have
been duly authorized and approved by the board of directors of Purchaser. No
other corporate proceedings on the part of Purchaser are necessary to authorize
Purchaser's execution, delivery and performance of this Agreement or the other
agreements to be entered into by Purchaser pursuant to this Agreement.

            (b) This Agreement has been duly and validly executed and delivered
by Purchaser, and as of the Closing, the other agreements to be entered into by
Purchaser pursuant to the terms of this Agreement will have been duly and
validly executed and delivered by Purchaser. This Agreement constitutes, and
upon their execution and delivery, such other agreements will constitute, the
legal, valid and binding obligations of Purchaser, enforceable against Purchaser
in accordance with their respective terms (assuming the valid authorization,
execution and delivery hereof and thereof by Seller, and any other unaffiliated
entity that is a party thereto).

      4.3 Capitalization. The authorized capital stock of Purchaser consists of
48,000,000 shares of common stock, $.01 par value per share, of which 20,496,730
shares are issued and outstanding (the "Purchaser Common Stock") and 6,000,000
shares of preferred stock, $.01 par value per share, of which no shares are
issued and outstanding. The issued and outstanding shares of Purchaser Common
Stock are, and the Purchaser Shares when issued in accordance with this
Agreement shall be, duly authorized, validly issued, fully paid and
non-assessable and issued in compliance with all applicable federal and state
securities Laws.

      4.4 No Conflicting Agreements; Consents. Neither the execution and
delivery of this Agreement or any of the other agreements to be entered into by
Purchaser pursuant to this Agreement nor the consummation of any of the
transactions contemplated hereby or thereby will:

            (a) violate, conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default under (i) the Constituent
Documents of Purchaser or any subsidiary thereof, (ii) any Contract
(substituting the term "Purchaser or one its subsidiaries" for the phrase
"Acquired

                                       27



Entities" in the definition thereof), except such violations, conflicts,
breaches or defaults which, either individually or in the aggregate, would not
materially impair the ability of Purchaser to perform its obligations hereunder
or under the other agreements contemplated hereby to be entered into by
Purchaser or would not prevent the consummation of the transactions contemplated
hereby or thereby, (iii) any Court Order to which Purchaser or one of its
subsidiaries is a party or by which Purchaser is bound, or (iv) any requirements
of Law affecting Purchaser or one of its subsidiaries, except such violations,
conflicts, breaches or defaults of such requirements of Laws which, either
individually or in the aggregate, would not materially impair the ability of
Purchaser to perform its obligations hereunder or under the other agreements
contemplated hereby to be entered into by Purchaser or which would not prevent
the consummation of the transactions contemplated hereby or thereby; or

            (b) require a permit from, the approval, consent or authorization
of, or the making by Purchaser or one its subsidiaries of any declaration,
filing or registration with, any Governmental Authority, except as provided in
Section 5.1 or Section 6.2 and except for such approvals, consents,
authorizations, declarations, filings or registrations, the failure of which to
be obtained or made would not, either individually or in the aggregate,
materially impair the ability of Purchaser to perform its obligations hereunder
or under the other agreements contemplated hereby to be entered into by
Purchaser or prevent the consummation of the transactions contemplated hereby or
thereby.

      4.5 Legal Proceedings, etc. There are no actions, suits or proceedings
pending or, to the Knowledge of Purchaser, threatened against Purchaser or any
of its subsidiaries which, either individually or in the aggregate, would
materially impair the ability of Purchaser to perform its obligations hereunder
or under the other agreements contemplated hereby to be entered into by
Purchaser or could reasonably be expected to prevent the consummation of the
transactions contemplated hereby or thereby.

      4.6 Brokers. Except for Citigroup Global Markets Inc., Purchaser has not
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.

      4.7 Investment Representations.

            (a) Purchaser is acquiring the AHS Shares for its own account and
not with a view to the distribution thereof within the meaning of the Securities
Act.

            (b) Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of
purchasing the AHS Shares and to understand the risks of, and other
considerations relating to, its purchase of the AHS Shares.

            (c) Purchaser is aware that as of the Closing Date, the AHS Shares
will not have been registered under the Securities Act or any state's securities
laws. Purchaser further understands that the certificates representing the AHS
Shares will include an appropriate legend to the effect that such securities
have not been registered under the Securities Act or any state's securities laws
and that such securities may not be sold or transferred except in compliance
with the Securities Act and applicable state securities laws.

      4.8 SEC Filings; Financial Statements.

            (a) Purchaser has timely filed all SEC documents required to be
filed by Purchaser since December 31, 2002 (together with all such SEC documents
filed, whether or not required to be filed, the "Purchaser SEC Filings"). The
Purchaser SEC Filings (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Laws and other applicable
Laws and (ii) did not, at the time they were filed (or, if amended or superseded
by a filing

                                       28



prior to the date of this Agreement, then on the date of such filing or, in the
case of registration statements, at the effective date thereof) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in such Purchaser SEC Filings or necessary in order to make the
statements in such Purchaser SEC Filings, in light of the circumstances under
which they were made, not misleading.

            (b) Each of the Purchaser financial statements (including, in each
case, any related notes) contained in the Purchaser SEC Filings, including any
Purchaser SEC Filings filed after the date of the Original Agreement until the
Effective Time (the "Purchaser Financial Statements") complied in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited interim statements, as
permitted by Form 10-Q of the SEC), and fairly presented in all material
respects the consolidated financial position of Purchaser and the Purchaser
subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments.

            (c) Purchaser maintains internal accounting controls that provide
reasonable assurance that (i) transactions are executed in accordance with
management's authorization, (ii) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (iii) access to its assets is permitted only in accordance with
management's authorization and (iv) the reported accountability for its assets
is compared with existing assets at reasonable intervals.

      4.9 Financing. Purchaser has delivered to Seller a true and correct copy
of the commitment letter executed by Lender and all other material agreements
with the Lender (with all fees redacted) with respect to financing the
transactions contemplated by this Agreement (together, the "Commitment Letter").
The Commitment Letter is in full force and effect and sets forth all of the
material agreements with the Lender with respect to the financing of the
transactions contemplated by this Agreement. Purchaser has the ability to obtain
funds in cash in amounts equal to the sum of the Seller Cash Payment and the
Loan Amount by means of the Commitment Letter or otherwise and will at the
Closing have immediately available funds in cash, which are sufficient to pay
the Seller Cash Payment and to consummate the transactions contemplated hereby.

      4.10 No Material Adverse Change. Since the Balance Sheet Date, there has
not been any change in the business, assets, condition (financial or otherwise)
or results of operations of Purchaser that would reasonably be expected to have
a Material Adverse Effect (substituting the term "Purchaser and its
subsidiaries" for the phrase "Acquired Entities" in the definition thereof).

                                    ARTICLE V
                               COVENANTS OF SELLER

      5.1 Regulatory Approvals. Seller will, and will cause the Acquired
Entities, to (a) use commercially reasonable efforts to obtain, as promptly as
practicable, each of the Permits that are or should be listed in Schedule 5.1
hereto (other than those that have been obtained prior to the date hereof), and
to make the filings and declarations with Governmental Authorities that are
listed in Schedule 5.1 hereto as promptly as practicable after the date hereof
(other than those that have been made prior to the date hereof), (b) provide
such information and communications to applicable Governmental Authorities that
are necessary in connection with the foregoing or in connection with Purchaser's
obtaining any Permits or making any filings or declarations with Governmental
Authorities in accordance with Section 6.2 as such Governmental Authorities or
Purchaser may

                                       29



reasonably request, and (c) cooperate with Purchaser in obtaining or making, as
soon as practicable, any Permits that Purchaser is required to obtain pursuant
to Section 6.2.

      5.2 Conduct Prior to the Closing. On or after the date hereof and prior to
the Closing, except (w) as disclosed in Schedule 5.2 hereto, (x) for the
Excluded Subsidiaries Sale Transaction, the Tender Offer and the Bank
Refinancing, (y) as consented to or approved in writing by an authorized officer
of Purchaser, such consent not to be unreasonably withheld or (z) as
contemplated by Section 2.2 or Section 5.10:

            (a) Seller shall not act or omit to act, and shall cause the
Acquired Entities not to act or omit to act, otherwise than in accordance with
the following:

                  (i) None of the Acquired Entities shall amend its Constituent
Documents;

                  (ii) No change shall be made in the number of shares of
authorized or issued capital stock (or other authorized capital) of any of the
Acquired Entities; nor shall any option, warrant, call, right, commitment or
agreement of any character be granted or made by any of the Acquired Entities
relating to the capital stock or other securities of such Acquired Entity; nor
shall any of the Acquired Entities issue, grant or sell any securities or
obligations convertible into or exchangeable for shares of its capital stock,
nor shall Seller enter into or permit any of the Acquired Entities to enter into
any other agreement with respect to any capital stock of such Acquired Entity or
any security convertible into or relating to any capital stock of any of the
Acquired Entities;

                  (iii) AHS shall not declare or pay dividends or make any other
distributions in respect of its capital stock;

                  (iv) Seller shall not make or change any election, change an
annual accounting period, adopt or change any accounting method, file any
amended Tax Return, enter into any closing agreement, settle any Tax claim or
assessment relating to the Acquired Entities, surrender any right to claim a
refund of Taxes, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment relating to the Acquired Entities, or
take any other similar action relating to the filing of any Tax Return or the
payment of any Tax, if such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action would have the effect of
materially increasing the Tax liability of the Acquired Entities for any period
ending after the Closing Date or decreasing any Tax attribute of the Acquired
Entities existing on the Closing Date; provided, however, that notwithstanding
this clause (iv), the Acquired Entities shall be permitted prior to Closing to
(x) file amended income tax returns for their 2002 and 2003 taxable years in
order to deduct certain transaction costs not previously deducted for such
years, (y) file for a quick refund of overpayments of estimated taxes made by
the Acquired Entities with respect to their 2004 taxable year and (z) carry back
net operating losses incurred by the Acquired Entities in their 2004 taxable
year to obtain a refund of taxes paid by the Acquired Entities with respect to
their 2002 taxable year (provided, that Seller shall submit a draft of any such
amended Tax Returns to Purchaser for its review and comment at least twenty (20)
days prior to the due date of such amended Tax Returns); and

                  (v) Except for borrowing arrangements incurred pursuant to
physician agreements entered into in the ordinary course of business, the
Acquired Entities will not (A) incur any indebtedness for borrowed money, other
than intercompany indebtedness that will be forgiven at the Closing in
accordance with Section 5.11 hereof; (B) assume, guaranty, endorse or otherwise
become liable or responsible for the obligations of any Person other than
another Acquired Entity; (C) make any loans, advances or capital contributions
to, or investments in, any other Person; or (D) make any commitments to do any
of the foregoing.

                                       30



            (b) Seller shall use commercially reasonable efforts not to act or
omit to act, and shall cause the Acquired Entities to use commercially
reasonable efforts not to act or omit to act, otherwise than in accordance with
the following:

                  (i) The business operations, activities and practices of the
Acquired Entities shall be conducted consistent with the ordinary course of
business and in conformity with past practice, including keeping the insurance
policies covering the Acquired Entities in full force and effect;

                  (ii) The respective business organizations of the Acquired
Entities shall be preserved intact, and the services of the present employees,
agents and representatives of the Acquired Entities shall be kept available for
Purchaser (except with respect to those employees or relationships terminated
for cause); and

                  (iii) The relationships with, and the goodwill of, the
customers and employees of the Acquired Entities and others having business
relations with the Acquired Entities shall be preserved.

      5.3 Employee Matters. Pending the Closing, except as otherwise consented
to or approved in writing by an authorized officer of Purchaser or as otherwise
provided in Schedule 5.3 hereto, Seller shall cause the Acquired Entities not to
(a) make any increase in the rate of compensation payable to any of the
employees of the Acquired Entities or the employees of AHS Management Company,
Inc. listed on Schedule 6.5 other than in the ordinary course of business
consistent with past practice, (b) increase severance or termination obligations
to any of such employees (other than as a result of compensation increases as
provided above and in compliance with applicable Law), (c) enter into any
employment, consulting, severance or termination agreement with any such
employees (other than physicians in the ordinary course of business), or (d)
except as provided in this Section 5.3, amend or terminate any Company Plan,
with respect to the benefits provided to such employees, or adopt or enter into
any new plan or agreement that would be a Company Plan if it existed on the date
of the Original Agreement. Notwithstanding clause (d) of the preceding sentence,
Seller reserves the right to amend each of the Company Plans and transfer the
plan sponsorship and administrative duties of the Company Plans to one of
Seller's Affiliates which is not one of the Acquired Entities and, to the extent
necessary, to make any other amendment that may be required to comply with ERISA
or the Code.

      5.4 Access by Purchaser. Subject to the terms of the Confidentiality
Agreement, between the date of this Agreement and the Closing Date, to the
extent permitted by Law, Seller will provide Purchaser and its counsel,
accountants and other representatives with reasonable access during normal
business hours, to all of the assets, properties, facilities, employees, agents,
accountants and Books and Records of any Acquired Entity and will furnish or
make available to Purchaser and such representatives during such period all such
information and data (including, without limitation, copies of the Contracts)
concerning the business, operations or affairs of any Acquired Entity in the
possession of Seller or any Acquired Entity or under its control as Purchaser or
such representatives reasonably may request; provided, however, such
investigation shall be coordinated through persons as may be designated in
writing by Seller for such purpose. Purchaser's right of access and inspection
shall be made in such a manner as not to interfere unreasonably with the
operation of the Acquired Entities. In this regard, Purchaser agrees that such
inspection shall not take place, and no employees or other personnel of the
Acquired Entities shall be contacted by Purchaser's representatives, without
first coordinating such contact or inspection with any of the officers of Seller
or their designee.

      5.5 Financial Statements and Reports. As soon as practicable following the
end of each month from and after the date hereof and prior to the Closing Date,
Seller will deliver to Purchaser

                                       31



true and complete copies of the unaudited balance sheets and the related
unaudited statements of income of the Company (on a consolidated basis) for each
month then ended, which financial statements shall have been prepared from and
in accordance with the Books and Records of the Company, and which shall fairly
present, in all material respects, the financial position and results of
operations of the Company, as of the date and for the period indicated.

      5.6 Closing Conditions. Seller will use its commercially reasonable
efforts to cause each of the conditions set forth in Article VII to be satisfied
as soon as reasonably practicable.

      5.7 Transfer of Assets. From and after the date hereof and until the
Closing, Seller shall cause the Acquired Entities not to sell or dispose of any
of their assets or properties without the prior written consent of Purchaser,
except for (a) dispositions contemplated by the Excluded Subsidiaries Sale
Transaction, or (b) dispositions or sales of inventory or obsolete equipment in
the ordinary course of business.

      5.8 Encumbrances. From and after the date hereof and until the Closing,
Seller shall not cause or permit the Acquired Entities to enter into or assume
any mortgage, pledge, conditional sale or other title retention agreement or
permit any Lien to attach upon any of the assets of any Acquired Entity, whether
now owned or hereafter acquired, except for Permitted Liens and Liens under the
Credit Agreement (which Liens shall be released at Closing).

      5.9 Condition of Assets. From and after the date hereof and until the
Closing, Seller shall use commercially reasonable efforts, and shall cause the
Acquired Entities to use commercially reasonable efforts, to maintain and keep
in good order, subject to ordinary wear and tear, all Real Property, inventory,
machinery, equipment and other tangible personal property owned or leased by the
Acquired Entities and used in connection with the operation of the businesses of
the Acquired Entities.

      5.10 Intercompany Accounts. Except as otherwise provided in this
Agreement, including without limitation Section 2.2, and except as otherwise
provided in Schedule 5.10, at or prior to the Closing, (a) all indebtedness and
other amounts (i) owed by Seller, or any of its Affiliates (other than an
Acquired Entity) to an Acquired Entity or (ii) owed by an Acquired Entity to
Seller or any of its Affiliates (other than an Acquired Entity) shall be paid,
canceled or eliminated (whether or not then due), and (b) all Liens relating to
any of the aforesaid indebtedness or amounts shall be canceled and shall be
discharged of record and (c) all arrangements calling for the transfer of funds
by any Acquired Entity in connection with Seller's cash management program shall
be terminated as of the Closing.

      5.11 Exclusivity. From the date hereof until the Closing, Seller agrees
that neither Seller nor any Affiliate thereof nor any of their respective
officers, directors or representatives will, (a) negotiate with any Persons
(other than Purchaser and its Affiliates) with respect to a sale, merger,
consolidation, reorganization or other business combination pursuant to which
the stock, assets or business of any Acquired Entity would be combined with that
of, or sold to, any acquirer or any other business or entity (except as
contemplated by Section 2.2); (b) solicit or respond to any Acquisition
Proposals; (c) furnish any information with respect to the business, activities,
operations, assets or liabilities of the Acquired Entities, or other similar
matters, to any Person whatsoever (other than to Lender and the lenders in
connection with the financing contemplated by the Commitment Letter or as
otherwise described in this Agreement) with respect to the foregoing; nor (d)
proceed or continue with negotiations in respect of the foregoing which may be
in progress as of the date of this Agreement.

      5.12 Resignations. Seller shall obtain the written resignations of all
directors and officers of the Acquired Entities as are requested by Purchaser
not less than ten (10) days in advance of the Closing, such resignations to be
effective as of the Effective Time. To the extent that any such officer

                                       32



or director is also an employee of an Acquired Entity, such resignation shall be
applicable only to the person's position as an officer or director and not to
such person's employment.

      5.13 Company Plans. Notwithstanding anything herein to the contrary,
Seller shall, upon request by Purchaser, at the Closing (i) fully vest the
employees of the Acquired Entities in their accounts in the Company Plans that
are intended to be tax-qualified plans described in Code Section 401(a), and
(ii) as soon as administratively feasible after Closing, transfer the accounts
of the employees of the Acquired Entities in the Company Plans that are intended
to qualify under section 125, 129, and 401(a) of the Code to corresponding plans
maintained by Purchaser or its Affiliates. Prior to the date of any such
transfer, Purchaser agrees to provide copies of any such recipient plans to the
plan administrator of each of the Company Plans involved in any such transfer
and to enter into a plan-to-plan transfer agreement with such plan
administrator, on terms reasonably acceptable to the plan administrator, and to
make reasonable assurances regarding the handling of the transferred funds in
such agreement in order to preserve the qualified status of the transferee plan
involved with such transfer. If Purchaser does not request such a transfer of
the accounts of the employees of the Acquired Entities in the Company Plans
intended to be qualified under Section 401(a), such employees shall have the
right to receive a distribution of their accounts in such Company Plans
following the Closing.

      5.14 Non-Competition Agreement. Seller shall execute and deliver to
Purchaser the Non-Competition Agreement in the form attached hereto as Exhibit
5.14 (the "Non-Competition Agreement").

      5.15 Notice of Certain Occurrences. Seller will notify Purchaser promptly
in writing of, and contemporaneously will provide Purchaser with true and
complete copies of any and all material information or documents relating to,
any event, transaction or circumstance occurring prior to or after the date
hereof of which Seller has Knowledge that causes or would cause any covenant or
agreement of Seller under this Agreement to be breached, or that renders or
would render untrue any representation or warranty of Seller contained in this
Agreement as if such representation or warranty were made on or as of the date
of such event, transaction or circumstance.

      5.16 Amendment of Management Agreements. Seller shall use its best efforts
to cause (i) that certain Management Services Agreement between BHC Management
Services of Louisiana, LLC and AHS Summit Hospital, LLC, dated January 6, 2004,
and (ii) that certain Management Services Agreement between BHC Management
Services of New Mexico, LLC and AHS Albuquerque Regional Medical Center, LLC,
dated February 4, 2003, to be amended to provide that such agreements will not
be terminated without cause by AHS Summit Hospital, LLC or AHS Albuquerque
Regional Medical Center, LLC, respectively; provided, however, that, in the
event Purchaser owns or controls a behavioral health care hospital or behavioral
residential treatment center located within fifty (50) miles of such facilities,
the agreements may be terminated without cause.

      5.17 Canyon Ridge Acquisition. In the event Seller consummates its
proposed acquisition of the assets of Canyon Ridge Hospital from Inland Mental
Health Associates, Inc. and the real property used in the operation of such
business, the Seller Cash Payment shall be increased, as directed by Seller
prior to the Closing Date, by the amount of consideration paid by Seller in such
acquisition, net of any assumed long-term debt, plus reasonable costs and fees
associated therewith, as set forth on Schedule 5.17.

                                       33



                                   ARTICLE VI
                   COVENANTS OF PURCHASER; CERTAIN ADDITIONAL
                            COVENANTS OF THE PARTIES

      6.1 Notice of Certain Occurrences. Purchaser will notify Seller promptly
in writing of, and contemporaneously will provide Seller with true and complete
copies of any and all material information or documents relating to, any event,
transaction or circumstance occurring prior to or after the date hereof of which
Purchaser has Knowledge that causes or would cause any covenant or agreement of
Purchaser under this Agreement to be breached, or that renders or would render
untrue any representation or warranty of Purchaser contained in this Agreement
as if such representation or warranty were made on or as of the date of such
event, transaction or circumstance.

      6.2 Regulatory Approvals. Purchaser will (a) use commercially reasonable
efforts to obtain, as promptly as practicable, all Permits that are or should be
listed in Schedule 6.2 hereto (other than those that have been obtained prior to
the date hereof) and to make the filings and declarations with Governmental
Authorities that are or should be listed in Schedule 6.2 hereto as promptly as
practicable after the date hereof (other than those that have been made prior to
the date hereof) (b) provide such information and communications to applicable
Governmental Authorities as is necessary in connection with the foregoing or in
connection with Seller's obtaining any of the Permits or making any filings or
declarations with Governmental Authorities in accordance with Section 5.1 as
such Governmental Authorities or Seller may reasonably request, and (c)
cooperate with Seller in obtaining or making, as soon as practicable, any
Permits that Seller is required to obtain or make pursuant to Section 5.1.

      6.3 Books and Records. Until six (6) months after the later to occur of
(a) the final adjudication of any dispute or investigation involving Taxes
arising out of the business, operations or affairs of the Acquired Entities
before the Effective Time, (b) the final adjudication of any matter for which
Seller may be required to indemnify or hold harmless Purchaser pursuant to the
terms of this Agreement, or (c) the running of applicable statutes of
limitations, Purchaser will maintain all Books and Records of the Acquired
Entities that relate to the pre-Closing business, operations, assets and
properties of the Acquired Entities, and shall give Seller full and complete
access during regular business hours to all such Books and Records to the
fullest extent reasonably required to enable Seller to satisfy its obligations
hereunder or under applicable Law. While as a general matter Purchaser will
maintain all Books and Records of the Acquired Entities, as an interim matter,
Seller shall maintain such Books and Records to the extent necessary to prepare
any Pre-Closing Period Tax Returns. In addition to the following, Purchaser
shall not, without ninety (90) days prior written notification (a "Destruction
Notice") to Seller, destroy any pre-Closing Books and Records of the Acquired
Entities. Following Seller's receipt of a Destruction Notice, if Seller advises
Purchaser in writing within such ninety (90) day period, Purchaser will promptly
deliver the applicable Books and Records to Seller.

      6.4 Closing Conditions. Purchaser will use its commercially reasonable
efforts to cause the conditions set forth in Article VIII hereof to be satisfied
as soon as reasonably practicable, but in all circumstances prior to July 1,
2005.

      6.5 Employee Matters.

            (a) As of the Effective Time, the employees of the Acquired Entities
shall continue employment with the Acquired Entities and the employees of AHS
Management Company, Inc. listed on Schedule 6.5 shall be offered employment by
Purchaser at the Acquired Entities in substantially similar positions and at a
substantially similar level of wages and/or salary and without having incurred a
termination of employment or separation from service; provided, however,

                                       34



such employees meet the pre-employment screening requirements of Purchaser.
Except as may be specifically required by applicable Law, the Acquired Entities
shall not be obligated to continue any employment relationship with any employee
for any specific period of time.

            (b) Purchaser shall provide the employees of the Acquired Entities
and the employees of AHS Management Company, Inc. listed on Schedule 6.5 who
commence employment with the Acquired Entities (each, an "Acquired Entity
Employee") with employee benefits that are comparable in the aggregate to those
provided to similarly situated employees of Purchaser (with similar situations
to be determined in light of each such Acquired Entity Employee's new
post-transaction responsibilities).

            (c) With respect to the benefits provided pursuant to this Section
6.5, (i) service accrued by Acquired Entity Employees during employment with an
Acquired Entity, Seller or an Affiliate of Seller (including any predecessor
entity) prior to the Effective Time shall be recognized for all purposes, except
for benefit accruals with respect to defined benefit pension plans, (ii) any and
all pre-existing condition limitations (to the extent such limitations did not
apply to a pre-existing condition under the Company Plan that provided
compensable benefits to such Acquired Entity Employee prior to the Closing Date)
and eligibility waiting periods under any group health plan shall be waived with
respect to such Acquired Entity Employees and their eligible dependents, and
(iii) Acquired Entity Employees shall be given credit for amounts paid under a
Company Plan during the applicable period for purposes of applying deductibles,
co-payments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the employee welfare plans of
Purchaser or an Affiliate of Purchaser in which any Acquired Entity Employee
becomes entitled to participate.

            (d) Seller or an Affiliate of Seller shall retain the Company Plans
and any and all obligations related to the Company Plans, including but not
limited to claims incurred but not paid prior to or as of the Closing Date. As
of the Closing Date, the employees of the Acquired Entities and the employees of
AHS Management Company, Inc. listed on Schedule 6.5 will cease to be eligible to
participate or accrue any additional benefits in any of the Company Plans.

      6.6 WARN Act Compliance; COBRA. Without limiting the generality of the
foregoing, Seller shall be solely responsible for any and all liability arising
directly or indirectly under the WARN Act, as a result of the transactions
contemplated by this Agreement that occur prior to the Effective Time. Purchaser
shall be solely responsible for compliance with the WARN Act following the
Effective Time. Seller acknowledges and agrees that Purchaser does not assume or
agree to discharge any liability of Seller under COBRA with respect to any
current or former employees (and their beneficiaries) of the Acquired Entities
or the employees of AHS Management Company, Inc. who are terminated prior to the
Effective Time. Seller shall retain any and all liabilities under Section 4980B
of the Code and Sections 601 through 608 of ERISA with respect to all current
and former employees (and their beneficiaries) of the Acquired Entities or the
employees of AHS Management Company, Inc. who are terminated prior to the
Effective Time. With respect to "qualifying events" (as described in Section
4980B(f)(3) of the Code) occurring after the Effective Time, Purchaser shall be
responsible for the COBRA obligations relating to employees of the AHS
Subsidiaries who continue employment following the Effective Time and the
employees of AHS Management Company, Inc. listed on Schedule 6.5 who commence
employment with Purchaser or the Acquired Entities pursuant to Section 6.5(a).

      6.7 Tax Matters.

            (a) Preparation and Filing of Tax Returns; Payment of Taxes.

                                       35



                  (i) Seller shall prepare (or cause to be prepared) all Tax
Returns required to be filed by the Acquired Entities for all taxable periods
that end on or prior to the Closing Date (a "Pre-Closing Period") (such Tax
Returns, the "Pre-Closing Period Tax Returns") (provided that Seller shall
submit a draft of any such Pre-Closing Period Tax Return required to be filed by
the Acquired Entities to Purchaser for its review and comment at least twenty
(20) days prior to the due date of such Pre-Closing Period Tax Return (taking
into account valid extensions)). In the event of any disagreement between Seller
and Purchaser as to the proper reporting of any item on any Pre-Closing Period
Tax Return, Seller and Purchaser (after good faith attempt to resolve such
disagreement) shall submit such disagreement to a mutually-agreed upon public
accounting firm whose determination as to the proper reporting of such item
shall be binding on Seller and Purchaser. Seller and Purchaser shall share
equally the costs of such public accounting firm. Seller shall timely file all
such Pre-Closing Period Tax Returns, provided, however, if any Pre-Closing
Period Tax Return is due after the Closing and Seller is not authorized to file
such Pre-Closing Period Tax Return by Law, Purchaser shall file (or cause to be
filed) such Pre-Closing Period Tax Return as prepared by Seller with the
appropriate Governmental Authorities. Seller shall pay all Taxes due and payable
in respect of all Pre-Closing Periods; provided, however, that if any
Pre-Closing Period Tax Return is due after the Closing and is to be filed (or
caused to be filed) by Purchaser, Seller shall pay (in immediately available
funds) all Taxes due and payable in respect of such Tax Return to Purchaser no
later than five (5) days prior to the due date of such Tax Return.

                  (ii) Purchaser shall prepare and file (or cause to be prepared
and filed), all Tax Returns required to be filed by the Acquired Entities for
all taxable periods beginning before the Closing Date and ending after the
Closing Date (a "Straddle Period") (such Tax Returns, the "Straddle Period Tax
Returns"). Purchaser shall deliver or cause to be delivered drafts of all
Straddle Period Tax Returns to Seller for its review and comment at least twenty
(20) days prior to the due date of any such Straddle Period Tax Return (taking
into account valid extensions) and notify Seller of Purchaser's calculation of
Seller's share of the Taxes of the Acquired Entities for any such Straddle
Periods. In the event of any disagreement between Seller and Purchaser as to the
proper reporting of any item on any Straddle Period Tax Return or calculation of
Taxes for such Straddle Period Tax Return, Seller and Purchaser (after a good
faith attempt to resolve such disagreement) shall submit such disagreement to a
mutually-agreed upon public accounting firm whose determination as to the proper
reporting of such item and calculation of Taxes shall be binding on Seller and
Purchaser. Seller and Purchaser shall share equally the costs of such public
accounting firm. No later than three (3) days prior to the filing of such
Straddle Period Tax Return, Seller shall pay to Purchaser (in immediately
available funds) the amount of Seller's share of the Tax liability for the
Straddle Period determined as of such time pursuant to this Section 6.7(a).

                  (iii) In order to apportion appropriately any Taxes relating
to a Straddle Period, the parties hereto shall, to the extent required or
permitted under applicable Law, treat the Closing Date as the last day of the
taxable year or period of the Acquired Entities for all Tax purposes. In any
case where applicable Law does not permit the Acquired Entities to treat the
Closing Date as the last day of the taxable year or period, the portion of any
Taxes that are allocable to the portion of the Straddle Period ending on the
Closing Date shall be: (A) in the case of Taxes that are imposed on a periodic
basis, deemed to be the amount of such Taxes for the entire period multiplied by
a fraction the numerator of which is the number of calendar days in the Straddle
Period ending on (and including) the Closing Date and the denominator of which
is the number of calendar days in the entire relevant Straddle Period; and (B)
in the case of Taxes not described in (A) (such as (x) Taxes that are based upon
or measured by income or receipts or imposed in connection with any sale or
other transfer or assignment of property (real or personal, tangible or
intangible) and (y) payroll and similar Taxes), deemed equal to the amount that
would be payable if the taxable year or period ended on the Closing Date;
provided, however, that Purchaser and Seller agree that any real property Taxes
of any Acquired Entity with respect to any Straddle Period shall be the sole
responsibility of Purchaser.

                                       36



            (b) Transfer Taxes. Notwithstanding any provision of this Agreement
to the contrary, Seller shall pay all sales, value added, use, privilege,
transfer, documentary, gains, stamp, duties and recording Taxes and fees
(including any penalties, interest or additions) (collectively, the "Transfer
Taxes") imposed upon any party incurred as a result of the Excluded Subsidiaries
Sale Transaction and Seller and Purchaser shall each pay one-half of the
Transfer Taxes imposed upon any party incurred as a result of the sale of the
AHS Shares. Seller and Purchaser agree to jointly prepare and timely file all
necessary Tax Returns and other documentation with respect to any Transfer
Taxes.

            (c) Post-Closing Audits and Other Procedures.

                  (i) If a notice of deficiency, proposed adjustment,
adjustment, assessment, audit, examination or other administrative or court
proceeding, suit, dispute or other claim (a "Tax Proceeding") is delivered or
sent to or commenced or initiated against any of the Acquired Entities by any
Governmental Authority with respect to Taxes for which Purchaser is entitled to
indemnification from Seller, Purchaser shall notify Seller in writing of the Tax
Proceeding, and shall include a copy of the relevant Tax Proceeding notice;
provided, that the failure by Purchaser to notify Seller of any such notice
shall not release Seller from its obligations under this Section 6.7 and Section
6.8, except to the extent that Seller is actually prejudiced by the failure of
Purchaser to notify.

                  (ii) With respect to Tax Proceedings of or relating to Taxes
of any of the Acquired Entities for any Pre-Closing Period, Seller may, upon
written notice to Purchaser at any time, assume and control the defense of such
Tax Proceeding at its own cost and expense and with its own counsel. If Seller
elects to assume the defense of any such Tax Proceeding, notwithstanding
anything to the contrary contained herein, (A) Seller shall not enter into any
settlement with respect to any such Tax Proceeding without Purchaser's prior
written consent, which consent shall not be unreasonably withheld; (B) Seller
shall keep Purchaser informed of all material developments and events relating
to such Tax Proceeding (including promptly forwarding copies to Purchaser of any
related correspondence sent to any Governmental Authority); (C) Purchaser shall
cooperate fully with Seller and its Affiliates in Seller's defense of such Tax
Proceeding; and (D) at its own cost and expense, Purchaser shall have the right
to participate in the defense of such Tax Proceeding only to the extent that
such participation is not in Seller's reasonable judgment detrimental to
Seller's position in such Tax Proceeding.

                  (iii) In connection with the contest of any Tax Proceeding
that relates to (A) any Straddle Period, (B) any taxable period beginning on or
after the Closing Date and (C) any Tax Proceeding that Seller has the ability to
control but does not timely elect to control pursuant to Section 6.7(c)(ii),
such Tax Proceeding shall be controlled by Purchaser (and Seller shall reimburse
Purchaser for reasonable out-of-pocket expenses incurred by Purchaser or its
Affiliates relating to a Tax Proceeding described in clause (C)), and Seller
agrees to cooperate fully with Purchaser and its Affiliates in pursuing such
contest. Nothing contained herein shall be construed as limiting Purchaser's
right to indemnification under Section 6.8.

                  (iv) Notwithstanding anything to the contrary in this
Agreement, the procedure for indemnification claims with regard to Taxes of or
relating to the Acquired Entities shall be governed exclusively by this Section
6.7 and Section 6.8.

            (d) Cooperation. Following the Closing, Seller, on the one hand, and
Purchaser and the Acquired Entities, on the other hand, agree to furnish or
cause to be furnished to each other or their respective representatives, upon
request, as promptly as practicable, such information and assistance (including
access to Books and Records) relating to the Acquired Entities as is reasonably
necessary for the preparation of any Tax Return, claim for refund, audit or
similar matter, or the

                                       37



prosecution or defense of any Tax Proceeding relating to any proposed adjustment
of Taxes. Purchaser, Seller, the Acquired Entities and their Affiliates shall
retain (or cause to be retained) all Books and Records with respect to Tax
matters pertinent to the Acquired Entities relating to any Pre-Closing Period,
Straddle Period or any taxable period beginning on the Closing Date until the
expiration of the relevant statutory period of limitations for the assessment of
Tax.

            (e) Termination of Tax Indemnification Agreements. Seller hereby
agrees and covenants that any and all Tax Indemnification Agreements that may
have been entered into by the Acquired Entities shall be terminated on or before
the Closing Date, and no payments to or from the Acquired Entities pursuant to
any such Tax Indemnification Agreement shall be made after such termination.

            (f) Tax Refunds. Any Tax refunds (including applicable interest
thereon) that are received by Purchaser or the Acquired Entities, and any
amounts credited against Taxes to which Purchaser or the Acquired Entities
become entitled, that relate to taxable periods or portions thereof ending on or
before the Closing Date shall be for the account of Seller, and Purchaser shall
notify Seller of any such refund or the amount of any such credit within ten
days after receipt or entitlement thereto and pay over same to Seller within ten
days after receipt or entitlement thereto. Any such refund or credit that
relates to a Straddle Period shall be allocated between the period of such
Straddle Period ending on the Closing Date and the period of such Straddle
Period beginning after the Closing Date in a manner consistent with the
principles for allocating Taxes between such periods set forth in Section
6.7(a)(iii). All Tax refunds (including applicable interest thereon) not
otherwise payable to the Seller under this Section 6.7(f) shall be for the
benefit of Purchaser and if received by or otherwise credited to the Seller or
any Affiliate thereof, the Seller shall notify Purchaser of any such Tax refund
or the amount of any such credit within ten days after receipt or entitlement
thereto and pay over same to Purchaser within ten days after receipt or
entitlement thereto. Purchaser agrees to file any Tax refund claim that Seller
reasonably requests Purchaser to file for any period or portion thereof ending
prior to the Closing Date, provided that Seller shall reimburse Purchaser for
the reasonable costs incurred by Purchaser to file any such claim. Specifically
and in the event that such refund claims are not filed prior to the Closing
Date, Seller agrees (x) to file for a refund of income taxes paid by the
Acquired Entities in their 2002 taxable year by carrying back any net operating
losses incurred by the Acquired Entities in their 2004 taxable year to their
2002 taxable year and (y) to file for a refund of estimated taxes overpaid by
the Acquired Entities with respect to their 2004 taxable year.

            (g) Consolidated Return Principles. The federal income Tax Returns
that include the Acquired Entities for the taxable year that ends on the Closing
Date and the taxable year that begins the day after the Closing Date shall be
prepared in accordance with Treasury Regulations Section 1.1502-76(b)(1)(ii)(A).
In addition, the Acquired Entities will incur certain expenses with respect to
the Tender Offer on the Closing Date, including the redemption premium that AHS
will pay to the holders of the Senior Subordinated Notes and fees to service
providers in connection with the Tender Offer (the "Tender Offer Expenses").
Purchaser and Seller agree that the Tender Offer Expenses shall be deducted on
the consolidated federal income Tax Return to be prepared by Seller with respect
to the short federal income taxable year of the Acquired Entities that will end
on and include the Closing Date, and neither Purchaser nor Seller shall take any
position for tax or financial reporting purposes that is inconsistent with the
deduction of the Tender Offer Expenses unless otherwise determined by a court of
competent jurisdiction whose determination is no longer subject to appeal or
further review (it being understood that Seller shall be responsible for
prosecuting and financing any contest relating to such deductibility after
receiving timely notice thereof from Purchaser, and that Purchaser shall be
released from its covenants under this sentence should Seller fail to do so).
Purchaser and Seller further agree that the Acquired Entities shall become
members of the federal income consolidated tax group of which Purchaser is the
common parent on the day after the Closing Date. To the extent applicable, any
state or local income Tax

                                       38



Returns shall be prepared in accordance with provisions comparable to Treasury
Regulations Section 1.1502-76(b)(1)(ii)(A) under state or local Law.

            (h) Survival. Notwithstanding anything to the contrary contained in
this Agreement, each of the provisions set forth in this Section 6.7 and Section
6.8 shall survive thirty (30) days after the expiration of the applicable
statute of limitations (taking into account all valid extensions) for the
applicable Taxes or Tax Return to which the provision relates; provided,
however, in the event notice of any claim for indemnification under this
Agreement shall have been given within the applicable survival period, the
provisions that are the subject of the indemnification claim shall survive with
respect to such claims until such time as such claim is finally resolved.

            (i) Net Operating Losses. Purchaser and Seller agree that (i) after
the Closing Date the Acquired Entities may have a certain amount of federal "net
operating losses" (within the meaning of Section 172(c) of the Code)
attributable to taxable periods ending on or before the Closing Date (the
"NOLs"); (ii) such NOLs will be carried back to Pre-Closing Periods of the
Acquired Entities to the extent possible under applicable Laws to secure a
refund of Taxes paid, or to reduce or eliminate Taxes otherwise payable, with
respect to such Pre-Closing Periods; (iii) to the extent that such NOLs cannot
be carried back to Pre-Closing Periods, such NOLs will be carried forward to
taxable periods beginning after the Closing Date and Purchaser shall utilize
such NOLs to the extent and as promptly as possible under applicable Laws; and
(iv) in the event that Purchaser or its Affiliates recognize a reduction in
federal Taxes with respect to the utilization of such NOLs for a taxable period
beginning after the Closing Date (a "Tax Benefit"): (A) Purchaser shall promptly
pay to Seller the lesser of the amount of such Tax Benefit or the sum of (x) any
federal Taxes paid by Seller or its Affiliates to any Governmental Authority or
to Purchaser or its Affiliates under Section 6.7(a) with respect to any
Pre-Closing Period or any Straddle Period and (y) any federal Tax
indemnification payments made by Seller or its Affiliates under Section 6.8; (B)
to the extent that the amount of such Tax Benefit exceeds the aggregate amount
of federal Taxes (or indemnification therefor) that Seller and its Affiliates
have paid under Sections 6.7(a) and 6.8, an amount equal to such excess may be
used to offset any future federal Tax liability (or indemnification therefor)
that Seller or its Affiliates may have under Section 6.7(a) or 6.8. Purchaser
will cooperate with Seller and will provide Seller with information as Seller
may reasonably require to determine whether Purchaser or its Affiliates have
recognized a Tax Benefit with respect to the NOLs. In the event of any
disagreement between Seller and Purchaser as to whether Purchaser or its
Affiliates have recognized a Tax Benefit, Seller and Purchaser (after a good
faith attempt to resolve such disagreement) shall submit such disagreement to a
mutually-agreed upon public accounting firm whose decision as to the existence
and amount of such Tax Benefit shall be binding on Seller and Purchaser. Seller
and Purchaser shall equally share the costs of such public accounting firm.

      6.8 Tax Indemnification. Seller shall indemnify, defend, and hold harmless
Purchaser from and against any and all Damages for: (i) Transfer Taxes required
to be paid by Seller pursuant to this Agreement; (ii) Taxes of or imposed upon
the Acquired Entities with respect to any Pre-Closing Periods, and for any
Straddle Periods but only with respect to the portion of such Straddle Period
ending on the Closing Date and as determined in the manner provided in Section
6.7 of this Agreement; (iii) Taxes imposed on any member of an affiliated,
consolidated, combined or unitary group of which any of the Acquired Entities
(or any predecessor of any Acquired Entity) is or was a member on or prior to
the Closing Date, including under Treasury Regulations Section 1.1502-6 (and
corresponding provisions of state, local, or foreign Law), for any taxable
period ending on or before, or that includes, the Closing Date, or as a
transferee or successor, pursuant to any Tax Indemnification Agreement, or
similar contract or arrangement, or otherwise; (iv) Taxes imposed on or related
or attributable to (A) the Excluded Assets, (B) the Excluded Subsidiaries, (C)
the Excluded Subsidiaries Sale Transaction or (D) the deduction of the Tender
Offer Expenses to the extent that the disallowance of such deduction of the
Tender Offer Expenses results in a Tax with respect to which Purchaser is
entitled to indemnification pursuant to clause (ii) of this Section 6.8 (it
being

                                       39



understood that this part (D) is intentionally duplicative of such clause (ii));
(v) any breach by Seller of any of the covenants and obligations contained in
Section 6.7 of this Agreement; and (vi) the breach or inaccuracy of the
representations and warranties set forth in Section 3.14 of this Agreement. All
amounts payable or to be paid under this Section 6.8 shall be paid by Seller in
immediately available funds within five (5) Business Days after the receipt of a
written request from Purchaser. The parties hereto agree to treat any payment
made pursuant to this Section 6.8 and Article IX as an adjustment to the
Purchase Price for all Tax purposes, except as required under applicable Law. In
no event shall the indemnities provided for in this Section 6.8 be subject to
the provisions of Article IX of this Agreement.

      6.9 Registration of Resale of Purchaser Shares. Within thirty (30) days
after the Closing Date, Purchaser shall file a Registration Statement on Form
S-3 (the "Registration Statement") with the SEC to register the offer and resale
of the Purchaser Shares. Purchaser shall use commercially reasonable efforts to
cause the Registration Statement to be declared effective by the SEC as soon as
reasonably practicable after filing, and in any event within ninety (90) days of
the Closing Date. In addition, Purchaser shall take commercially reasonable
efforts to keep the Registration Statement effective until Seller has sold or
distributed the Purchaser Shares. Purchaser shall also take any action required
to be taken under any applicable state securities laws in connection with the
issuance of the Purchaser Shares and the offer and resale by Seller thereof. The
Registration Statement shall be prepared, filed and maintained in accordance
with the terms and conditions specified in the Registration Rights Agreement to
be entered into between Seller and Purchaser on or prior to the Closing Date, in
substantially the form attached hereto as Exhibit 6.9 (the "Registration Rights
Agreement").

      6.10 Public Announcements. Purchaser and Seller will consult with each
other before issuing, and provide each other the opportunity to review, comment
upon and concur with, any press release or other public statements with respect
to the transactions contemplated by this Agreement and shall not issue any such
press release or make any such public statement prior to such consultation,
except as either party may determine is required by applicable Law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange.

      6.11 Consultative Process. From and after the date hereof and until the
Closing, Purchaser shall designate an individual or individuals whom Seller may
contact during normal business hours for the purpose of approving actions or
transactions for which the consent of Purchaser is required under this
Agreement. The written approval of a designated individual as contemplated in
this Section 6.11 shall constitute the consent of Purchaser to the transaction
or action so approved. Failure of a designated individual to respond within ten
(10) Business Days of receipt of a written request for such approval shall
constitute the consent of the Purchaser to the transaction or action in
question. Unless and until Purchaser gives written notice to Seller to the
contrary, such designated individuals shall be Brent Turner and Jack Polson,
each of whom shall be contacted by Seller as contemplated by this Section 6.11.

      6.12 Redemption of Untendered Notes. If any Untendered Notes exist
following the Closing, then on the Redemption Date, Purchaser shall cause AHS
to, pursuant to the second paragraph of Section 3.07(b) of the Indenture, redeem
all the Untendered Notes in accordance with the terms and procedures set forth
in Sections 3.01 through 3.05 of the Indenture and take any other action at
Seller's expense reasonably necessary to effect the complete discharge of the
obligations of AHS and the Guarantors under the Indenture (other than any
continuing obligations to the trustee thereunder that by their terms remain
outstanding following any such discharge). Seller agrees to reimburse Purchaser
for all of Purchaser's reasonable and documented out-of-pocket legal fees and
expenses and printing and mailing costs in connection with such redemption and
all fees and expenses of the trustee.

                                       40



                                   ARTICLE VII
                     CONDITIONS TO OBLIGATIONS OF PURCHASER

      Except as may be waived by Purchaser, the obligations of Purchaser to
purchase the AHS Shares and to consummate the transactions contemplated hereby
on the Closing Date shall be subject to the satisfaction on or prior to the
Closing Date of the following conditions:

      7.1 Representations and Warranties. The representations and warranties of
Seller set forth in this Agreement (i) to the extent qualified by Material
Adverse Effect shall be true and correct and (ii) to the extent not qualified by
Material Adverse Effect shall be true and correct in all material respects as
though made on and as of the Closing Date (except to the extent such
representations speak as of an earlier date, in which case as of such date.)

      7.2 Compliance with Agreement. On and as of the Closing Date, Seller and
AHS shall have performed and complied in all material respects with each
covenant and agreement required by this Agreement to be performed and complied
with by them on or before the Closing Date (and Seller and AHS shall have
complied in all material respects with such covenants between the date of the
Original Agreement and the date hereof to the extent Seller and AHS were bound
by such covenants during such period pursuant to the Original Agreement).

      7.3 Closing Certificates. Seller shall have delivered to Purchaser a
certificate, dated as of the Closing Date and signed on behalf of Seller and
AHS, respectively, by an authorized officer of each thereof, certifying (a) the
fulfillment of the conditions specified in Sections 7.1 and 7.2 hereof and (b)
that the Untendered Note Amount is the amount of the aggregate Redemption Price
for the Untendered Notes.

      7.4 Secretary's Certificates. At the Closing, Purchaser shall have
received copies of the following, in each case certified as of the Closing Date
by a Secretary or an Assistant Secretary of Seller and AHS, respectively:

            (a) resolutions of the respective managers or boards of directors of
Seller and AHS authorizing the execution, delivery and performance of this
Agreement and the other agreements that Seller or AHS is required to execute and
deliver pursuant to the terms of this Agreement; and

            (b) the signature and incumbency of the respective officers of
Seller and AHS authorized to execute and deliver this Agreement and the other
agreements and certificates that Seller or AHS is required to deliver on or
before the Closing Date pursuant to this Agreement.

      7.5 Opinion of Counsel. At the Closing, Purchaser shall have received an
opinion, dated the Closing Date, of Boult Cummings Conners & Berry, PLC, counsel
for Seller, as to matters for which opinions are customarily given in
transactions of this nature. Such opinion may include qualifications and
assumptions that are customary and appropriate with respect to the substance of
such opinion.

      7.6 Consents, Authorizations, Etc. All Permits that are or should be set
forth on Schedules 5.1 and 6.2 hereto that are required to be obtained or given
prior to the Closing shall have been obtained or given, and all applicable
waiting periods with respect thereto shall have expired.

      7.7 No Action or Proceeding. On the Closing Date, (a) no judgment, order
or decree of any court or other Governmental Authority restraining, enjoining or
otherwise preventing the consummation of this Agreement or the transactions
contemplated hereby shall be outstanding, and (b) no action, suit, investigation
or proceeding brought by any Governmental Authority shall be pending before any
court or other Governmental Authority to restrain, enjoin or otherwise prevent

                                       41



the consummation of this Agreement or the transactions contemplated hereby,
which action, suit, investigation or proceeding, in the reasonable opinion of
Purchaser, may result in a decision, ruling or finding that individually or in
the aggregate has materially impaired, or would reasonably be expected to
materially impair, the validity or enforceability of this Agreement, or on the
ability of Purchaser to perform its obligations under this Agreement.

      7.8 Constituent Documents. Seller shall have delivered to Purchaser true
and complete copies of the respective Constituent Documents of the Acquired
Entities.

      7.9 Resignation of Boards of Directors and Officers. Each then-current
officer and/or member of the board of directors of any of the Acquired Entities
as requested by Purchaser pursuant to Section 5.12 shall have tendered his or
her written resignation as an officer and/or director to the applicable Acquired
Entity, such resignations to be effective at or before the Effective Time.

      7.10 Good Standing Certificates. At the Closing, Seller shall have
delivered to Purchaser good standing certificates issued with respect to Seller,
AHS and each of the other Acquired Entities issued by the Secretary of State of
the relevant entity's state of incorporation or organization. Each such good
standing certificate shall be dated as of a date that is not more than twenty
(20) days prior to the Closing Date.

      7.11 Non-Imputation Endorsements. If Purchaser elects to obtain title
commitments for the issuance of title policies or endorsements on any of the
Real Property, Seller shall have delivered to the title company such affidavits,
a form of which is attached hereto as Exhibit 7.11, as may be reasonably
acceptable to Seller in order for the title company to issue non-imputation
endorsements.

      7.12 Termination of Guarantees. Except for guarantees pursuant to
physician agreements which have been entered into in the ordinary course of
business, all guarantees (other than guarantees under the Indenture which will
be released upon completion of the Tender Offer and/or the Redemption of any
Untendered Notes) executed by the Acquired Entities shall have been terminated.

      7.13 Non-Competition Agreement. Seller shall have executed and delivered
the Non-Competition Agreement to Purchaser.

      7.14 FIRPTA. Purchaser shall have received from Seller a copy of a
statement, dated not earlier than thirty (30) days before the Closing Date,
issued by Seller that complies with the requirements of Section 1.1445-2(c)(3)
of the Treasury Regulations and certifies that Seller is not a foreign person.

      7.15 Waiver of Conditions. Purchaser may waive any condition of this
Article VII to the extent permitted by applicable Law. Except as otherwise
provided herein, the consequences of any knowing waiver shall be (a) the
elimination of the waived condition as a valid basis for Purchaser to refuse to
close the transactions contemplated by this Agreement, and (b) the release of
Seller from any claim by Purchaser for resulting injuries and Damages with
respect to that waived condition.

                                  ARTICLE VIII
                       CONDITIONS TO OBLIGATIONS OF SELLER

      Except as may be waived in writing by Seller, the obligations of Seller to
consummate the transactions contemplated hereby on the Closing Date shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions:

                                       42



      8.1 Representations and Warranties. The representations and warranties of
Purchaser set forth in this Agreement shall be true and correct in all material
respects as though made on and as of the Closing Date (except to the extent such
representations speak as of an earlier date, in which case as of such date.)

      8.2 Compliance with Agreement. On and as of the Closing Date, Purchaser
shall have performed and complied in all material respects with each covenant
and agreement required by this Agreement to be performed and complied with by it
on or before the Closing Date (and Purchaser shall have complied in all material
respects with such covenants between the date of the Original Agreement and the
date hereof to the extent Purchaser was bound by such covenants during such
period pursuant to the Original Agreement).

      8.3 Closing Certificates. Purchaser shall have delivered to Seller a
certificate, dated as of the Closing Date and signed on behalf of Purchaser by
an authorized officer thereof, certifying the fulfillment of the conditions
specified in Sections 8.1 and 8.2 hereof.

      8.4 Secretary's Certificate. At the Closing, Seller shall have received
copies of the following, in each case certified as of the Closing Date by a
Secretary or an Assistant Secretary of Purchaser:

            (a) resolutions of the board of directors of Purchaser authorizing
the execution, delivery and performance of this Agreement and the other
agreements that Purchaser is required to execute and deliver pursuant to the
terms of this Agreement;

            (b) the signature and incumbency of the officers of Purchaser
authorized to execute and deliver this Agreement and the other agreements and
certificates that Purchaser is required to deliver on or before the Closing Date
pursuant to this Agreement.

      8.5 Opinion of Counsel. At the Closing, Seller shall have received an
opinion, dated the Closing Date, of Waller Lansden Dortch & Davis, PLLC, counsel
for Purchaser, as to matters for which opinions are customarily given in
transactions of this nature. Such opinion may include qualifications and
assumptions that are customary and appropriate with respect to the substance of
such opinion.

      8.6 Consents, Authorizations, Etc. All Permits that are or should be set
forth on Schedules 5.1 and 6.2 hereto that are required to be obtained or given
prior to the Closing shall have been obtained or given, and all applicable
waiting periods with respect thereto shall have expired.

      8.7 No Action or Proceeding. On the Closing Date, (a) no judgment, order
or decree of any court or other Governmental Authority restraining, enjoining or
otherwise preventing the consummation of this Agreement or the transactions
contemplated hereby shall be outstanding, and (b) no action, suit, investigation
or proceeding brought by any Governmental Authority shall be pending before any
court or other Governmental Authority or threatened by any Governmental
Authority to restrain, enjoin or otherwise prevent the consummation of this
Agreement or any of the transactions contemplated hereby, which action, suit,
investigation or proceeding, in the reasonable opinion of Seller, may result in
a decision, ruling or finding that individually or in the aggregate has
materially impaired, or would reasonably be expected to materially impair, the
validity or enforceability of this Agreement, or on the ability of Seller or AHS
to perform their respective obligations under this Agreement.

      8.8 Good Standing Certificate. At the Closing, Purchaser shall have
delivered to Seller a good standing certificate issued with respect to Purchaser
by the Secretary of State of Purchaser's

                                       43



state of incorporation. Such good standing certificate shall be dated as of a
date that is not more than twenty (20) days prior to the Closing Date.

      8.9 Registration Rights Agreement. Purchaser shall have executed and
delivered the Registration Rights Agreement to Seller.

      8.10 Tender Offer. Not less than a majority of the aggregate principal
amount of the Senior Subordinated Notes shall have been tendered in the Tender
Offer and the Indenture Amendments shall have been approved and become
effective.

      8.11 Waiver of Conditions. Seller may waive any conditions of this Article
VIII to the extent permitted by applicable Law. Except as otherwise provided
herein, the consequences of any knowing waiver shall be (a) the elimination of
the waived condition as a valid basis for Seller to refuse to close the
transactions contemplated by this Agreement, and (b) the release of Purchaser
from any claim by Seller for resulting injuries and Damages with respect to that
waived condition.

                                   ARTICLE IX
                                 INDEMNIFICATION

      9.1 Indemnification by Seller. Subject to the provisions of this Article
IX, Seller shall indemnify and hold harmless Purchaser, any Affiliate of
Purchaser, the respective officers, directors, stockholders, employees, agents
and representatives of Purchaser and its Affiliates, and each such Person's
respective successors and assigns (each, a "Purchaser Indemnitee") from and
after the Effective Time from and against any Damages incurred or suffered by
such Purchaser Indemnitee as a result of or arising from (a) any breach,
misrepresentation or inaccuracy in any of the representations and warranties
made herein by Seller, other than the representations and warranties contained
in Section 3.14, (b) any breach of any of the covenants or agreements made
herein by Seller, other than the covenants contained in Sections 6.7 and 6.8,
(c) any claims, actions, suits or other proceedings arising out of any of the
Excluded Liabilities and (d) any claims, actions, suits or other proceedings
arising out of the Excluded Subsidiaries Sale Transaction. The sole recourse of
a Purchaser Indemnitee for any and all Damages relating to or arising from a
breach of any of the representations, covenants or agreements contained in
Section 3.14 or Section 6.7 shall be controlled by the provisions of Section
6.8.

      9.2 Indemnification by Purchaser. Purchaser shall indemnify and hold
harmless Seller, any Affiliate of Seller, the respective officers, directors,
managers, members, employees, agents and representatives of Seller and their
respective Affiliates, and each such Person's respective successors and assigns
(each a "Seller Indemnitee") from and after the Effective Time from and against
any Damages incurred or suffered by such Seller Indemnitee as a result of or
arising from (a) any breach, misrepresentation or inaccuracy in any of the
representations and warranties made herein by Purchaser, (b) any breach of any
of the covenants or agreements made herein by Purchaser, (c) any claims,
actions, suits or other proceedings relating solely to the operations of the
Acquired Entities after the Effective Time and (d) any claims, actions, suits or
proceedings arising out of any post-Closing obligation or action on the part of
the Acquired Entities under any Contract which is not an Excluded Liability.

      9.3 Claims Procedures. In the case of any Damages for which
indemnification is sought hereunder, the party seeking indemnification (the
"Indemnitee") shall promptly notify the party from whom indemnification is
sought (the "Indemnifying Party") in writing of the existence and nature of such
Damages, as well as the claim, demand, action or proceeding, if any, out of
which the Damages arise (a "Claim"); provided, however, that no failure or delay
by the Indemnitee in the performance of the foregoing shall reduce or otherwise
affect the obligation of the Indemnifying Party to indemnify and hold the
Indemnitee harmless, except to the extent the Indemnitee's failure to give or
delay in

                                       44



giving the required notice materially impairs the Indemnifying Party's ability
to indemnify, defend or mitigate its Damages, in which case the Indemnifying
Party shall have no obligation to indemnify the Indemnitee to the extent of
Damages, if any, caused by such failure to give or delay in giving the required
notice. If such Damages arise out of a Claim by a third party, the Indemnitee
must give the Indemnifying Party a reasonable opportunity to defend the same or
prosecute such action to conclusion or settlement satisfactory to the
Indemnifying Party at the Indemnifying Party's sole cost and expense and with
counsel of its own selection, and the Indemnifying Party shall pay any resulting
settlements (including all associated Damages), satisfy any judgments or comply
with any decrees; provided, further, however, that the Indemnitee shall at all
times also have the right fully to participate in the defense at Indemnitee's
sole cost and expense so long as such participation occurs without hindering or
impairing the defense of the Indemnifying Party. Notwithstanding the foregoing,
without the prior written consent of the Indemnitee, the Indemnifying Party
shall not compromise or settle any Claim if (i) the terms thereof impose any
liability or obligations on the Indemnitee or (ii) the terms thereof fail to
include an unconditional general release of the Indemnitee with respect to all
liabilities and obligations in respect of such Claim. If the Indemnifying Party
shall, within a reasonable time after said notice, fail to defend, the
Indemnitee shall have the right, but not the obligation, and without waiving any
rights against the Indemnifying Party, to undertake the defense of, and with the
consent of the Indemnifying Party (such consent not to be withheld
unreasonably), to compromise or settle the Claim on behalf, for the account, and
at the risk and expense, of the Indemnifying Party and shall be entitled to
collect the amount of any settlement or judgment or decree and all costs and
expenses (including, without limitation, reasonable attorneys' fees) in
connection therewith from the Indemnifying Party. Except as provided in the
preceding sentence, the Indemnitee shall not compromise or settle any Claim.

      9.4 Limitations on Claims.

            (a) Liability Thresholds. Notwithstanding anything in this Article
IX to the contrary, no Damages with respect to Claims arising out of this
Article IX shall be payable pursuant to this Article IX unless and until the
aggregate amount of Damages asserted against the Indemnifying Party under this
Article IX with respect to such Claims equals or exceeds an amount equal to
$5,000,000.00 (the "Liability Threshold"). Once the Liability Threshold for such
Claims has been reached, the Indemnitee shall be entitled to indemnity under
this Article IX for any and all Damages exceeding the Liability Threshold;
provided, however, that with respect to Claims for indemnification pursuant to
Section 9.1(a), 9.1(b), 9.2(a) or 9.2(b), the aggregate amount of each of
Seller's and Purchaser's respective liability under Article IX shall not exceed
$84,000,000.00. Notwithstanding anything in this Agreement to the contrary,
Seller's or Purchaser's liability for Claims for indemnification pursuant to
Sections 9.1(c), 9.1(d), 9.2(c) or 9.2(d) shall not be subject to any Liability
Threshold, liability cap or time limitation (other than limitations imposed by
Law or common law).

            (b) Subrogation. Following full indemnification as provided for
hereunder, the Indemnifying Party shall be subrogated to all rights of the
Indemnitee with respect to all Persons relating to the matter for which
indemnification has been made.

            (c) Survival of Representations and Warranties; Limitation of Time
to Bring Claims. The representations and warranties set forth in this Agreement
shall survive the Closing and shall expire eighteen (18) months after the
Effective Time, other than those set forth in Section 3.14 which shall survive
until thirty (30) days after the expiration of the applicable statute of
limitations (taking into account all valid extensions). No Claim for
indemnification arising out of a breach of representations and warranties in
this Agreement may be brought after the applicable time provided for in this
Section 9.4(c).

                                       45



      9.5 Insured Losses. The amount of any Damages for which indemnification is
provided under this Article IX shall be net of any duplicative amounts recovered
by the Indemnitee under insurance policies or from unaffiliated third Persons
with respect to such Damages.

                                    ARTICLE X
                                   TERMINATION

      10.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:

            (a) by mutual written consent of Purchaser and Seller;

            (b) by either Purchaser or Seller, by notice in writing to the other
party if a Governmental Authority shall have permanently enjoined, restrained or
otherwise prohibited the consummation of the transactions contemplated by this
Agreement;

            (c) by either Seller or Purchaser if the Closing shall not have
occurred by August 31, 2005; provided, however, that the right to terminate this
Agreement under this Section 10.1(c) shall not be available to any party whose
breach of its representations and warranties in this Agreement or whose failure
to perform any of its covenants and agreements under this Agreement shall have
been a contributing cause of, or resulted in, the failure of the Closing to
occur on or before such date;

            (d) by Purchaser, if Seller or AHS shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (a) would give rise to the failure of a condition set forth
in Sections 7.1 or 7.2, and (b) cannot be or has not been cured within ten (10)
Business Days after Purchaser's giving written notice to Seller of such breach
(a "Seller Material Breach") (provided that Purchaser is not then in Purchaser
Material Breach); or

            (e) by Seller, if Purchaser shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(a) would give rise to the failure of a condition set forth in Sections 8.1 or
8.2, and (b) cannot be or has not been cured within ten (10) Business Days after
Seller's giving written notice to Purchaser of such breach (a "Purchaser
Material Breach") (provided that Seller is not then in Seller Material Breach).

      10.2 Effect of Termination. In the event of termination of this Agreement
by either Seller or Purchaser pursuant to Section 10.1, this Agreement shall
become void and have no effect without any liability or obligation on the part
of Purchaser or Seller, except for the obligations and provisions set forth in
Sections 10.2, 12.1, 12.6, 12.7, 12.8 and 12.12. Moreover, in the event of
termination of this Agreement pursuant to Section 10.1(c), (d) or (e), nothing
herein shall prejudice the ability of the non-breaching party from seeking
damages from any other party for any breach of this Agreement, including without
limitation, attorneys' fees and the right to pursue any remedy at law or in
equity.

                                   ARTICLE XI
                                     NOTICES

      11.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person or
received by telegraphic or other electronic means (including facsimile, telecopy
and telex) or when delivered by overnight courier, or if mailed, five (5) days
after being deposited in the United States mail, certified or registered mail,

                                       46



first-class postage prepaid, return receipt requested, to the parties at the
following addresses or facsimile numbers:

      If to Seller, to:

                  Ardent Health Services LLC
                  One Burton Hills Boulevard, Suite 250
                  Nashville, Tennessee 37215
                  Attention: David T. Vandewater
                  Fax: (615) 296-6001

      With copies to:

                  Boult Cummings Conners & Berry, PLC
                  Suite 700
                  1600 Division Street
                  Nashville, Tennessee 37203
                  Attention: Stephen T. Braun, Esq.
                  Fax: (615) 252-6300

      If to Purchaser, to:

                  Psychiatric Solutions, Inc.
                  840 Crescent Centre Drive, Suite 460
                  Franklin, Tennessee 37067
                  Attention: Joey A. Jacobs
                  Fax: (615) 312-5711

With a copy to:

                  Waller Lansden Dortch & Davis, PLLC
                  Nashville City Center
                  511 Union Street, Suite 2700
                  Nashville, Tennessee 37219
                  Attention: Christopher L. Howard, Esq.
                  Fax: (615) 244-6804

      Any party from time to time may change its address or facsimile number for
the purpose of receipt of notices to that party by giving a similar notice
specifying a new address or facsimile number to the other notice parties listed
above in accordance with the provisions of this Section 11.1.

                                   ARTICLE XII
                                  MISCELLANEOUS

      12.1 Fees and Expenses. Except as otherwise provided in this Agreement,
Seller shall pay its own expenses (including, without limitation, the expenses
of the Acquired Entities in connection with this Agreement and the transactions
contemplated hereby incurred prior to the Effective Time) and Purchaser shall
pay its own expenses (including, without limitation, the fees and expenses of
the Lender in connection with this Agreement, and also including those of the
Acquired Entities in connection with this Agreement and the transactions
contemplated hereby incurred after the Effective Time) in connection with this
Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, Purchaser shall be responsible for the costs of any surveys, title

                                       47



policies, environmental surveys and any audits of the Company's financial
statements required in connection with this Agreement and the transactions
contemplated hereby. Purchaser shall pay the fees and expenses, including
counsel fees and filing fees, with respect to the preparation and filing of its
notifications under the HSR Act. Further, and notwithstanding the foregoing,
Purchaser will bear all reasonable costs and expenses, including attorneys' fees
of all parties, resulting from or relating to any investigation or challenge of
the transactions contemplated hereby initiated by the United States Federal
Trade Commission, the United States Department of Justice or the Attorney
General of any state on, prior to or after the Closing under antitrust or
similar laws, including reasonable costs and expenses resulting from or relating
to any "second request" issued in connection with the parties' HSR Act filings
made in connection with the transactions contemplated hereby.

      12.2 Entire Agreement. Except for documents and agreements executed
pursuant hereto, the provisions of the Confidentiality Agreement (which
Confidentiality Agreement shall survive the parties' execution and delivery of
this Agreement) and the other documents and agreements contemplated hereby, this
Agreement supersedes all prior oral discussions and written agreements between
the parties with respect to the subject matter of this Agreement (including any
term sheet or similar agreement or document relating to the transactions
contemplated hereby). Except for the Confidentiality Agreement, this Agreement,
including the exhibits and schedules hereto and other documents and agreements
delivered in connection herewith, contains the sole and entire agreement between
the parties hereto with respect to the subject matter hereof.

      12.3 Waiver. Any term or condition of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof. Any such waiver must
be in writing and must be duly executed by such party. A waiver on one occasion
shall not be deemed to be a waiver of the same or any other breach, provision or
requirement on any other occasion.

      12.4 Amendment. This Agreement may be modified or amended only by a
written instrument duly executed by each of the parties hereto.

      12.5 Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
Facsimile signatures on this Agreement shall be deemed to be original signatures
for all purposes.

      12.6 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of Seller, Purchaser and their
respective successors or assigns, and it is not the intention of the parties to
confer third party beneficiary rights upon any other Person.

      12.7 GOVERNING LAW, CONSTRUCTION. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. The parties
hereto agree that no provisions of this Agreement or any related document shall
be construed for or against or interpreted to the advantage or disadvantage of
any party hereto by any court or other Governmental Authority by reason of any
party's having or being deemed to have structured or drafted such provision,
each party having participated equally in the structuring and drafting hereof.

      12.8 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns,
including successors by merger or otherwise.

      12.9 No Assignment. Neither this Agreement nor any right hereunder or part
hereof may be assigned by any party hereto without the prior written consent of
the other parties hereto; provided, however, that Seller and AHS, on the one
hand, and Purchaser, on the other hand, may

                                       48



assign their respective rights and obligations under this Agreement to other
Persons who (a) are wholly-owned (directly or indirectly) by Seller or
Purchaser, respectively, and (b) agree to be bound by the terms and conditions
of this Agreement. Notwithstanding the foregoing, Purchaser may assign its
rights and obligations under this Agreement to the administrative agent for the
benefit of the lenders as collateral for all obligations under Purchaser's
senior credit facility, as it may exist from time to time. Notwithstanding the
assignment of this Agreement or any rights or obligations hereunder, the
assignor shall be jointly and severally liable with its assignee for its
obligations hereunder.

      12.10 Headings, Gender, Etc. The headings used in this Agreement have been
inserted for convenience and do not constitute provisions to be construed or
interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words of any gender will be deemed to include
each other gender, (b) words using the singular or plural number also will
include the plural or singular number, respectively, (c) the terms "hereof",
"herein", "hereby" and derivative or similar words will refer to this entire
Agreement, and (d) the terms "Article," "Section," "Schedule" and "Exhibit" will
refer to the specified Article or Section of this Agreement or the specified
Schedule or Exhibit to this Agreement.

      12.11 Access to Information. Seller and Purchaser agree that, from time to
time after the Closing, upon the reasonable request of another party hereto,
they will cooperate and will cause its respective subsidiaries to cooperate with
each other to effect the orderly transition of the business, operations and
affairs of the Acquired Entities. Without limiting the generality of the
foregoing, (a) Seller will give and will cause its subsidiaries to give
representatives of the Acquired Entities reasonable access to all Books and
Records of Seller reasonably requested by the Acquired Entities or Purchaser in
the preparation of any post-Closing financial statements, reports or Tax Returns
of the Acquired Entities; and (b) Purchaser will give and will cause the
Acquired Entities to give representatives of Seller reasonable access to all
Books and Records of the Acquired Entities reasonably requested by Seller in the
preparation of any post-Closing financial statements, reports or Tax Returns of
Seller.

      12.12 Severability; Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any present or future Law,
(a) such provisions will be fully severable; (b) this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom; and
(d) in lieu of such illegal, invalid or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.

      12.13 Cooperation. Upon request, each of the parties hereto shall
cooperate with the other in good faith, at the requesting party's expense, in
furnishing information, testimony and other assistance in connection with any
actions, proceedings, arrangements, or disputes involving any of the parties
hereto (other than in a dispute among such parties or entities) and based upon
contracts, arrangements or acts of Seller, AHS, or the Acquired Entities which
were in effect or occurred prior to the Effective Time and which relate to the
business of the Acquired Entities. Purchaser shall cause the Acquired Entities
to provide any information or documents reasonably requested by Seller in
connection with Tax or other disputes, settlements, investigations, proceeding
or other matters in respect of any period ending at or prior to the Effective
Time. The party requesting documents or information pursuant to this Section
shall pay all fees and expenses paid to unaffiliated third parties by the party
providing such documents or information in connection with providing such
information or document. In addition, following the Closing, the parties hereto
shall cooperate fully with each other and make available to the other, as
reasonably requested, and to any taxing authority, all

                                       49



information, records, documents relating to Tax liabilities or potential Tax
liabilities and Tax basis of the Acquired Entities, and shall preserve all such
information, records and documents at least until the expiration of any
applicable statute of limitations or extensions thereof.

      12.14 Further Assurance Clause. On and after the Closing Date, Seller, the
Acquired Entities and Purchaser will take all appropriate action and execute all
documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the provisions hereof, including,
without limitation, putting Purchaser in possession and operating control of the
business of the Acquired Entities.

      12.15 Schedules and Other Instruments. Each Schedule and Exhibit to this
Agreement shall be considered a part hereof as if set forth herein in full.
Seller and Purchaser shall each have the right through two (2) business days
prior to the Closing Date to supplement the Schedules prepared by it, other than
Schedule 6.5 which cannot be amended or supplemented without the written consent
of Purchaser and Seller, so that the representations and warranties shall be
true and correct as of the Closing; provided that such supplemental disclosure
shall, in the aggregate, taken together with the Schedules accompanying this
Agreement when first executed (the "Original Schedules"), not disclose any state
of affairs having, individually or in the aggregate, a Material Adverse Effect
not disclosed on the Original Schedules. In the event that such supplemental
disclosures reflect a state of affairs having, individually or in the aggregate,
a Material Adverse Effect, then the condition in Section 7.1 or Section 8.1, as
the case may be, shall be deemed not to be satisfied. For purposes of this
Section 12.15, when determining whether the supplemental disclosure has a
Material Adverse Effect on Purchaser, there shall be a substitution of the term
"Purchaser and its subsidiaries" for the phrase "Acquired Entities" in the
definition of Material Adverse Effect.

                   [THE FOLLOWING PAGE IS THE SIGNATURE PAGE.]

                                       50



      IN WITNESS WHEREOF, the parties have caused this Stock Purchase Agreement
to be executed as of the date first above written.

                                    PSYCHIATRIC SOLUTIONS, INC.

                                    By:     /s/ Joey A. Jacobs
                                            ------------------------
                                    Name:   Joey A. Jacobs
                                    Title:  President and Chief
                                            Executive Officer

                                    ARDENT HEALTH SERVICES LLC

                                    By:     /s/ Stephen C. Petrovich
                                            ------------------------
                                    Name:   Stephen C. Petrovich
                                    Title:  Senior Vice President

                                    ARDENT HEALTH SERVICES, INC.

                                    By:     /s/ Stephen C. Petrovich
                                            ------------------------
                                    Name:   Stephen C. Petrovich
                                    Title:  Senior Vice President



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

                  AMENDED AND RESTATED STOCK PURCHASE AGREEMENT

                                  by and among

                           ARDENT HEALTH SERVICES LLC,

                          ARDENT HEALTH SERVICES, INC.

                                       and

                           PSYCHIATRIC SOLUTIONS, INC.

                            Dated as of June 30, 2005

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


                                TABLE OF CONTENTS



                                                                                               Page
                                                                                               ----
                                                                                            
ARTICLE I DEFINITIONS................................................................            1

ARTICLE II PURCHASE AND SALE; CLOSING................................................            9
         2.1      Sale of the AHS Shares.............................................            9
         2.2      Excluded Assets and Liabilities; Certain Included Liabilities......            9
         2.3      Purchase Price.....................................................           10
         2.4      Loan Amount........................................................           10
         2.5      Closing............................................................           10
         2.6      Closing Deliveries.................................................           10
         2.7      Repayment of Seller Promissory Note................................           10

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.................................           11
         3.1      Organization of Seller.............................................           11
         3.2      Organization and Capitalization of AHS.............................           11
         3.3      Organization and Capitalization of the AHS Subsidiaries............           11
         3.4      Authorization......................................................           12
         3.5      No Conflicting Agreements; Consents................................           13
         3.6      Financial Statements...............................................           13
         3.7      Absence of Undisclosed Liabilities.................................           14
         3.8      Absence of Certain Changes.........................................           14
         3.9      Legal Proceedings, etc.............................................           15
         3.10     Contracts; No Defaults.............................................           15
         3.11     Title to Property..................................................           16
         3.12     Employees; Labor Matters; Employee Benefit Plans; ERISA............           17
         3.13     Bank Accounts......................................................           19
         3.14     Taxes..............................................................           19
         3.15     Insurance..........................................................           21
         3.16     Intellectual Property..............................................           21
         3.17     Compliance with Laws...............................................           21
         3.18     Environmental Matters..............................................           22
         3.19     Books and Records..................................................           22
         3.20     No Material Adverse Change.........................................           22
         3.21     Brokers............................................................           22
         3.22     HIPAA Matters......................................................           22
         3.23     Medical Waste......................................................           23
         3.24     Certificates of Need...............................................           23
         3.25     Medicare Participation; Accreditation..............................           24
         3.26     Compliance Program.................................................           24
         3.27     Regulatory Compliance..............................................           24
         3.28     Medical Staff Matters..............................................           25


                                       i



                                                                                             
         3.29     Third Party Payor Cost Reports.....................................           25
         3.30     Reimbursement......................................................           26
         3.31     Statutory Funds....................................................           26
         3.32     Investment Representations.........................................           26
         3.33     Controlled Substances..............................................           26

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................           27
         4.1      Organization.......................................................           27
         4.2      Corporate Authorization............................................           27
         4.3      Capitalization.....................................................           27
         4.4      No Conflicting Agreements; Consents................................           27
         4.5      Legal Proceedings, etc.............................................           28
         4.6      Brokers............................................................           28
         4.7      Investment Representations.........................................           28
         4.8      SEC Filings; Financial Statements..................................           28
         4.9      Financing..........................................................           29
         4.10     No Material Adverse Change.........................................           29

ARTICLE V COVENANTS OF SELLER........................................................           29
         5.1      Regulatory Approvals...............................................           29
         5.2      Conduct Prior to the Closing.......................................           30
         5.3      Employee Matters...................................................           31
         5.4      Access by Purchaser................................................           31
         5.5      Financial Statements and Reports...................................           31
         5.6      Closing Conditions.................................................           32
         5.7      Transfer of Assets.................................................           32
         5.8      Encumbrances.......................................................           32
         5.9      Condition of Assets................................................           32
         5.10     Intercompany Accounts..............................................           32
         5.11     Exclusivity........................................................           32
         5.12     Resignations.......................................................           32
         5.13     Company Plans......................................................           33
         5.14     Non-Competition Agreement..........................................           33
         5.15     Notice of Certain Occurrences......................................           33
         5.16     Amendment of Management Agreements.................................           33

ARTICLE VI COVENANTS OF PURCHASER; CERTAIN ADDITIONAL COVENANTS OF THE PARTIES.......           34
         6.1      Notice of Certain Occurrences......................................           34
         6.2      Regulatory Approvals...............................................           34
         6.3      Books and Records..................................................           34
         6.4      Closing Conditions.................................................           34
         6.5      Employee Matters...................................................           34
         6.6      WARN Act Compliance; COBRA.........................................           35
         6.7      Tax Matters........................................................           35



                                       ii



                                                                                             
         6.8      Tax Indemnification................................................           39
         6.9      Registration of Resale of Purchaser Shares.........................           40
         6.10     Public Announcements...............................................           40
         6.11     Consultative Process...............................................           40
         6.12     Redemption of Untendered Notes.....................................           40

ARTICLE VII CONDITIONS TO OBLIGATIONS OF PURCHASER...................................           41
         7.1      Representations and Warranties.....................................           41
         7.2      Compliance with Agreement..........................................           41
         7.3      Closing Certificates...............................................           41
         7.4      Secretary's Certificates...........................................           41
         7.5      Opinion of Counsel.................................................           41
         7.6      Consents, Authorizations, Etc......................................           41
         7.7      No Action or Proceeding............................................           41
         7.8      Constituent Documents..............................................           42
         7.9      Resignation of Boards of Directors and Officers....................           42
         7.10     Good Standing Certificates.........................................           42
         7.11     Non-Imputation Endorsements........................................           42
         7.12     Termination of Guarantees..........................................           42
         7.13     Non-Competition Agreement..........................................           42
         7.14     FIRPTA.............................................................           42
         7.15     Waiver of Conditions...............................................           42

ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER.....................................           42
         8.1      Representations and Warranties.....................................           43
         8.2      Compliance with Agreement..........................................           43
         8.3      Closing Certificates...............................................           43
         8.4      Secretary's Certificate............................................           43
         8.5      Opinion of Counsel.................................................           43
         8.6      Consents, Authorizations, Etc......................................           43
         8.7      No Action or Proceeding............................................           43
         8.8      Good Standing Certificate..........................................           43
         8.9      Registration Rights Agreement......................................           44
         8.10     Tender Offer.......................................................           44
         8.11     Waiver of Conditions...............................................           44

ARTICLE IX INDEMNIFICATION...........................................................           44
         9.1      Indemnification by Seller..........................................           44
         9.2      Indemnification by Purchaser.......................................           44
         9.3      Claims Procedures..................................................           44
         9.4      Limitations on Claims..............................................           45
         9.5      Insured Losses.....................................................           46

ARTICLE X TERMINATION................................................................           46
         10.1     Termination........................................................           46



                                      iii



                                                                                             
         10.2     Effect of Termination..............................................           46

ARTICLE XI NOTICES...................................................................           46
         11.1     Notices............................................................           46

ARTICLE XII MISCELLANEOUS............................................................           47
         12.1     Fees and Expenses..................................................           47
         12.2     Entire Agreement...................................................           48
         12.3     Waiver.............................................................           48
         12.4     Amendment..........................................................           48
         12.5     Counterparts; Facsimile Signatures.................................           48
         12.6     No Third Party Beneficiary.........................................           48
         12.7     GOVERNING LAW, CONSTRUCTION........................................           48
         12.8     Binding Effect.....................................................           48
         12.9     No Assignment......................................................           48
         12.10    Headings, Gender, Etc..............................................           49
         12.11    Access to Information..............................................           49
         12.12    Severability; Invalid Provisions...................................           49
         12.13    Cooperation........................................................           49
         12.14    Further Assurance Clause...........................................           50
         12.15    Schedules and Other Instruments....................................           50



                                       iv

EX-4.1

                                                                     Exhibit 4.1

================================================================================

                           PSYCHIATRIC SOLUTIONS, INC.

                                  $220,000,000

                    7.75% SENIOR SUBORDINATED NOTES DUE 2015

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

                                    INDENTURE

                            Dated as of July 6, 2005

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

                      Wachovia Bank, National Association,

                                   as Trustee

================================================================================



            This INDENTURE, dated as of July 6, 2005, is by and among
Psychiatric Solutions, Inc., a Delaware corporation, each Guarantor listed on
the signature pages hereto, and Wachovia Bank, National Association, as trustee
(the "Trustee").

            The Company, each Guarantor and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 7.75% Senior Subordinated Notes due 2015 (the "Notes") issued under this
Indenture:

                                   ARTICLE 1.

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. DEFINITIONS

            For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

            "144A Global Note" means a Global Note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee
issued in a denomination equal to the outstanding principal amount of the Notes
sold for initial resale in reliance on Rule 144A.

            "Acquired Debt" means, with respect to any specified Person:

            (a) Indebtedness of any other Person existing at the time such other
      Person is merged with or into or became a Subsidiary of such specified
      Person, whether or not such Indebtedness is incurred in connection with,
      or in contemplation of, such other Person merging with or into, or
      becoming a Subsidiary of, such specified Person; and

            (b) Indebtedness secured by a Lien encumbering any asset acquired by
      such specified Person.

            "Additional Interest" has the meaning set forth in a Registration
Rights Agreement relating to amounts to be paid in the event the Company fails
to satisfy certain conditions set forth herein. For all purposes of this
Indenture, the term "interest" shall include Additional Interest, if any, with
respect to the Notes.

            "Additional Notes" means any Notes (other than Initial Notes,
Exchange Notes and Notes issued under Sections 2.06, 2.07, 2.10 and 3.06 hereof)
issued under this Indenture in accordance with Sections 2.02, 2.15 and 4.09
hereof, as part of the same series as the Initial Notes or as an additional
series.

            "Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.

            "Agent" means any Registrar, co-registrar, Paying Agent or
additional paying agent.

            "Applicable Procedures" means, with respect to any transfer,
redemption or exchange of or for beneficial interests in any Global Note, the
rules and procedures of the Depositary, Euroclear and Clearstream that apply to
such transfer, redemption or exchange.



            "Asset Sale" means the sale, lease, transfer, conveyance or other
disposition of any assets or rights, other than sales, leases, transfers,
conveyances or other dispositions of inventory in the ordinary course of
business consistent with past practices; provided that the sale, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole will be governed by Section 4.17
hereof and/or Section 5.01 hereof and not by Section 4.12 hereof.

            Notwithstanding the preceding, the following items will not be
deemed to be Asset Sales:

            (a) any single transaction or series of related transactions that
      involves assets having a fair market value of less than $5.0 million;

            (b) a sale, lease, transfer, conveyance or other disposition of
      assets between or among the Company and its Restricted Subsidiaries;

            (c) an issuance of Equity Interests by a Restricted Subsidiary to
      the Company or to another Restricted Subsidiary;

            (d) a sale, lease, transfer, conveyance or other disposition
      effected in compliance with the provisions described in Article 5 hereof;

            (e) a Restricted Payment or Permitted Investment that is permitted
      by Section 4.10 hereof;

            (f) a transfer of property or assets that are obsolete, damaged or
      worn out equipment and that are no longer useful in the conduct of the
      Company's or its Subsidiaries' business and that is disposed of in the
      ordinary course of business; and

            (g) a Permitted Asset Swap.

            "Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.

            "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors, or the law of any other jurisdiction
relating to bankruptcy, insolvency, winding up, liquidation, reorganization or
relief of debtors.

            "Beneficial Owner" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" have a
corresponding meaning.

            "Board of Directors" means:

            (a) with respect to a corporation, the board of directors of the
      corporation;

            (b) with respect to a partnership, the Board of Directors of the
      general partner of the partnership; and

            (c) with respect to any other Person, the board or committee of such
      Person serving a similar function.

                                       2


            "Board Resolution" of a Person means a copy of a resolution
certified by the secretary or an assistant secretary (or individual performing
comparable duties) of the applicable Person to have been duly adopted by the
Board of Directors of such Person and to be in full force and effect on the date
of such certification, and delivered to the Trustee.

            "Business Day" means any day other than a Legal Holiday.

            "Capital Lease Obligation" means, at the time any determination is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.

            "Capital Stock" means:

            (a) in the case of a corporation, corporate stock;

            (b) in the case of an association or business entity, any and all
      shares, interests, participations, rights or other equivalents (however
      designated) of corporate stock;

            (c) in the case of a partnership or limited liability company,
      partnership or membership interests (whether general or limited); and

            (d) any other interest or participation that confers on a Person the
      right to receive a share of the profits and losses of, or distributions of
      assets of, the issuing Person.

            "Cash Equivalents" means:

            (a) United States dollars;

            (b) securities issued or directly and fully guaranteed or insured by
      the United States government or any agency or instrumentality of the
      United States government (provided that the full faith and credit of the
      United States is pledged in support of those securities) having maturities
      of not more than six months from the date of acquisition;

            (c) certificates of deposit and eurodollar time deposits with
      maturities of six months or less from the date of acquisition, bankers'
      acceptances with maturities not exceeding six months and overnight bank
      deposits, in each case, with any lender party to the Credit Agreement or
      with any domestic commercial bank having capital and surplus in excess of
      $500.0 million and a Thomson Bank Watch Rating of "B" or better;

            (d) repurchase obligations with a term of not more than seven days
      for underlying securities of the types described in clauses (b) and (c)
      above entered into with any financial institution meeting the
      qualifications specified in clause (c) above;

            (e) commercial paper rated at least A-1 by Standard & Poor's Rating
      Services, or at least P-1 by Moody's Investors Service, Inc., and in each
      case maturing within six months after the date of acquisition; and

            (f) money market funds at least 95% of the assets of which
      constitute Cash Equivalents of the kinds described in clauses (a) through
      (e) of this definition.

            "Change of Control" means the occurrence of any of the following:

            (a) the direct or indirect sale, transfer, conveyance or other
      disposition (other than by way of merger or consolidation), in one or a
      series of related transactions, of all or substantially all of the
      properties or assets of the Company and its Restricted Subsidiaries, taken
      as a whole, to any "person" (as

                                       3


      that term is used in Section 13(d)(3) of the Exchange Act);

            (b) the adoption of a plan relating to the liquidation or
      dissolution of the Company;

            (c) the consummation of any transaction (including, without
      limitation, any merger or consolidation) the result of which is that any
      "person" (as defined in clause (a) above), becomes the Beneficial Owner,
      directly or indirectly, of more than 30% of the Voting Stock of the
      Company, measured by voting power rather than number of shares;

            (d) the consummation by the Company of any "going private"
      transaction that would constitute a "Rule 13e-3 transaction" as defined in
      the Exchange Act;

            (e) the first day on which a majority of the members of the Board of
      Directors of the Company are not Continuing Directors; or

            (f) the Company consolidates with, or merges with or into, any
      Person, or any Person consolidates with, or merges with or into, the
      Company, in any such event pursuant to a transaction in which any of the
      outstanding Voting Stock of the Company or such other Person is converted
      into or exchanged for cash, securities or other property, other than any
      such transaction where the Voting Stock of the Company outstanding
      immediately prior to such transaction is converted into or exchanged for
      Voting Stock (other than Disqualified Stock) of the surviving or
      transferee Person constituting a majority of the outstanding shares of
      such Voting Stock of such surviving or transferee Person (immediately
      after giving effect to such issuance).

            "Clearstream" means Clearstream Banking S.A. and any successor
thereto.

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Commission" means the Securities and Exchange Commission.

            "Company" means Psychiatric Solutions, Inc., and any successor
thereto.

            "Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:

            (a) an amount equal to any extraordinary loss plus any net loss
      realized by such Person or any of its Subsidiaries in connection with an
      Asset Sale, to the extent such losses were deducted in computing such
      Consolidated Net Income; plus

            (b) provision for taxes based on income or profits of such Person
      and its Restricted Subsidiaries for such period, to the extent that such
      provision for taxes was deducted in computing such Consolidated Net
      Income; plus

            (c) consolidated interest expense of such Person and its Restricted
      Subsidiaries for such period, whether paid or accrued and whether or not
      capitalized (including, without limitation, amortization of debt issuance
      costs and original issue discount, non-cash interest payments, the
      interest component of any deferred payment obligations, the interest
      component of all payments associated with Capital Lease Obligations,
      imputed interest with respect to Attributable Debt, commissions, discounts
      and other fees and charges incurred in respect of letter of credit or
      bankers' acceptance financings, and net of the effect of all payments made
      or received pursuant to Hedging Obligations), to the extent that any such
      expense was deducted in computing such Consolidated Net Income; plus

            (d) depreciation, amortization (including amortization of goodwill
      and other intangibles but excluding amortization of prepaid cash expenses
      that were paid in a prior period) and other non-cash expenses (excluding
      any such non-cash expense to the extent that it represents an accrual of
      or reserve for

                                       4


      expenses to be paid in cash in any future period) of such Person and its
      Restricted Subsidiaries for such period to the extent that such
      depreciation, amortization and other non-cash expenses were deducted in
      computing such Consolidated Net Income; minus

            (e) non-cash items increasing such Consolidated Net Income for such
      period, other than the accrual of revenue in the ordinary course of
      business,

      in each case, on a consolidated basis and determined in accordance with
GAAP.

            "Consolidated Net Income" means, with respect to any specified
Person for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:

            (a) the Net Income (but not loss) of any Person that is not a
      Restricted Subsidiary or that is accounted for by the equity method of
      accounting will be included only to the extent of the amount of dividends
      or distributions paid in cash to the specified Person or a Restricted
      Subsidiary of the Person;

            (b) the Net Income of any Restricted Subsidiary will be excluded to
      the extent that the declaration or payment of dividends or similar
      distributions by that Restricted Subsidiary of that Net Income is not at
      the date of determination permitted without any prior governmental
      approval (that has not been obtained) or, directly or indirectly, by
      operation of the terms of its charter or any agreement, instrument,
      judgment, decree, order, statute, rule or governmental regulation
      applicable to that Restricted Subsidiary or its stockholders;

            (c) the Net Income of any Person acquired in a pooling of interests
      transaction for any period prior to the date of such acquisition will be
      excluded; and

            (d) the cumulative effect of a change in accounting principles will
      be excluded.

            "Consolidated Net Tangible Assets" means, as of any date of
determination, the sum of the amounts that would appear on a consolidated
balance sheet of the Company and its consolidated Restricted Subsidiaries as the
total assets (less accumulated depreciation and amortization, allowances for
doubtful receivables, other applicable reserves and other properly deductible
items) of the Company and its Restricted Subsidiaries, after giving effect to
purchase accounting, and after deducting therefrom consolidated current
liabilities and, to the extent otherwise included, the amounts of (without
duplication):

            (a) the excess of cost over fair market value of assets or
      businesses acquired;

            (b) any revaluation or other write-up in book value of assets
      subsequent to the last day of the fiscal quarter of the Company
      immediately preceding the date of issuance of the notes as a result of a
      change in the method of valuation in accordance with GAAP;

            (c) unamortized debt discount and expenses and other unamortized
      deferred charges, goodwill, patents, trademarks, service marks, trade
      names, copyrights, licenses, organization or developmental expenses and
      other intangible items;

            (d) minority interests in consolidated subsidiaries held by Persons
      other than the Company or any Restricted Subsidiary;

            (e) treasury stock;

            (f) cash or securities set aside and held in a sinking or other
      analogous fund established for the purpose of redemption or other
      retirement of Capital Stock to the extent such obligation is not reflected
      in Consolidated Current Liabilities; and

                                       5


            (g) Investments in and assets of Unrestricted Subsidiaries.

            "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:

            (a) was a member of such Board of Directors on the date of this
      Indenture; or

            (b) was nominated for election or elected to such Board of Directors
      with the approval of a majority of the Continuing Directors who were
      members of such Board at the time of such nomination or election.

            "Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 13.02 hereof, or such other address as to which
the Trustee may give notice to the Company.

            "Credit Agreement" means the Second Amended and Restated Credit
Agreement, dated as of the date hereof, among the Company, the Guarantors party
thereto, Citicorp North America, Inc., as term loan facility administrative
agent, Bank of America, N.A., as revolving credit facility administrative agent,
collateral agent and swing line lender, Citigroup Global Markets Inc. and Banc
of America Securities LLC, as co-syndication agents, Citigroup Global Markets
Inc., as documentation agent and as sole lead arranger and sole book manager,
and the lenders from time to time party thereto, providing for up to $150.0
million of revolving credit borrowings and $325.0 million of term borrowings,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
restated, modified, renewed, refunded, replaced or refinanced (in whole or in
part) from time to time, whether or not with the same lenders or agent.

            "Credit Facilities" means, one or more debt facilities or agreements
(including, without limitation, the Credit Agreement) or commercial paper
facilities, in each case with banks or other institutional lenders or investors
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced (including any agreement to extend the maturity thereof
and adding additional borrowers or guarantors) in whole or in part from time to
time under the same or any other agent, lender or group of lenders and including
increasing the amount of available borrowings thereunder; provided that such
increase is permitted by Section 4.09 hereof.

            "Custodian" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03(c) hereof
as Custodian with respect to the Notes, and any and all successors thereto
appointed as custodian hereunder and having become such pursuant to the
applicable provisions of this Indenture.

            "Default" means any event that is, or with the passage of time or
the giving of notice or both would be, an Event of Default.

            "Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 or 2.10 hereof,
in substantially the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.

            "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03(b) hereof
as the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provisions of this Indenture.

            "Designated Senior Debt" means (a) any Indebtedness outstanding
under the Credit Agreement and (b) any other Senior Debt permitted hereunder the
principal amount of which is $25.0 million or more and that has been designated
by the Company as "Designated Senior Debt."

                                       6


            "Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the Notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a Change of
Control or an Asset Sale will not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with the Section 4.10 hereof.

            "Domestic Subsidiary" means any Restricted Subsidiary of the Company
that was formed under the laws of the United States or any state or territory of
the United States or the District of Columbia or that guarantees or otherwise
provides direct credit support for any Indebtedness of the Company.

            "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

            "Equity Offering" means any private or public sale of common stock
of the Company.

            "Euroclear" means Euroclear Bank, S.A./N.V., as operator of the
Euroclear systems, and any successor thereto.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Exchange Notes" means notes issued in exchange for the Initial
Notes or any Additional Notes pursuant to a Registration Rights Agreement.

            "Exchange Offer" has the meaning set forth in a Registration Rights
Agreement relating to an exchange of Notes registered under the Securities Act
for Notes not so registered.

            "Exchange Offer Registration Statement" has the meaning set forth in
a Registration Rights Agreement.

            "Existing Indebtedness" means Indebtedness existing on the Issue
Date (other than Indebtedness under this Indenture and the Credit Agreement),
including the Existing Senior Subordinated Notes and any existing HUD
Financings.

            "Existing Senior Subordinated Notes" means the $38,680,000 aggregate
principal amount of the Company's 10-5/8% Senior Subordinated Notes due 2013.

            "Financing Transactions" means the Financing Transactions as
described in the Offering Memorandum.

            "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:

            (a) the consolidated interest expense of such Person and its
      Restricted Subsidiaries for such period, whether paid or accrued,
      including, without limitation, non-cash interest payments, the interest
      component of any deferred payment obligations, the interest component of
      all payments associated with Capital Lease Obligations, imputed interest
      with respect to Attributable Debt, commissions, discounts and other fees
      and charges incurred in respect of letter of credit or bankers' acceptance
      financings, and net of the effect of all payments made or received
      pursuant to Hedging Obligations; plus

                                       7


            (b) the consolidated interest expense of such Person and its
      Restricted Subsidiaries that was capitalized during such period; plus

            (c) any interest expense on Indebtedness of another Person that is
      guaranteed by such Person or one of its Restricted Subsidiaries or secured
      by a Lien on assets of such Person or one of its Restricted Subsidiaries,
      whether or not such Guarantee or Lien is called upon; plus

            (d) the product of (i) all dividends, whether paid or accrued and
      whether or not in cash, on any series of preferred stock of such Person or
      any of its Restricted Subsidiaries, other than dividends on Equity
      Interests payable solely in Equity Interests of the Company (other than
      Disqualified Stock) or to the Company or a Restricted Subsidiary, times
      (ii) a fraction, the numerator of which is one and the denominator of
      which is one minus the then current combined federal, state and local
      statutory tax rate of such Person, expressed as a decimal, in each case,
      on a consolidated basis and in accordance with GAAP.

            "Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period. In the event that the
specified Person or any of its Restricted Subsidiaries incurs, assumes,
guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated
giving pro forma effect to such incurrence, assumption, guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.

            In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:

            (a) acquisitions that have been made by the specified Person or any
      of its Restricted Subsidiaries, including through mergers or
      consolidations and including any related financing transactions, during
      the four-quarter reference period or subsequent to such reference period
      and on or prior to the Calculation Date will be given pro forma effect
      (calculated in accordance with Regulation S-X) as if they had occurred on
      the first day of the four-quarter reference period and Consolidated Cash
      Flow for such reference period will be calculated without giving effect to
      clause (c) of the proviso set forth in the definition of Consolidated Net
      Income;

            (b) the Consolidated Cash Flow attributable to discontinued
      operations, as determined in accordance with GAAP (other than the
      treatment of the termination and expiration of management contracts which
      shall be governed by Accounting Principles Board Opinion No. 2 as in
      effect before the adoption of Financial Accounting Standards No. 144), and
      operations or businesses disposed of prior to the Calculation Date, will
      be excluded; and

            (c) the Fixed Charges attributable to discontinued operations, as
      determined in accordance with GAAP (other than the treatment of the
      termination and expiration of management contracts which shall be governed
      by Accounting Principles Board Opinion No. 2 as in effect before the
      adoption of Financial Accounting Standards No. 144), and operations or
      businesses disposed of prior to the Calculation Date, will be excluded,
      but only to the extent that the obligations giving rise to such Fixed
      Charges will not be obligations of the specified Person or any of its
      Restricted Subsidiaries following the Calculation Date.

            "GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the Issue Date.

                                       8


            "Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.

            "Global Note" means any global Note in the form of Exhibit A hereto
issued in accordance with Article 2 hereof.

            "Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness. The term "guarantee"
used as a verb has a corresponding meaning.

            "Guarantors" means each of:

            (a) the Company's Domestic Subsidiaries (other than the HUD
      Financing Subsidiaries, PSI Surety, Inc. and certain immaterial
      Subsidiaries in which neither PSI nor any Restricted Subsidiary has made
      an Investment in excess of $0.1 million); and

            (b) any other Subsidiary that executes a Subsidiary Guarantee in
      accordance with the provisions of this Indenture;

and their respective successors and assigns.

            "Hedging Obligations" means, with respect to any specified Person,
the obligations of such Person under:

            (a) interest rate swap agreements, interest rate cap agreements and
      interest rate collar agreements; and

            (b) other agreements or arrangements designed to protect such Person
      against fluctuations in interest rates.

            "Holder" means a Person in whose name a Note is registered in the
Security Register.

            "HUD Financing" means Indebtedness of HUD Financing Subsidiaries
that is insured by the Federal Housing Administration, an organizational unit of
the United States Department of Housing and Urban Development.

            "HUD Financing Subsidiaries" means any Domestic Subsidiary formed
solely for the purpose of holding assets pledged as security in connection with
any HUD Financing, including Holly Hill Real Estate, LLC, PSI Cedar Springs
Hospital Real Estate, Inc., Psychiatric Solutions of Oklahoma Real Estate, Inc.,
Neuro Rehab Real Estate, L.P., Texas Laurel Ridge Hospital Real Estate, L.P.,
Texas Oaks Psychiatric Hospital Real Estate, L.P., Texas San Marcos Treatment
Center Real Estate, L.P., Cypress Creek Real Estate, L.P., West Oaks Real
Estate, L.P. and Riveredge Real Estate, Inc.; provided that the designation of a
Domestic Subsidiary as a HUD Financing Subsidiary shall be evidenced by an
Officers' Certificate stating that such Domestic Subsidiary shall be designated
as a HUD Financing Subsidiary and certifying that the sole purpose of such HUD
Financing Subsidiary shall be to hold assets pledged as security in connection
with HUD Financing and that the incurrence of the HUD Financing complies with
the provisions of Section 4.09 hereof.

            "IAI Global Note" means a Global Note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee
issued in a denomination equal to the outstanding principal amount of the Notes
sold to Institutional Accredited Investors, if any, to the extent required by
the Applicable Procedures.

            "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:

                                       9


            (a) in respect of borrowed money;

            (b) evidenced by bonds, notes, debentures or similar instruments or
      letters of credit (or reimbursement agreements in respect thereof);

            (c) in respect of banker's acceptances;

            (d) representing Capital Lease Obligations;

            (e) representing the balance deferred and unpaid of the purchase
      price of any property, except any such balance that constitutes an accrued
      expense or trade payable; or

            (f) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person.

            The amount of any Indebtedness outstanding as of any date will be:

                  (i) the accreted value of the Indebtedness, in the case of any
            Indebtedness issued with original issue discount; and

                  (ii) the principal amount of the Indebtedness, together with
            any interest on the Indebtedness that is more than 30 days past due,
            in the case of any other Indebtedness.

            "Indenture" means this instrument, as originally executed or as it
may from time to time be supplemented or amended in accordance with Article 9
hereof.

            "Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.

            "Initial Notes" means $220,000,000 aggregate principal amount of
Notes issued under this Indenture on the Issue Date.

            "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.

            "Interest Payment Dates" shall have the meaning set forth in
paragraph 1 of any Note in the form of Exhibit A hereto issued in accordance
with Article 2 hereof.

            "Investments" means, with respect to any Person, all direct or
indirect investments by such Person in other Persons (including Affiliates) in
the forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances, fees
and compensation paid to officers, directors and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company will be deemed
to have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Equity Interests of such Subsidiary not sold or
disposed of in an amount determined as provided in the final paragraph of
Section 4.10. The acquisition by the Company or any Subsidiary of the Company of
a Person that holds an Investment in a third Person will be deemed to be an
Investment by the Company or such

                                       10


Subsidiary in such third Person in an amount equal to the fair market value of
the Investment held by the acquired Person in such third Person in an amount
determined as provided in the final paragraph of Section 4.10.

            "Issue Date" means July 6, 2005.

            "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the Corporate Trust
Office of the Trustee is located or any other place of payment on the Notes are
authorized by law, regulation or executive order to remain closed.

            "Letter of Transmittal" means the letter of transmittal, or its
electronic equivalent in accordance with the Applicable Procedures, to be
prepared by the Company and sent to all Holders of the Initial Notes or any
Additional Notes for use by such Holders in connection with an Exchange Offer.

            "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

            "Moody's" means Moody's Investors Service, Inc. or any successor to
the rating agency business thereof.

            "Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:

            (a) any gain (but not loss), together with any related provision for
      taxes on such gain (but not loss), realized in connection with: (i) any
      Asset Sale; or (ii) the disposition of any securities by such Person or
      any of its Restricted Subsidiaries or the extinguishment of any
      Indebtedness of such Person or any of its Restricted Subsidiaries; and

            (b) any extraordinary gain (but not loss), together with any related
      provision for taxes on such extraordinary gain (but not loss).

            "Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale, taxes paid or
payable as a result of the Asset Sale, in each case, after taking into account
any available tax credits or deductions and any tax sharing arrangements, and
amounts required to be applied to the repayment of Indebtedness, other than
Senior Debt, secured by a Lien on the asset or assets that were the subject of
such Asset Sale, and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.

            "Non-recourse Debt" means Indebtedness:

            (a) as to which neither the Company nor any of its Restricted
      Subsidiaries (i) provides credit support of any kind (including any
      undertaking, agreement or instrument that would constitute Indebtedness),
      (ii) is directly or indirectly liable as a guarantor or otherwise, or
      (iii) constitutes the lender;

            (b) no default with respect to which (including any rights that the
      holders thereof may have to take enforcement action against an
      Unrestricted Subsidiary) would permit upon notice, lapse of time of both
      any holder of any other Indebtedness (other than the Notes) of the Company
      or any of its Restricted Subsidiaries to declare a default on such other
      Indebtedness or cause the payment thereof to be accelerated or payable
      prior to its stated maturity; and

                                       11


            (c) as to which the lenders have been notified in writing that they
      will not have any recourse to the stock or assets of the Company or any of
      its Restricted Subsidiaries.

            "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

            "Offering Memorandum" means the Offering Memorandum relating to the
Initial Notes dated June 30, 2005.

            "Officer" means the Chief Executive Officer, the President, the
Chief Financial Officer, any Executive Vice President or the Treasurer of the
Company.

            "Officers' Certificate" means a certificate, in form and substance
reasonably satisfactory to the Trustee, signed by two Officers of the Company,
at least one of whom shall be the principal executive officer or principal
financial officer of the Company, and delivered to the Trustee.

            "Opinion of Counsel" means a written opinion, in form and substance
reasonably satisfactory to the Trustee, from legal counsel who is acceptable to
the Trustee and which meets the requirements of Section 13.05 hereof. The
counsel may be an employee of or counsel to the Company or the Trustee.

            "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively, and, with respect to DTC, shall include Euroclear and
Clearstream.

            "Permitted Asset Swap" means sales, transfers or other dispositions
of assets, including all of the outstanding Capital Stock of a Restricted
Subsidiary, for consideration at least equal to the fair market value of the
assets sold or disposed of, but only if the consideration received consists of
Capital Stock of a Person that becomes a Restricted Subsidiary engaged in, or
property or assets (other than cash, except to the extent used as a bona fide
means of equalizing the value of the property or assets involved in the swap
transaction) of a nature or type or that are used in, a business having property
or assets of a nature or type, or engaged in a business similar or related to
the nature or type of the property and assets of, or business of, the Company
and the Restricted Subsidiaries existing on the date of such sale or other
disposition.

            "Permitted Business" means the lines of business conducted by the
Company and its Restricted Subsidiaries on the Issue Date and the businesses
reasonably related thereto, including the ownership, operation and/or management
of a hospital, outpatient clinic or other facility or business that is used or
useful in or related to the provision of health care services in connection with
the ownership, operation and/or management of such hospital or outpatient clinic
or ancillary to the provision of health care services or information or the
investment in or management, lease or operation of a hospital or outpatient
clinic.

            "Permitted Investments" means:

            (a) any Investment in the Company or a Restricted Subsidiary;

            (b) any Investment in Cash Equivalents;

            (c) any Investment by the Company or any Restricted Subsidiary in a
      Person, if as a result of such Investment:

                  (i) such Person becomes a Restricted Subsidiary; or

                  (ii) such Person is merged, consolidated or amalgamated with
            or into, or transfers or conveys substantially all of its assets to,
            or is liquidated into, the Company or a Subsidiary;

            (d) any Investment made as a result of the receipt of non-cash
      consideration from an Asset

                                       12


      Sale that was made pursuant to and in compliance with Section 4.12 hereof;

            (e) any acquisition of assets solely in exchange for the issuance of
      Equity Interests (other than Disqualified Stock) of the Company;

            (f) any Investments received in compromise of obligations of such
      persons incurred in the ordinary course of trade creditors or customers
      that were incurred in the ordinary course of business, including pursuant
      to any plan of reorganization or similar arrangement upon the bankruptcy
      or insolvency of any trade creditor or customer;

            (g) Hedging Obligations;

            (h) Investments the payment for which is Capital Stock (other than
      Disqualified Stock) of the Company;

            (i) Physician Support Obligations;

            (j) Investments in prepaid expenses, negotiable instruments held for
      collection, utility and workers compensation, performance and similar
      deposits made in the ordinary course of business;

            (k) loans and advances to non-executive officers and employees of
      the Company or any Restricted Subsidiary in the ordinary course of
      business in accordance with the past practices of the Company or any
      Restricted Subsidiary in an aggregate amount for all such loans and
      advances not to exceed $1.0 million at any time outstanding;

            (l) Investments in any Person to the extent such Investment
      represents the non-cash portion of the consideration received in
      connection with an Asset Sale consummated in compliance with Section 4.12
      hereof;

            (m) Investments existing on the date of this Indenture; and

            (n) other Investments in any Person having an aggregate fair market
      value (measured on the date each such investment was made and without
      giving effect to subsequent changes in value), when taken together with
      all other Investments made pursuant to this clause (n) that are at the
      time outstanding, not to exceed $30.0 million.

            "Permitted Junior Securities" means:

            (a) Equity Interests in the Company or any Guarantor; or

            (b) debt securities that are subordinated to all Senior Debt and any
      debt securities issued in exchange for Senior Debt to substantially the
      same extent as, or to a greater extent than, the Notes and the Subsidiary
      Guarantees are subordinated to Senior Debt under this Indenture.

            "Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided, however, that:

            (a) the principal amount (or accreted value, if applicable) of such
      Permitted Refinancing Indebtedness does not exceed the principal amount
      (or accreted value, if applicable) of the Indebtedness extended,
      refinanced, renewed, replaced, defeased or refunded (plus all accrued
      interest on the Indebtedness and the amount of all expenses and premiums
      incurred in connection therewith);

            (b) in the case of Indebtedness other than Senior Debt, such
      Permitted Refinancing

                                       13


      Indebtedness has a final maturity date the same as or later than the final
      maturity date of, and has a Weighted Average Life to Maturity equal to or
      greater than the Weighted Average Life to Maturity of, the Indebtedness
      being extended, refinanced, renewed, replaced, defeased or refunded;

            (c) if Subordinated Obligations are being extended, refinanced,
      renewed, replaced, defeased or refunded, such Permitted Refinancing
      Indebtedness has a final maturity date later than the final maturity date
      of, and is subordinated in right of payment to, the Notes on terms at
      least as favorable to the holders of Notes as those contained in the
      documentation governing the Subordinated Obligations being extended,
      refinanced, renewed, replaced, defeased or refunded; and

            (d) such Indebtedness is incurred either by the Company or by the
      Subsidiary who is the obligor on the Indebtedness being extended,
      refinanced, renewed, replaced, defeased or refunded.

            "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.

            "Physician Support Obligation" means a loan to or on behalf of, or a
guarantee of indebtedness of a Qualified Physician made or given by the Company
or any of its Subsidiaries, (a) in the ordinary course of its business, and (b)
pursuant to a written agreement having a period not to exceed five years;
provided, however, that any such guarantee of Indebtedness of a Qualified
Physician shall be expressly subordinated in right of payment to the Notes or
the Subsidiary Guarantees, as the case may be.

            "Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same Debt as that evidenced by such
particular Note; and any Note authenticated and delivered under Section 2.07 in
lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same
Debt as the lost, destroyed or stolen Note.

            "Private Placement Legend" means the legend set forth in Section
2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except
as otherwise permitted by the provisions of this Indenture.

            "QIB" means a "qualified institutional buyer" as defined in Rule
144A.

            "Qualified Physicians" means one or more physicians or health care
professionals providing service to patients in a health care facility owned,
operated or managed by the Company or any of its Restricted Subsidiaries.

            "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Company, the Guarantors and
Citigroup Global Markets Inc. on behalf of the Initial Purchasers named therein
as such agreement may be amended, modified or supplemented from time to time
and, with respect to any Additional Notes, one or more registration rights
agreements between the Company and the other parties thereto, as such
agreement(s) may be amended, modified or supplemented from time to time,
relating to rights given by the Company to the purchasers of Additional Notes to
register such Additional Notes, or exchange such Additional Notes for registered
notes, under the Securities Act.

            "Regular Record Date" for the interest payable on any Interest
Payment Date means the applicable date specified as a "Record Date" on the face
of any Note in the form of Exhibit A hereto issued in accordance with Article 2
hereof.

            "Regulation S" means Regulation S promulgated under the Securities
Act.

            "Regulation S Global Note" means a Global Note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with and registered in the name of the Depositary or its nominee
issued in a denomination equal to the outstanding principal amount of the Notes
sold for initial resale in reliance on Rule 904 of Regulation S.

                                       14


            "Representative" means the trustee, agent or representative
expressly authorized to act in such capacity, if any, for an issue of Senior
Debt.

            "Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Office of the Trustee (or any successor
group of the Trustee) with direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.

            "Restricted Definitive Note" means one or more Definitive Notes
bearing the Private Placement Legend.

            "Restricted Global Notes" means 144A Global Notes, IAI Global Notes
and Regulation S Global Notes.

            "Restricted Investment" means an Investment other than a Permitted
Investment.

            "Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not a Unrestricted Subsidiary.

            "Rule 144" means Rule 144 promulgated under the Securities Act.

            "Rule 144A" means Rule 144A promulgated under the Securities Act.

            "Rule 903" means Rule 903 promulgated under the Securities Act.

            "Rule 904" means Rule 904 promulgated under the Securities Act.

            "S&P" means Standard & Poor's Ratings Services, a division of McGraw
Hill, Inc., or any successor to the rating agency business thereof.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Senior Debt" means:

            (a) all Indebtedness of the Company or any Guarantor outstanding
      under Credit Facilities and all Hedging Obligations with respect thereto;

            (b) all Indebtedness of the Company or any Guarantor outstanding
      under HUD Financing;

            (c) any other Indebtedness of the Company or any Guarantor permitted
      to be incurred under the terms of this Indenture, unless the instrument
      under which such Indebtedness is incurred expressly provides that it is on
      a parity with or subordinated in right of payment to the Notes or any
      Subsidiary Guarantee; and

            (d) all Obligations with respect to the items listed in the
      preceding clauses (a), (b) and (c).

            Notwithstanding anything to the contrary in the preceding, Senior
Debt will not include:

                  (i) any liability for federal, state, local or other taxes
            owed or owing by the Company;

                  (ii) any Indebtedness of the Company to any of its
            Subsidiaries or other Affiliates;

                  (iii) the Existing Senior Subordinated Notes;

                                       15


                  (iv) any trade payables; or

                  (v) the portion of any Indebtedness that is incurred in
            violation of this Indenture.

            "Senior Subordinated Indebtedness" means (a) with respect to the
Company, the Notes and any other Indebtedness of the Company that specifically
provides that such Indebtedness is to have the same rank as the Notes in right
of payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Company which is not Senior Debt; (b)
with respect to any Guarantor, the Subsidiary Guarantees and any other
Indebtedness of such Guarantor that specifically provides that such Indebtedness
is to have the same rank as the Subsidiary Guarantees in right of payment and is
not subordinated by its terms in right of payment to any Indebtedness or other
obligation of such Guarantor which is not Senior Debt; and (c) the Existing
Senior Subordinated Notes.

            "Shelf Registration Statement" means the registration statement
relating to the registration of the Notes under Rule 415 of the Securities Act,
as may be set forth in a Registration Rights Agreement.

            "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such regulation is in effect on
the date of this Indenture.

            "Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

            "Subordinated Obligations" means any Indebtedness of the Company
(whether outstanding on the date hereof or thereafter incurred) that is
subordinate or junior in right of payment to the Notes pursuant to a written
agreement to that effect.

            "Subsidiary" means, with respect to any specified Person:

            (a) any corporation, association or other business entity of which
      more than 50% of the total voting power of shares of Capital Stock
      entitled (without regard to the occurrence of any contingency) to vote in
      the election of directors, managers or trustees of the corporation,
      association or other business entity is at the time owned or controlled,
      directly or indirectly, by that Person or one or more of the other
      Subsidiaries of that Person (or a combination thereof); and

            (b) any partnership (i) the sole general partner or the managing
      general partner of which is such Person or a Subsidiary of such Person or
      (ii) the only general partners of which are that Person or one or more
      Subsidiaries of that Person (or any combination thereof).

            "Subsidiary Guarantee" means the Guarantee of the Notes by each of
the Guarantors pursuant to Article 10 hereof and in the form of the Guarantee
endorsed on the form of Note attached as Exhibit E hereto and any additional
Guarantee of the Notes to be executed by any Subsidiary of the Company pursuant
to Section 4.18 hereof.

            "Surviving Person" means the surviving Person formed by a merger,
consolidation or amalgamation and, for purposes of Section 5.01 hereof, a Person
to whom all or substantially all of the properties or assets of the Company or
any Guarantor is sold, assigned, transferred, conveyed or otherwise disposed of.

            "TIA" means the Trust Indenture Act of 1939, as amended, and the
rules and regulations thereunder.

            "Treasury Rate" means, at the time of computation, the yield to
maturity of United States Treasury Securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release

                                       16


H.15(519) which has become publicly available at least two business days prior
to the redemption date or, if such Statistical Release is no longer published,
any publicly available source of similar market data) most nearly equal to the
period from the redemption date to July 15, 2010; provided, however, that if the
period from the redemption date to July 15, 2010 is not equal to the constant
maturity of a United States Treasury Security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury Securities for which such yields are given, except
that if the period from the redemption date to July 15, 2010 is less than one
year, the weekly average yield on actually traded United States Treasury
Securities adjusted to a constant maturity of one year shall be used.

            "Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.

            "Unrestricted Definitive Notes" means one or more Definitive Notes
that do not and are not required to bear the Private Placement Legend.

            "Unrestricted Global Notes" means one or more Global Notes that do
not and are not required to bear the Private Placement Legend and are deposited
with and registered in the name of the Depositary or its nominee.

            "Unrestricted Subsidiary" means any Subsidiary of the Company or any
successor to any of them that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent
that such Subsidiary:

            (a) has no Indebtedness other than Non-Recourse Debt;

            (b) is not party to any agreement, contract, arrangement or
      understanding with the Company or any Restricted Subsidiary unless the
      terms of any such agreement, contract, arrangement or understanding are no
      less favorable to the Company or such Restricted Subsidiary than those
      that might be obtained at the time from Persons who are not Affiliates of
      the Company;

            (c) is a Person with respect to which neither the Company nor any of
      its Restricted Subsidiaries has any direct or indirect obligation (i) to
      subscribe for additional Equity Interests or (ii) to maintain or preserve
      such Person's financial condition or to cause such Person to achieve any
      specified levels of operating results;

            (d) has not guaranteed or otherwise directly or indirectly provided
      credit support for any Indebtedness of the Company or any of its
      Restricted Subsidiaries; and

            (e) has at least one director on its Board of Directors that is not
      a director or executive officer of the Company or any of its Restricted
      Subsidiaries and has at least one executive officer that is not a director
      or executive officer of the Company or any of its Restricted Subsidiaries.

            "U.S. Government Securities" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.

            "Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.

            "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

            (a) the sum of the products obtained by multiplying (i) the amount
      of each then remaining

                                       17


      installment, sinking fund, serial maturity or other required payments of
      principal, including payment at final maturity, in respect of the
      Indebtedness, by (ii) the number of years (calculated to the nearest
      one-twelfth) that will elapse between such date and the making of such
      payment; by

            (b) the then outstanding principal amount of such Indebtedness.

SECTION 1.02. OTHER DEFINITIONS.



                                                                      Defined in
Term                                                                    Section
- ----                                                                  ----------
                                                                   
"Acceleration Notice"...............................................      6.02
"Affiliate Transaction".............................................      4.14
"Asset Sale Offer"..................................................      4.12
"Authentication Order"..............................................      2.02
"Benefited Party"...................................................      10.01
"Change of Control Offer"...........................................      4.17
"Change of Control Purchase Price"..................................      4.17
"Covenant Defeasance"...............................................      8.03
"DTC"...............................................................      2.03
"Event of Default"..................................................      6.01
"Legal Defeasance"..................................................      8.02
"losses"............................................................      7.07
"Offer Amount"......................................................      3.09
"Offer Period"......................................................      3.09
"Offer to Purchase".................................................      3.09
"Paying Agent"......................................................      2.03
"Payment Blockage Notice"...........................................      12.03
"Purchase Date".....................................................      3.09
"Purchase Price.....................................................      3.09
"Registrar".........................................................      2.03
"Security Register".................................................      2.03


SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

            (a) Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.

            (b) The following TIA terms used in this Indenture have the
following meanings:

            "indenture securities" means the Notes and the Guarantees;

            "indenture security holder" means a Holder of a Note;

            "indenture to be qualified" means this Indenture;

            "indenture trustee" or "institutional trustee" means the Trustee;
and

            "obligor" on the Notes means the Company and any successor obligor
upon the Notes.

            (c) All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA and not otherwise defined herein have the meanings so assigned to
them.

                                       18


SECTION 1.04. RULES OF CONSTRUCTION.

            (a) Unless the context otherwise requires:

         (i) a term has the meaning assigned to it;

         (ii) an accounting term not otherwise defined herein has the meaning
      assigned to it in accordance with GAAP;

         (iii) "or" is not exclusive;

         (iv) words in the singular include the plural, and in the plural
      include the singular;

         (v) all references in this instrument to "Articles," "Sections" and
      other subdivisions are to the designated Articles, Sections and
      subdivisions of this instrument as originally executed;

         (vi) the words "herein," "hereof" and "hereunder" and other words of
      similar import refer to this Indenture as a whole and not to any
      particular Article, Section or other subdivision.

         (vii) "including" means "including without limitation;"

         (viii) provisions apply to successive events and transactions; and

         (ix) references to sections of or rules under the Securities Act, the
      Exchange Act or the TIA shall be deemed to include substitute, replacement
      or successor sections or rules adopted by the Commission from time to time
      thereunder.

                                   ARTICLE 2.

                                   THE NOTES

SECTION 2.01. FORM AND DATING.

            (a) GENERAL. The Notes and the Trustee's certificate of
authentication shall be substantially in the form included in Exhibit A hereto,
which is hereby incorporated in and expressly made part of this Indenture. The
Notes may have notations, legends or endorsements required by law, exchange rule
or usage in addition to those set forth on Exhibit A. Each Note shall be dated
the date of its authentication. The Notes shall be in denominations of $1,000
and integral multiples thereof. The terms and provisions contained in the Notes
shall constitute a part of this Indenture and the Company, the Guarantors and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby. To the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

            (b) FORM OF NOTES. Notes shall be issued initially in global form
and shall be substantially in the form of Exhibit A attached hereto (including
the Global Note Legend thereon and the "Schedule of Exchanges of Interests in
the Global Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such aggregate
principal amount of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions
and transfers of interests therein. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

                                       19


            (c) BOOK-ENTRY PROVISIONS. This Section 2.01(c) shall apply only to
Global Notes deposited with the Trustee, as custodian for the Depositary.
Participants and Indirect Participants shall have no rights under this Indenture
or any Global Note with respect to any Global Note held on their behalf by the
Depositary or by the Trustee as custodian for the Depositary, and the Depositary
shall be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Participants or Indirect
Participants, the Applicable Procedures or the operation of customary practices
of the Depositary governing the exercise of the rights of a holder of a
beneficial interest in any Global Note.

            (d) EUROCLEAR AND CLEARSTREAM PROCEDURES APPLICABLE. The provisions
of the "Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of
Clearstream" and "Customer Handbook" of Clearstream, or any successor
publications, shall be applicable to transfers of beneficial interests in Global
Notes that are held by Participants through Euroclear or Clearstream.

            (e) CERTIFICATED SECURITIES. The Company shall exchange Global notes
for Definitive Notes if: (i) at any time the Depositary notifies the Company
that it is unwilling or unable to continue to act as Depositary for the Global
Notes or if at any time the Depositary shall no longer be eligible to act as
such because it ceases to be a clearing agency registered under the Exchange
Act, and, in either case, the Company shall not have appointed a successor
Depositary within 120 days after the Company receives such notice or becomes
aware of such ineligibility, (ii) the Company, at its option, determines that
the Global Notes shall be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee or (iii) upon written request of a Holder
or the Trustee if a Default or Event of Default shall have occurred and be
continuing.

            Upon the occurrence of any of the events set forth in clauses (i),
(ii) or (iii) above, the Company shall execute, and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate and deliver, Definitive Notes, in authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global Notes in
exchange for such Global Notes.

            Upon the exchange of a Global Note for Definitive Notes, such Global
Note shall be cancelled by the Trustee or an agent of the Company or the
Trustee. Definitive Notes issued in exchange for a Global Note pursuant to this
Section 2.01 shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its Participants
or its Applicable Procedures, shall instruct the Trustee or an agent of the
Company or the Trustee in writing. The Trustee or such agent shall deliver such
Definitive Notes to or as directed by the Persons in whose names such Definitive
Notes are so registered or to the Depositary.

SECTION 2.02. EXECUTION AND AUTHENTICATION.

            (a) One Officer shall execute the Notes on behalf of the Company by
manual or facsimile signature.

            (b) If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated by the Trustee, the Note shall
nevertheless be valid.

            (c) A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.

            (d) The Trustee shall, upon a written order of the Company signed by
an Officer (an "AUTHENTICATION ORDER"), authenticate Notes for issuance.

            (e) The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. Unless otherwise provided in such
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by

                                       20


such agent. An authenticating agent shall have the same rights as the Trustee to
deal with Holders, the Company or an Affiliate of the Company.

SECTION 2.03. REGISTRAR AND PAYING AGENT.

            (a) The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("REGISTRAR") and an
office or agency where Notes may be presented for payment ("PAYING AGENT"). The
Registrar shall keep a register (the "SECURITY REGISTER") of the Notes and of
their transfer and exchange. The Company may appoint one or more co-registrars
and one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Company may change any Paying Agent or Registrar without notice to any
Holder. The Company shall notify the Trustee in writing of the name and address
of any Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent or
Registrar.

            (b) The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.

            (c) The Company initially appoints the Trustee to act as Registrar
and Paying Agent and to act as Custodian with respect to the Global Notes, and
the Trustee hereby agrees so to initially act.

SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.

            The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and shall notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all funds held
by it relating to the Notes to the Trustee. The Company at any time may require
a Paying Agent to pay all funds held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for such funds. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all funds held by it as Paying Agent. Upon any Event of
Default under Sections 6.01(i) and (j) hereof relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.

SECTION 2.05. HOLDER LISTS.

            The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish or cause to be furnished to the
Trustee at least seven Business Days before each Interest Payment Date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date or such shorter time as the Trustee may allow, as the Trustee
may reasonably require of the names and addresses of the Holders and the Company
shall otherwise comply with TIA Section 312(a).

SECTION 2.06. TRANSFER AND EXCHANGE.

            (a) TRANSFER AND EXCHANGE OF GLOBAL NOTES. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. Upon the occurrence of any of the
events set forth in Section 2.01(e) above, Definitive Notes shall be issued in
denominations of $1,000 or integral multiples thereof and in such names as the
Depositary shall instruct the Trustee in writing. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Except as provided above, every Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to
this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note

                                       21


may not be exchanged for another Note other than as provided in this Section
2.06(a), and beneficial interests in a Global Note may not be transferred and
exchanged other than as provided in Section 2.06(b), (c) or (f) hereof.

                (b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL
NOTES. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either clause (i) or (ii) below, as applicable, as well as one
or more of the other following clauses, as applicable:

            (i) Transfer of Beneficial Interests in the Same Global Note.
      Beneficial interests in any Restricted Global Note may be transferred to
      Persons who take delivery thereof in the form of a beneficial interest in
      the same Restricted Global Note in accordance with the transfer
      restrictions set forth in the Private Placement Legend and any Applicable
      Procedures. Beneficial interests in any Unrestricted Global Note may be
      transferred to Persons who take delivery thereof in the form of a
      beneficial interest in an Unrestricted Global Note. Except as may be
      required by any Applicable Procedures, no written orders or instructions
      shall be required to be delivered to the Registrar to effect the transfers
      described in this Section 2.06(b)(i).

            (ii) All Other Transfers and Exchanges of Beneficial Interests in
      Global Notes. In connection with all transfers and exchanges of beneficial
      interests that are not subject to Section 2.06(b)(i) above, the transferor
      of such beneficial interest must deliver to the Registrar either (A)(1) a
      written order from a Participant or an Indirect Participant given to the
      Depositary in accordance with the Applicable Procedures directing the
      Depositary to credit or cause to be credited a beneficial interest in
      another Global Note in an amount equal to the beneficial interest to be
      transferred or exchanged and (2) instructions given in accordance with the
      Applicable Procedures containing information regarding the Participant
      account to be credited with such increase or (B)(1) a written order from a
      Participant or an Indirect Participant given to the Depositary in
      accordance with the Applicable Procedures directing the Depositary to
      cause to be issued a Definitive Note in an amount equal to the beneficial
      interest to be transferred or exchanged and (2) instructions given by the
      Depositary to the Registrar containing information regarding the Person in
      whose name such Definitive Note shall be registered to effect the transfer
      or exchange referred to in (B)(1) above. Upon consummation of an Exchange
      Offer by the Company in accordance with Section 2.06(f) hereof, the
      requirements of this Section 2.06(b)(ii) shall be deemed to have been
      satisfied upon receipt by the Registrar of the instructions contained in
      the Letter of Transmittal delivered by the Holder of such beneficial
      interests in the Restricted Global Notes. Upon satisfaction of all of the
      requirements for transfer or exchange of beneficial interests in Global
      Notes contained in this Indenture and the Notes or otherwise applicable
      under the Securities Act, the Trustee shall adjust the principal amount of
      the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

            (iii) Transfer of Beneficial Interests in a Restricted Global Note
      to Another Restricted Global Note. A holder of a beneficial interest in a
      Restricted Global Note may transfer such beneficial interest to a Person
      who takes delivery thereof in the form of a beneficial interest in another
      Restricted Global Note if the transfer complies with the requirements of
      Section 2.06(b)(ii) above and the Registrar receives the following:

                  (A) if the transferee will take delivery in the form of a
            beneficial interest in the 144A Global Note, then the transferor
            must deliver a certificate in the form of Exhibit B hereto,
            including the certifications in item (1) thereof or, if permitted by
            the Applicable Procedures, item (3) thereof;

                  (B) if the transferee will take delivery in the form of a
            beneficial interest in the Regulation S Global Note, then the
            transferor must deliver a certificate in the form of Exhibit B
            hereto, including the certifications in item (2) thereof; and

                                       22


                  (C) if the transferee is required by the Applicable Procedures
            to take delivery in the form of a beneficial interest in the IAI
            Global Note, then the transferor must deliver a certificate in the
            form of Exhibit B hereto, including the certifications and
            certificates and Opinion of Counsel required by item (3) thereof, if
            applicable.

            (iv) Transfer or Exchange of Beneficial Interests in a Restricted
      Global Note for Beneficial Interests in an Unrestricted Global Note. A
      holder of a beneficial interest in a Restricted Global Note may exchange
      such beneficial interest for a beneficial interest in an Unrestricted
      Global Note or may transfer such beneficial interest to a Person who takes
      delivery thereof in the form of a beneficial interest in an Unrestricted
      Global Note only if the exchange or transfer complies with the
      requirements of Section 2.06(b)(ii) above and:

                  (A) such exchange or transfer is effected pursuant to the
            Exchange Offer in accordance with a Registration Rights Agreement
            and the holder of the beneficial interest, in the case of an
            exchange, or the transferee, in the case of a transfer, makes any
            and all certifications required in the applicable Letter of
            Transmittal (or is deemed to have made such certifications if
            delivery is made through the Applicable Procedures) as may be
            required by such Registration Rights Agreement;

                  (B) such transfer is effected pursuant to a Shelf Registration
            Statement in accordance with a Registration Rights Agreement;

                  (C) such transfer is effected by a broker-dealer pursuant to
            an Exchange Offer Registration Statement in accordance with a
            Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                  (1) if the holder of such beneficial interest in a Restricted
            Global Note proposes to exchange such beneficial interest for a
            beneficial interest in an Unrestricted Global Note, a certificate
            from such holder in the form of Exhibit C hereto, including the
            certifications in item (1)(a) thereof; or

                  (2) if the holder of such beneficial interest in a Restricted
            Global Note proposes to transfer such beneficial interest to a
            Person who shall take delivery thereof in the form of a beneficial
            interest in an Unrestricted Global Note, a certificate from such
            holder in the form of Exhibit B hereto, including the certifications
            in item (4) thereof;

            and, in each such case set forth in this clause (D), if the
Registrar so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that such
exchange or transfer complies with the Securities Act and that the restrictions
on transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

            If any such transfer is effected pursuant to clause (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall execute and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to clause (B) or (D) above.

            (v) Transfer or Exchange of Beneficial Interests in an Unrestricted
      Global Note for Beneficial Interests in a Restricted Global Note
      Prohibited. Beneficial interests in an Unrestricted Global Note may not be
      exchanged for, or transferred to Persons who take delivery thereof in the
      form of, beneficial interests in a Restricted Global Note.

                                       23


            (c) Transfer and Exchange of Beneficial Interests in Global Notes
for Definitive Notes.

         (i) Transfer or Exchange of Beneficial Interests in Restricted Global
      Notes to Restricted Definitive Notes. Subject to Section 2.06(a) hereof,
      if any holder of a beneficial interest in a Restricted Global Note
      proposes to exchange such beneficial interest for a Restricted Definitive
      Note or to transfer such beneficial interest to a Person who takes
      delivery thereof in the form of a Restricted Definitive Note, then, upon
      receipt by the Registrar of the following documentation:

                  (A) if the holder of such beneficial interest in a Restricted
            Global Note proposes to exchange such beneficial interest for a
            Restricted Definitive Note, a certificate from such holder in the
            form of Exhibit C hereto, including the certifications in item
            (2)(a) thereof;

                  (B) if such beneficial interest is being transferred to a QIB
            in accordance with Rule 144A, a certificate to the effect set forth
            in Exhibit B hereto, including the certifications in item (1)
            thereof;

                  (C) if such beneficial interest is being transferred to a
            "non-U.S. Person" in an offshore transaction (as defined in Section
            902(k) of Regulation S) in accordance with Rule 903 or Rule 904, a
            certificate to the effect set forth in Exhibit B hereto, including
            the certifications in item (2) thereof;

                  (D) if such beneficial interest is being transferred pursuant
            to an exemption from the registration requirements of the Securities
            Act in accordance with Rule 144 under the Securities Act, a
            certificate to the effect set forth in Exhibit B hereto, including
            the certifications in item (3)(a) thereof;

                  (E) if such beneficial interest is being transferred to an
            Institutional Accredited Investor in reliance on an exemption from
            the registration requirements of the Securities Act other than those
            listed in clauses (B) through (D) above, a certificate to the effect
            set forth in Exhibit B hereto, including the certifications,
            certificates and Opinion of Counsel required by item (3)(d) thereof,
            if applicable; or

                  (F) if such beneficial interest is being transferred to the
            Company or any of its Subsidiaries, a certificate to the effect set
            forth in Exhibit B hereto, including the certifications in item
            (3)(b) thereof,

      the Trustee shall reduce or cause to be reduced in a corresponding amount
      pursuant to Section 2.06(h) hereof, the aggregate principal amount of the
      applicable Restricted Global Note, and the Company shall execute and, upon
      receipt of an Authentication Order in accordance with Section 2.02 hereof,
      the Trustee shall authenticate and deliver a Restricted Definitive Note in
      the appropriate principal amount to the Person designated by the holder of
      such beneficial interest in the instructions delivered to the Registrar by
      the Depositary and the applicable Participant or Indirect Participant on
      behalf of such holder. Any Restricted Definitive Note issued in exchange
      for beneficial interests in a Restricted Global Note pursuant to this
      Section 2.06(c)(i) shall be registered in such name or names and in such
      authorized denomination or denominations as the holder of such beneficial
      interest shall designate in such instructions. The Trustee shall deliver
      such Restricted Definitive Notes to the Persons in whose names such Notes
      are so registered. Any Restricted Definitive Note issued in exchange for a
      beneficial interest in a Restricted Global Note pursuant to this Section
      2.06(c)(i) shall bear the Private Placement Legend and shall be subject to
      all restrictions on transfer contained therein.

         (ii) Transfer or Exchange of Beneficial Interests in Restricted Global
      Notes to Unrestricted Definitive Notes. Subject to Section 2.06(a) hereof,
      a holder of a beneficial interest in a Restricted Global Note may exchange
      such beneficial interest for an Unrestricted Definitive Note or may
      transfer such

                                       24


      beneficial interest to a Person who takes delivery thereof in the form of
      an Unrestricted Definitive Note only if:

                  (A) such exchange or transfer is effected pursuant to an
            Exchange Offer in accordance with a Registration Rights Agreement
            and the holder of such beneficial interest, in the case of an
            exchange, or the transferee, in the case of a transfer, makes any
            and all certifications in the applicable Letter of Transmittal (or
            is deemed to have made such certifications if delivery is made
            through the Applicable Procedures) as may be required by such
            Registration Rights Agreement;

                  (B) such transfer is effected pursuant to a Shelf Registration
            Statement in accordance with a Registration Rights Agreement;

                  (C) such transfer is effected by a broker-dealer pursuant to
            an Exchange Offer Registration Statement in accordance with a
            Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                  (1) if the holder of such beneficial interest in a Restricted
            Global Note proposes to exchange such beneficial interest for an
            Unrestricted Definitive Note, a certificate from such holder in the
            form of Exhibit C hereto, including the certifications in item
            (1)(b) thereof; or

                  (2) if the holder of such beneficial interest in a Restricted
            Global Note proposes to transfer such beneficial interest to a
            Person who shall take delivery thereof in the form of an
            Unrestricted Definitive Note, a certificate from such holder in the
            form of Exhibit B hereto, including the certifications in item (4)
            thereof;

            and, in each such case set forth in this clause (D), if the
            Registrar so requests or if the Applicable Procedures so require, an
            Opinion of Counsel in form reasonably acceptable to the Registrar to
            the effect that such exchange or transfer complies with the
            Securities Act and that the restrictions on transfer contained
            herein and in the Private Placement Legend are no longer required in
            order to maintain compliance with the Securities Act.

            Upon satisfaction of any of the conditions of any of the clauses of
      this Section 2.06(c)(ii), the Company shall execute and, upon receipt of
      an Authentication Order in accordance with Section 2.02 hereof, the
      Trustee shall authenticate and deliver an Unrestricted Definitive Note in
      the appropriate principal amount to the Person designated by the holder of
      such beneficial interest in instructions delivered to the Registrar by the
      Depositary and the applicable Participant or Indirect Participant on
      behalf of such holder, and the Trustee shall reduce or cause to be reduced
      in a corresponding amount pursuant to Section 2.06(h), the aggregate
      principal amount of the applicable Restricted Global Note.

         (iii) Transfer or Exchange of Beneficial Interests in Unrestricted
      Global Notes to Unrestricted Definitive Notes. Subject to Section 2.06(a)
      hereof, if any holder of a beneficial interest in an Unrestricted Global
      Note proposes to exchange such beneficial interest for an Unrestricted
      Definitive Note or to transfer such beneficial interest to a Person who
      takes delivery thereof in the form of an Unrestricted Definitive Note,
      then, upon satisfaction of the applicable conditions set forth in Section
      2.06(b)(i) hereof, the Trustee shall reduce or cause to be reduced in a
      corresponding amount pursuant to Section 2.06(h) hereof, the aggregate
      principal amount of the applicable Unrestricted Global Note, and the
      Company shall execute, and, upon receipt of an Authentication Order in
      accordance with Section 2.02 hereof, the Trustee shall authenticate and
      deliver an Unrestricted Definitive Note in the appropriate principal
      amount to the Person designated by the holder of such beneficial interest
      in instructions delivered to the Registrar by the Depositary and the
      applicable Participant or Indirect Participant on behalf of such holder.
      Any Unrestricted

                                       25


      Definitive Note issued in exchange for a beneficial interest pursuant to
      this Section 2.06(c)(iii) shall be registered in such name or names and in
      such authorized denomination or denominations as the holder of such
      beneficial interest shall designate in such instructions. The Trustee
      shall deliver such Unrestricted Definitive Notes to the Persons in whose
      names such Notes are so registered. Any Unrestricted Definitive Note
      issued in exchange for a beneficial interest pursuant to this Section
      2.06(c)(iii) shall not bear the Private Placement Legend.

            (d) Transfer and Exchange of Definitive Notes for Beneficial
      Interests in the Global Notes.

         (i) Transfer or Exchange of Restricted Definitive Notes to Beneficial
      Interests in Restricted Global Notes. If any holder of a Restricted
      Definitive Note proposes to exchange such Restricted Definitive Note for a
      beneficial interest in a Restricted Global Note or to transfer such
      Restricted Definitive Notes to a Person who takes delivery thereof in the
      form of a beneficial interest in a Restricted Global Note, then, upon
      receipt by the Registrar of the following documentation:

                  (A) if the holder of such Restricted Definitive Note proposes
            to exchange such Restricted Definitive Note for a beneficial
            interest in a Restricted Global Note, a certificate from such holder
            in the form of Exhibit C hereto, including the certifications in
            item (2)(b) thereof;

                  (B) if such Restricted Definitive Note is being transferred to
            a QIB in accordance with Rule 144A, a certificate to the effect set
            forth in Exhibit B hereto, including the certifications in item (1)
            thereof;

                  (C) if such Restricted Definitive Note is being transferred to
            a "non- U.S. Person" in an offshore transaction (as defined in Rule
            902(k) of Regulation S) in accordance with Rule 903 or Rule 904, a
            certificate to the effect set forth in Exhibit B hereto, including
            the certifications in item (2) thereof;

                  (D) if such Restricted Definitive Note is being transferred
            pursuant to an exemption from the registration requirements of the
            Securities Act in accordance with Rule 144, a certificate to the
            effect set forth in Exhibit B hereto, including the certifications
            in item (3)(a) thereof;

                  (E) if such Restricted Definitive Note is being transferred to
            an Institutional Accredited Investor in reliance on an exemption
            from the registration requirements of the Securities Act other than
            those listed in clauses (B) through (D) above, a certificate to the
            effect set forth in Exhibit B hereto, including the certifications,
            certificates and Opinion of Counsel required by item (3)(d) thereof,
            if applicable; or

                  (F) if such Restricted Definitive Note is being transferred to
            the Company or any of its Subsidiaries, a certificate to the effect
            set forth in Exhibit B hereto, including the certifications in item
            (3)(b) thereof,

      the Trustee shall cancel the Restricted Definitive Note, increase or cause
      to be increased in a corresponding amount pursuant to Section 2.06(h)
      hereof, the aggregate principal amount of, in the case of clause (A)
      above, the appropriate Restricted Global Note, in the case of clause (B)
      above, a 144A Global Note, in the case of clause (C) above, a Regulation S
      Global Note, and in all other cases, a IAI Global Note.

         (ii) Transfer or Exchange of Restricted Definitive Notes to Beneficial
      Interests in Unrestricted Global Notes. A holder of a Restricted
      Definitive Note may exchange such Restricted Definitive Note for a
      beneficial interest in an Unrestricted Global Note or transfer such
      Restricted Definitive Note to a Person who takes delivery thereof in the
      form of a beneficial interest in an Unrestricted Global Note only if:

                                       26


                  (A) such exchange or transfer is effected pursuant to an
            Exchange Offer in accordance with a Registration Rights Agreement
            and the holder of such beneficial interest, in the case of an
            exchange, or the transferee, in the case of a transfer, makes any
            and all certifications in the applicable Letter of Transmittal (or
            is deemed to have made such certifications if delivery is made
            through the Applicable Procedures) as may be required by such
            Registration Rights Agreement;

                  (B) such transfer is effected pursuant to a Shelf Registration
            Statement in accordance with a Registration Rights Agreement;

                  (C) such transfer is effected by a broker-dealer pursuant to
            an Exchange Offer Registration Statement in accordance with a
            Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                  (1) if the holder of such Restricted Definitive Note proposes
            to exchange such Restricted Definitive Note for a beneficial
            interest in an Unrestricted Global Note, a certificate from such
            holder in the form of Exhibit C hereto, including the certifications
            in item (1)(c) thereof; or

                  (2) if the holder of such Restricted Definitive Note proposes
            to transfer such Restricted Definitive Note to a Person who shall
            take delivery thereof in the form of a beneficial interest in an
            Unrestricted Global Note, a certificate from such Holder in the form
            of Exhibit B hereto, including the certifications in item (4)
            thereof;

            and, in each such case set forth in this clause (D), if the
            Registrar so requests or if the Applicable Procedures so require, an
            Opinion of Counsel in form reasonably acceptable to the Registrar to
            the effect that such exchange or transfer shall be effected in
            compliance with the Securities Act and that the restrictions on
            transfer contained herein and in the Private Placement Legend shall
            no longer be required in order to maintain compliance with the
            Securities Act.

            Upon satisfaction of the conditions of any of the clauses in this
Section 2.06(d)(ii), the Trustee shall cancel such Restricted Definitive Note
and increase or cause to be increased in a corresponding amount pursuant to
Section 2.06(h) hereof, the aggregate principal amount of the Unrestricted
Global Note.

         (iii) Transfer or Exchange of Unrestricted Definitive Notes to
      Beneficial Interests in Unrestricted Global Notes. A holder of an
      Unrestricted Definitive Note may exchange such Unrestricted Definitive
      Note for a beneficial interest in an Unrestricted Global Note or transfer
      such Unrestricted Definitive Note to a Person who takes delivery thereof
      in the form of a beneficial interest in an Unrestricted Global Note at any
      time. Upon receipt of a request for such an exchange or transfer, the
      Trustee shall cancel the applicable Unrestricted Definitive Note and
      increase or cause to be increased in a corresponding amount pursuant to
      Section 2.06(h) hereof the aggregate principal amount of one of the
      Unrestricted Global Notes.

         (iv) Transfer or Exchange of Unrestricted Definitive Notes to
      Beneficial Interests in Restricted Global Notes Prohibited. An
      Unrestricted Definitive Note may not be exchanged for, or transferred to
      Persons who take delivery thereof in the form of, beneficial interests in
      a Restricted Global Note.

         (v) Issuance of Unrestricted Global Notes. If any such exchange or
      transfer of a Definitive Note for a beneficial interest in an Unrestricted
      Global Note is effected pursuant to clause (ii)(B), (ii)(D) or (iii) above
      at a time when an Unrestricted Global Note has not yet been issued, the
      Company shall issue and, upon receipt of an Authentication Order in
      accordance with Section 2.02 hereof, the Trustee shall authenticate one or
      more Unrestricted Global Notes in an aggregate principal amount equal to
      the principal amount of Definitive Notes so transferred.

                                       27


            (e) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR DEFINITIVE NOTES.
Upon request by a holder of Definitive Notes and such holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such holder. In
addition, the requesting holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).

         (i) Transfer of Restricted Definitive Notes to Restricted Definitive
      Notes. Any Restricted Definitive Note may be transferred to and registered
      in the name of Persons who take delivery thereof in the form of a
      Restricted Definitive Note if the Registrar receives the following:

                  (A) if the transfer will be made pursuant to Rule 144A, a
            certificate in the form of Exhibit B hereto, including the
            certifications in item (1) thereof;

                  (B) if the transfer will be made pursuant to Rule 903 or Rule
            904, a certificate in the form of Exhibit B hereto, including the
            certifications in item (2) thereof; and

                  (C) if the transfer will be made pursuant to any other
            exemption from the registration requirements of the Securities Act,
            a certificate in the form of Exhibit B hereto, including the
            certifications, certificates and Opinion of Counsel required by item
            (3) thereof, if applicable.

         (ii) Transfer or Exchange of Restricted Definitive Notes to
      Unrestricted Definitive Notes. Any Restricted Definitive Note may be
      exchanged by the holder thereof for an Unrestricted Definitive Note or
      transferred to a Person or Persons who take delivery thereof in the form
      of an Unrestricted Definitive Note only if:

                  (A) such exchange or transfer is effected pursuant to an
            Exchange Offer in accordance with a Registration Rights Agreement
            and the holder, in the case of an exchange, or the transferee, in
            the case of a transfer, makes any and all certifications in the
            applicable Letter of Transmittal (or is deemed to have made such
            certifications if delivery is made through the Applicable
            Procedures) as may be required by a Registration Rights Agreement;

                  (B) any such transfer is effected pursuant to a Shelf
            Registration Statement in accordance with a Registration Rights
            Agreement;

                  (C) any such transfer is effected by a broker-dealer pursuant
            to an Exchange Offer Registration Statement in accordance with a
            Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                  (1) if the holder of such Restricted Definitive Note proposes
            to exchange such Restricted Definitive Notes for an Unrestricted
            Definitive Note, a certificate from such holder in the form of
            Exhibit C hereto, including the certifications in item (1)(d)
            thereof; or

                  (2) if the holder of such Restricted Definitive Notes proposes
            to transfer such Restricted Definitive Notes to a Person who shall
            take delivery thereof in the form of an Unrestricted Definitive
            Note, a certificate from such holder in the form of Exhibit B
            hereto, including the certifications in item (4) thereof;

                                       28


            and, in each such case set forth in this clause (D), if the
            Registrar so requests, an Opinion of Counsel in form reasonably
            acceptable to the Registrar to the effect that such exchange or
            transfer complies with the Securities Act and that the restrictions
            on transfer contained herein and in the Private Placement Legend are
            no longer required in order to maintain compliance with the
            Securities Act.

            Upon satisfaction of the conditions of any of the clauses of this
Section 2.06(e)(ii), the Trustee shall cancel the prior Restricted Definitive
Note and the Company shall execute, and upon receipt of an Authentication Order
in accordance with Section 2.02 hereof, the Trustee shall authenticate and
deliver an Unrestricted Definitive Note in the appropriate aggregate principal
amount to the Person designated by the holder of such prior Restricted
Definitive Note in instructions delivered to the Registrar by such holder.

         (iii) Transfer of Unrestricted Definitive Notes to Unrestricted
      Definitive Notes. A holder of Unrestricted Definitive Notes may transfer
      such Unrestricted Definitive Notes to a Person who takes delivery thereof
      in the form of an Unrestricted Definitive Note. Upon receipt of a request
      to register such a transfer, the Registrar shall register the Unrestricted
      Definitive Notes pursuant to the instructions from the holder thereof.

            (f) EXCHANGE OFFER. Upon the occurrence of an Exchange Offer in
accordance with a Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate (A) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the aggregate principal amount of the
beneficial interests in the applicable Restricted Global Notes (1) tendered for
acceptance by Persons that make any and all certifications in the applicable
Letters of Transmittal (or are deemed to have made such certifications if
delivery is made through the Applicable Procedures) as may be required by such
Registration Rights Agreement and (2) accepted for exchange in such Exchange
Offer and (B) Unrestricted Definitive Notes in an aggregate principal amount
equal to the aggregate principal amount of the Restricted Definitive Notes
tendered for acceptance by Persons who made the foregoing certifications and
accepted for exchange in the Exchange Offer. Concurrently with the issuance of
such Notes, the Trustee shall reduce or cause to be reduced in a corresponding
amount the aggregate principal amount of the applicable Restricted Global Notes,
and the Company shall execute and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver
to the Persons designated by the holders of Restricted Definitive Notes so
accepted Unrestricted Definitive Notes in the appropriate aggregate principal
amount.

            (g) LEGENDS. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

        (i) Private Placement Legend.

                  (A) Except as permitted by clause (B) below, each Global Note
            and each Definitive Note (and all Notes issued in exchange therefor
            or substitution thereof) shall bear the legend in substantially the
            following form:

            "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

            THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS
OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT

                                       29


THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON U.S. PERSONS THAT OCCUR OUTSIDE OF THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF $250,000, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE."

                  (B) Notwithstanding the foregoing, any Global Note or
            Definitive Note issued pursuant to clauses (b)(iv), (c)(ii),
            (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this
            Section 2.06 (and all Notes issued in exchange therefor or
            substitution thereof) shall not bear the Private Placement Legend.

         (ii) Global Note Legend. Each Global Note shall bear a legend in
      substantially the following form:

            "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.

            UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS MAY BE REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN."

            (h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and

                                       30


cancelled by the Trustee in accordance with Section 2.11 hereof. At any time
prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note or for Definitive Notes,
the aggregate principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, the aggregate principal amount of such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.

            (i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.

         (i) No service charge shall be made to a holder of a beneficial
      interest in a Global Note or to a Holder of a Definitive Note for any
      registration of transfer or exchange, but the Company may require payment
      of a sum sufficient to cover any transfer tax or similar governmental
      charge payable in connection therewith (other than any such transfer taxes
      or similar governmental charge payable upon exchange or transfer pursuant
      to Sections 2.10, 3.06, 4.12, 4.17 and 9.05 hereof).

         (ii) All Global Notes and Definitive Notes issued upon any registration
      or transfer or exchange of Global Notes or Definitive Notes shall be the
      valid obligations of the Company, evidencing the same debt as the Global
      Notes or Definitive Notes surrendered upon such registration of transfer
      or exchange and shall be entitled to all of the benefits of this Indenture
      equally and proportionately with all other Notes duly issued hereunder.

         (iii) Neither the Registrar nor the Company shall be required (A) to
      issue, to register the transfer of or to exchange any Notes during a
      period beginning at the opening of business 15 days before the day of any
      selection of Notes for redemption under Section 3.02 hereof and ending at
      the close of business on the date of selection, (B) to register the
      transfer of or to exchange any Note so selected for redemption in whole or
      in part, except the unredeemed portion of any Note being redeemed in part
      or (C) to register the transfer of or to exchange a Note between a record
      date (including a Regular Record Date) and the next succeeding Interest
      Payment Date.

         (iv) Prior to due presentment for the registration of transfer of any
      Note, the Trustee, any Agent and the Company may deem and treat the Person
      in whose name any Note is registered as the absolute owner of such Note
      for the purpose of receiving payment of principal of, premium, if any, and
      interest on such Note and for all other purposes, in each case regardless
      of any notice to the contrary.

         (v) All certifications, certificates and Opinions of Counsel required
      to be submitted to the Registrar pursuant to this Section 2.06 to effect a
      registration of transfer or exchange may be submitted by facsimile.

         (vi) The Trustee shall have no obligation or duty to monitor, determine
      or inquire as to compliance with any restriction on transfer imposed under
      this Indenture or under applicable law with respect to any transfer of any
      interest in any Note (including transfers between or among beneficial
      owners of interests in any Global Note) other than to require delivery of
      such certificates and other documentation or evidence as are expressly
      required by, and to do so if and when expressly required by the terms of,
      this Indenture, and to examine the same to determine substantial
      compliance as to form with the express requirements hereof.

SECTION 2.07. REPLACEMENT NOTES.

            If any mutilated Note is surrendered to the Trustee or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate a replacement Note. If required by the Trustee or the Company, the
Holder of such Note shall provide an affidavit of loss and indemnity

                                       31


that is sufficient, in the judgment of the Trustee or the Company, to protect
the Company, the Trustee, any Agent and any authenticating agent from any loss
that any of them may suffer in connection with such replacement. If required by
the Company, such Holder shall reimburse the Company for its reasonable expenses
in connection with such replacement.

            Every replacement Note issued in accordance with this Section 2.07
shall be the valid obligation of the Company, evidencing the same debt as the
destroyed, lost or stolen Note, and shall be entitled to all of the benefits of
this Indenture equally and proportionately with all other Notes duly issued
hereunder.

SECTION 2.08. OUTSTANDING NOTES.

            (a) The Notes outstanding at any time shall be the entire principal
amount of Notes represented by all of the Global Notes and Definitive Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those subject to reductions in beneficial interests
effected by the Trustee in accordance with Section 2.06 hereof, and those
described in this Section 2.08 as not outstanding. Except as set forth in
Section 2.09 hereof, a Note shall not cease to be outstanding because the
Company or an Affiliate of the Company holds the Note; provided, however, that
Notes held by the Company or a Subsidiary of the Company shall be deemed not to
be outstanding for purposes of Section 3.07(c) hereof.

            (b) If a Note is replaced pursuant to Section 2.07 hereof, it shall
cease to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced note is held by a bona fide purchaser.

            (c) If the principal amount of any Note is considered paid under
Section 4.01 hereof, it shall cease to be outstanding and interest on it shall
cease to accrue.

            (d) If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date, a Purchase Date or a
maturity date, funds sufficient to pay Notes payable on that date, then on and
after that date such Notes shall be deemed to be no longer outstanding and shall
cease to accrue interest.

SECTION 2.09. TREASURY NOTES.

            In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.

SECTION 2.10. TEMPORARY NOTES.

            Until certificates representing Notes are ready for delivery, the
Company may prepare and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of Definitive Notes but may
have variations that the Company considers appropriate for temporary Notes and
as shall be reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate Global Notes or
Definitive Notes in exchange for temporary Notes, as applicable. After
preparation of Definitive Notes, the Temporary Notes will be exchangeable for
Definitive Notes upon surrender of the Temporary Notes.

            Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture equally and proportionately with all other Notes duly issued
hereunder.

SECTION 2.11. CANCELLATION.

            The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
Upon sole direction of the Company, the Trustee and no one else shall cancel all
Notes surrendered for

                                       32


registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirements of
the Exchange Act or other applicable laws) unless by written order, signed by an
Officer of the Company, the Company directs them to be returned to it.
Certification of the destruction of all cancelled Notes shall be delivered to
the Company from time to time upon request. The Company may not issue new Notes
to replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.

SECTION 2.12. PAYMENT OF INTEREST; DEFAULTED INTEREST.

            If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date; provided that no such special
record date shall be less than 10 days prior to the related Interest Payment
Date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related Interest
Payment Date and the amount of such interest to be paid.

SECTION 2.13. CUSIP OR ISIN NUMBERS.

            The Company in issuing the Notes may use "CUSIP" and/or "ISIN"
numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP"
and/or "ISIN" numbers in notices of redemption or Offers to Purchase as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption or notice of
an Offer to Purchase and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption or Offer to
Purchase shall not be affected by any defect in or omission of such numbers. The
Company shall promptly notify the Trustee of any change in the "CUSIP" and/or
"ISIN" numbers.

SECTION 2.14. ADDITIONAL INTEREST.

            If Additional Interest is payable by the Company pursuant to a
Registration Rights Agreement and paragraph 1 of the Notes, the Company shall
deliver to the Trustee a certificate to that effect stating (i) the amount of
such Additional Interest that is payable and (ii) the date on which such
interest is payable pursuant to Section 4.01 hereof. Unless and until a
Responsible Officer of the Trustee receives such a certificate or instruction or
direction from the Holders in accordance with the terms of this Indenture, the
Trustee may assume without inquiry that no Additional Interest is payable. The
foregoing shall not prejudice the rights of the Holders with respect to their
entitlement to Additional Interest as otherwise set forth in this Indenture or
the Notes and pursuing any action against the Company directly or otherwise
directing the Trustee to take any such action in accordance with the terms of
this Indenture and the Notes. If the Company has paid Additional Interest
directly to the Persons entitled to it, the Company shall deliver to the Trustee
an Officers' Certificate setting forth the details of such payment.

SECTION 2.15. ISSUANCE OF ADDITIONAL NOTES.

            The Company shall be entitled, subject to its compliance with
Section 4.09 hereof, to issue Additional Notes under this Indenture which shall
have identical terms as the Initial Notes issued on the date hereof, other than
with respect to the date of issuance, issue price and rights under a related
Registration Rights Agreement, if any. The Initial Notes issued on the date
hereof, any Additional Notes and all Exchange Notes issued in exchange therefor
shall be treated as a single class for all purposes under this Indenture,
including directions, waivers, amendments, consents, redemptions and Offers to
Purchase.

            With respect to any Additional Notes, the Company shall set forth in
a Board Resolution and an Officers' Certificate, a copy of each of which shall
be delivered to the Trustee, the following information:

                                       33


            (a) the aggregate principal amount of such Additional Notes to be
authenticated and delivered pursuant to this Indenture;

            (b) the issue price, the Issue Date and the CUSIP and/or ISIN number
of such Additional Notes; provided, however, that no Additional Notes may be
issued at a price that would cause such Additional Notes to have "original issue
discount" within the meaning of Section 1273 of the Code, other than a de
minimis original issue discount within the meaning of Section 1273 of the Code;
and

            (c) whether such Additional Notes shall be subject to the
restrictions on transfer set forth in Section 2.06 hereof relating to Restricted
Global Notes and Restricted Definitive Notes.

SECTION 2.16. RECORD DATE.

            The record date for purposes of determining the identity of Holders
of Notes entitled to vote or consent to any action by vote or consent or
permitted under this Indenture shall be determined as provided for in TIA
Section 316(c).

                                   ARTICLE 3.

                            REDEMPTION AND PREPAYMENT

SECTION 3.01. NOTICES TO TRUSTEE.

            If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date (or such
shorter period as allowed by the Trustee), an Officers' Certificate setting
forth (a) the applicable section of this Indenture pursuant to which the
redemption shall occur, (b) the redemption date, (c) the principal amount of
Notes to be redeemed and (d) the redemption price.

SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.

            If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee deems
fair and appropriate. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.

            The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or integral multiples thereof;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not an integral
multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.

SECTION 3.03. NOTICE OF REDEMPTION.

            At least 30 days but not more than 60 days prior to a redemption
date, the Company shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Notes are to be redeemed at such
Holder's registered address appearing in the Security Register, except that
redemption notices may be mailed more than 60 days prior to a redemption date if
the notice is issued in connection with a defeasance pursuant to Article 8
hereof or a satisfaction and discharge pursuant to Article 11 hereof.

            The notice shall identify the Notes to be redeemed and shall state:

                                       34


            (a) the redemption date;

            (b) the appropriate method for calculation of the redemption price,
but need not include the redemption price itself; the actual redemption price
shall be set forth in an Officers' Certificate delivered to the Trustee no later
than two (2) Business Days prior to the redemption date;

            (c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, if applicable, a new Note or Notes in principal
amount equal to the unredeemed portion shall be issued upon cancellation of the
original Note;

            (d) the name and address of the Paying Agent;

            (e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;

            (f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;

            (g) the applicable section of this Indenture pursuant to which the
Notes called for redemption are being redeemed; and

            (h) that no representation is made as to the correctness of the
CUSIP and/or ISIN numbers, if any, listed in such notice or printed on the
Notes.

            At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days (or such shorter
period allowed by the Trustee), prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice (in the name and at the
expense of the Company) and setting forth the information to be stated in such
notice as provided in this Section 3.03.

SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.

            Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption shall become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.

SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.

            On or prior to 11:00 a.m. Eastern time on the Business Day prior to
any redemption date, the Company shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption price of and, if applicable,
accrued and unpaid interest on all Notes to be redeemed on that date, and shall
invest such proceeds until such use to pay the redemption price as directed by
the Company in Cash Equivalents. The Trustee or the Paying Agent shall promptly,
and in any event within two (2) Business Days after the redemption date, return
to the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of, and
accrued and unpaid interest, if any, on, all Notes to be redeemed.

            If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for purchase or redemption in
accordance with Section 2.08(d) hereof, whether or note such Notes are presented
for payment. If a Note is redeemed on or after a Regular Record Date but on or
prior to the related Interest Payment Date, then any accrued and unpaid
interest, if any, shall be paid to the Person in whose name such Note was
registered at the close of business on such Regular Record Date. If any Note
called for redemption shall not be so paid upon surrender for redemption because
of the failure of the Company to comply with the preceding paragraph, interest
shall be paid on

                                       35


the unpaid principal from the redemption date until such principal is paid, and
to the extent lawful on any interest not paid on such unpaid principal, in each
case at the rate provided in the Notes and in Section 4.01 hereof.

SECTION 3.06. NOTES REDEEMED IN PART.

            Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon receipt of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.

SECTION 3.07. OPTIONAL REDEMPTION.

            (a) Except as set forth in clauses (b) and (c) of this Section 3.07,
the Notes shall not be redeemable at the option of the Company prior to July 15,
2010. Beginning on July 15, 2010, the Company may redeem all or a portion of the
Notes, at once or over time, after giving the notice required pursuant to
Section 3.03 hereof, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest and
Additional Interest, if any, on the Notes redeemed, to the applicable redemption
date (subject to the right of Holders of record on the relevant Regular Record
Date to receive interest due on the relevant Interest Payment Date), if redeemed
during the twelve-month period commencing on July 15 of the years indicated
below:



Year                                                          Percentage
- ----                                                          ----------
                                                           
2010...................................................        103.875%
2011...................................................        102.583%
2012...................................................        101.292%
2013 and thereafter....................................        100.000%


            (b) At any time and from time to time prior to July 15, 2008, the
Company may redeem up to 35% of the aggregate principal amount of the Notes
(including Additional Notes) issued under this Indenture at a redemption price
(expressed as a percentage of principal amount) equal to 107.750% of the
principal amount thereof, plus accrued and unpaid interest and Additional
Interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on the
relevant Interest Payment Date) with the net cash proceeds of any Equity
Offering of common stock of the Company; provided, however, that (i) at least
65% of the aggregate principal amount of the Notes initially issued under this
Indenture (excluding Notes held by the Company and its Subsidiaries) remains
outstanding immediately after giving effect to such redemption and (ii) any such
redemption shall be made within 120 days of such Equity Offering.

            (c) At any time prior to July 15, 2010, the Company may redeem all
or any portion of the Notes, at once or over time, after giving the required
notice under the indenture at a redemption price equal to the greater of:

            (i)   100% of the principal amount of the notes to be redeemed, and

            (ii)  the sum of the present values of (1) the redemption price of
                  the notes at July 15, 2010 (as set forth above) and (2) the
                  remaining scheduled payments of interest from the redemption
                  date through July 15, 2010, but excluding accrued and unpaid
                  interest through the redemption date, discounted to the
                  redemption date (assuming a 360 day year consisting of twelve
                  30 day months), at the Treasury Rate plus 50 basis points,

plus, in either case, accrued and unpaid interest, including Additional
Interest, if any, to but excluding the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date).

            (d) Any notice to holders of Notes of such a redemption shall
include the appropriate calculation of the redemption price, but need not
include the redemption price itself. The actual redemption price, calculated as

                                       36


described above, shall be set forth in an Officers' Certificate delivered to the
Trustee no later than two business days prior to the redemption date.

            (e) Any prepayment pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.

SECTION 3.08 MANDATORY REDEMPTION.

            Except as set forth in Sections 4.12 and 4.17 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments with
respect to, or offer to purchase, the Notes.

SECTION 3.09. OFFER TO PURCHASE.

            (a) In the event that, pursuant to Section 4.12 or 4.17 hereof, the
Company shall be required to commence an Asset Sale Offer or a Change of Control
Offer (each, an "OFFER TO PURCHASE"), it shall follow the procedures specified
below.

            (b) The Company shall cause a notice of the Offer to Purchase to be
sent at least once to the Dow Jones News Service or similar business news
service in the United States.

            (c) The Company shall commence the Offer to Purchase by sending, by
first-class mail, with a copy to the Trustee, to each Holder at such Holder's
address appearing in the Security Register, a notice the terms of which shall
govern the Offer to Purchase stating:

         (i) that the Offer to Purchase is being made pursuant to this Section
      3.09 and Section 4.12 or Section 4.17, as the case may be, and, in the
      case of a Change of Control Offer, that a Change of Control has occurred,
      the circumstances and relevant facts regarding the Change of Control and
      that a Change of Control Offer is being made pursuant to Section 4.17;

         (ii) the principal amount of Notes required to be purchased pursuant to
      Section 4.12 or Section 4.17, as the case may be (the "OFFER AMOUNT"), the
      purchase price set forth in Section 4.12 or Section 4.17 hereof, as
      applicable (the "PURCHASE PRICE"), the Offer Period and the Purchase Date
      (each as defined below);

         (iii) except as provided in clause (ix), that all Notes timely tendered
      and not withdrawn shall be accepted for payment;

         (iv) that any Note not tendered or accepted for payment shall continue
      to accrue interest;

         (v) that, unless the Company defaults in making such payment, any Note
      accepted for payment pursuant to the Offer to Purchase shall cease to
      accrue interest after the Purchase Date;

         (vi) that Holders electing to have a Note purchased pursuant to an
      Offer to Purchase may elect to have Notes purchased in integral multiples
      of $1,000 only;

         (vii) that Holders electing to have a Note purchased pursuant to any
      Offer to Purchase shall be required to surrender the Note, with the form
      entitled "Option of Holder to Elect Purchase" on the reverse of the Note
      completed, or transfer by book-entry transfer, to the Company, the
      Depositary, if appointed by the Company, or a Paying Agent at the address
      specified in the notice before the close of business on the third Business
      Day before the Purchase Date;

         (viii) that Holders shall be entitled to withdraw their election if the
      Company, the Depositary or the Paying Agent, as the case may be, receives,
      not later than the expiration of the Offer Period, a telegram, facsimile
      transmission or letter setting forth the name of the Holder, the principal
      amount of the Note (or

                                       37


      portions thereof) the Holder delivered for purchase and a statement that
      such Holder is withdrawing his election to have such Note purchased;

         (ix) that, in the case of an Asset Sale Offer, if the aggregate
      principal amount of Notes surrendered by Holders exceeds the Offer Amount,
      the Company shall select the Notes to be purchased on a pro rata basis
      (with such adjustments as may be deemed appropriate by the Company so that
      only Notes in denominations of $1,000 or integral multiples thereof shall
      be purchased);

         (x) that Holders whose Notes were purchased in part shall be issued new
      Notes equal in principal amount to the unpurchased portion of the Notes
      surrendered (or transferred by book-entry transfer); and

         (xi) any other procedures the Holders must follow in order to tender
      their Notes (or portions thereof) for payment and the procedures that
      Holders must follow in order to withdraw an election to tender Notes (or
      portions thereof) for payment.

            (d) The Offer to Purchase shall remain open for a period of at least
30 days but no more than 60 days following its commencement, except to the
extent that a longer period is required by applicable law (the "OFFER PERIOD").
No later than five (5) Business Days (and in any event no later than the 60th
day following the Change of Control) after the termination of the Offer Period
(the "PURCHASE DATE"), the Company shall purchase the Offer Amount or, if less
than the Offer Amount has been tendered, all Notes tendered in response to the
Offer to Purchase. Payment for any Notes so purchased shall be made in the same
manner as interest payments are made. The Company shall publicly announce the
results of the Offer to Purchase on the Purchase Date.

            (e) On or prior to the Purchase Date, the Company shall, to the
extent lawful:

         (i) accept for payment (on a pro rata basis to the extent necessary in
      connection with an Asset Sale Offer), the Offer Amount of Notes or
      portions of Notes properly tendered and not withdrawn pursuant to the
      Offer to Purchase, or if less than the Offer Amount has been tendered, all
      Notes tendered;

         (ii) deposit with the Paying Agent funds in an amount equal to the
      Purchase Price in respect of all Notes or portions of Notes properly
      tendered; and

         (iii) deliver or cause to be delivered to the Trustee the Notes
      properly accepted together with an Officers' Certificate stating the
      aggregate principal amount of Notes or portions of Notes being purchased
      by the Company and that such Notes or portions thereof were accepted for
      payment by the Company in accordance with the terms of this Section 3.09.

            (f) The Paying Agent shall promptly (but in the case of a Change of
Control not later than 60 days from the date of the Change of Control) execute
and issue a new Note, and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate and deliver (or cause
to be transferred by book-entry) such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered; provided,
however, that each such new Note shall be in a principal amount of $1,000 or an
integral multiple thereof. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof.

            (g) If the Purchase Date is on or after a Regular Record Date and on
or before the related Interest Payment Date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such Regular Record Date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Offer to Purchase.

            (h) The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent those laws and regulations are
applicable in connection with the Offer to Purchase. To the extent that the
provisions of any securities laws or regulations conflict with Sections 4.12 or
4.17, as applicable, this Section 3.09 or other provisions of this Indenture,
the Company shall comply with applicable securities laws and regulations and
shall not be deemed

                                       38


to have breached its obligations under Sections 4.12 or 4.17, as applicable,
this Section 3.09 or such other provision by virtue of such compliance.

            (i) Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made in accordance with the
provisions of Section 3.01 through 3.06 hereof.

                                   ARTICLE 4.

                                   COVENANTS

SECTION 4.01. PAYMENT OF NOTES.

            The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on, the Notes on the dates and in the manner provided in
this Indenture and the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 11:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available United States dollars
and designated for and sufficient to pay all principal, premium, if any, and
interest then due. Such Paying Agent shall return to the Company promptly, and
in any event, no later than five (5) Business Days following the date of
payment, any money (including accrued interest) that exceeds such amount of
principal, premium, if any, and interest paid on the Notes. The Company shall
pay Additional Interest, if any, in the same manner, on the dates and in the
amounts set forth in a Registration Rights Agreement, the Notes and this
Indenture. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on such payment for the intervening
period.

            The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods), from time to time on demand at
the same rate to the extent lawful.

            Interest shall be computed on the basis of a 360-day year of twelve
30-day months.

SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.

            (a) The Company shall maintain in the Borough of Manhattan, The City
of New York, an office or agency (which may be an office or drop facility of the
Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes
may be presented or surrendered for registration of transfer or for exchange and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.

            (b) The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.

            (c) The Company hereby designates the Corporate Trust Office of the
Trustee, as one such office, drop facility or agency of the Company in
accordance with Section 2.03 hereof.

                                       39


SECTION 4.03. REPORTS.

            (a) Whether or not required by the Commission, so long as any Notes
are outstanding, the Company will furnish to the Holders, within the time
periods specified in the Commission's rules and regulations:

                  (i) all quarterly and annual financial information that would
            be required to be contained in a filing with the Commission on Forms
            10-Q and 10-K if the Company were required to file such Forms,
            including a "Management's Discussion and Analysis of Financial
            Condition and Results of Operations" and, with respect to the annual
            information only, a report on the annual financial statements by the
            Company's certified independent accountants; and

                  (ii) all current reports that would be required to be filed
            with the Commission on Form 8-K if the Company were required to file
            such reports.

            (b) If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph will include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and if the Company or any of its Restricted Subsidiaries has made an
Investment of at least $0.1 million in such Unrestricted Subsidiary, in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.

            (c) In addition, following the consummation of the Exchange Offer
contemplated by the Registration Rights Agreement, whether or not required by
the Commission, the Company will file a copy of all of the information and
reports referred to in clauses (a)(i) and (a)(ii) above with the Commission for
public availability within the time periods specified in the Commission's rules
and regulations (unless the Commission will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request. In addition, the Company and the Guarantors have agreed that, for so
long as any Notes remain outstanding, they will furnish to the holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

            (d) The Trustee shall not be under a duty to review or evaluate any
report or information delivered to the Trustee pursuant to the provisions of
this Section 4.03 for the purposes of making such reports available to it and to
the Holders of Notes who may request such information. Delivery of such reports,
information and documents to the Trustee as may be required pursuant to this
Section 4.03 is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).

SECTION 4.04. COMPLIANCE CERTIFICATE.

            (a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year commencing with the fiscal year ended December 31,
2005, an Officers' Certificate stating that a review of the activities of the
Company, the Guarantors and their respective Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company, the Guarantors and their respective
Subsidiaries have kept, observed, performed and fulfilled their obligations
under this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company, the
Guarantors and their respective Subsidiaries have kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and are not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of, premium, if any, or interest on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.

                                       40


            (b) The Company shall otherwise comply with TIA Section 314(a)(2).

            (c) The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any event that with the giving of notice and/or the lapse of time would
become an Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto.

SECTION 4.05. TAXES.

            The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments and governmental
levies, except such as are being contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders.

SECTION 4.06. STAY, EXTENSION AND USURY LAWS.

            The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.

SECTION 4.07. CORPORATE EXISTENCE.

            Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (a) its
corporate existence, and the corporate, partnership or other existence of each
Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (b) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any
Restricted Subsidiary, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Notes, or
that such preservation is not necessary in connection with any transaction not
prohibited by this Indenture.

SECTION 4.08. PAYMENTS FOR CONSENT.

            The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, pay or cause to be paid any consideration
to or for the benefit of any Holder for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture or the
Notes unless such consideration is offered to be paid and is paid to all Holders
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

SECTION 4.09. INCURRENCE OF ADDITIONAL DEBT AND ISSUANCE OF CAPITAL STOCK.

            (a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, issue, assume, Guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and the Company will not issue any Disqualified Stock and will not permit
any Restricted Subsidiary to issue any shares of preferred stock (including
Disqualified Stock) other than to the Company; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue Disqualified
Stock and any of the Company's Restricted Subsidiaries that are Guarantors may
incur Indebtedness (including Acquired Debt), if the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal quarters for which
internal financial statements are

                                       41


available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock is issued would have been at least 2.00
to 1, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred or
the preferred stock or Disqualified Stock had been issued, as the case may be,
at the beginning of such four-quarter period.

            (b) Section 4.09(a) will not prohibit the incurrence of any of the
following items of Indebtedness (collectively, "PERMITTED DEBT"):

            (1) the incurrence by the Company or any Guarantor of additional
      Indebtedness and letters of credit under one or more Credit Facilities and
      Guarantees thereof by the Guarantors; provided that the aggregate
      principal amount of all Indebtedness and letters of credit of the Company
      and the Guarantors incurred pursuant to this clause (1) (with letters of
      credit being deemed to have a principal amount equal to the maximum
      potential liability of the Company and the Guarantors thereunder) does not
      exceed $525.0 million, less the aggregate amount of Net Proceeds from an
      Asset Sale applied by the Company and its Subsidiaries to repay
      Indebtedness thereunder, pursuant to Section 4.12 hereof;

            (2) the incurrence by the Company and the Restricted Subsidiaries of
      the Existing Indebtedness, including any existing HUD Financings and the
      Existing Senior Subordinated Notes;

            (3) the incurrence by the Company and the Guarantors of Indebtedness
      represented by the Initial Notes (and the related Exchange Notes to be
      issued pursuant to the Registration Rights Agreement and in exchange for
      any Additional Notes) and the incurrence by the Guarantors of the
      Subsidiary Guarantees of those notes and any Additional Notes;

            (4) additional HUD Financings incurred after the date of this
      indenture in an aggregate principal amount not to exceed $25.0 million
      outstanding at any time;

            (5) the incurrence by the Company or any Restricted Subsidiary of
      Indebtedness represented by Capital Lease Obligations, mortgage financings
      or purchase money obligations, in each case incurred for the purpose of
      financing all or any part of the purchase price or cost of construction or
      improvement of property, plant or equipment used in the business of the
      Company or such Restricted Subsidiary, in an aggregate principal amount,
      including all Permitted Refinancing Indebtedness incurred to refund,
      refinance or replace any Indebtedness incurred pursuant to this clause
      (5), not to exceed $20.0 million at any time outstanding;

            (6) the incurrence by the Company or any Restricted Subsidiary of
      Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
      which are used to extend, defease, renew, refund, refinance or replace
      Indebtedness (other than intercompany Indebtedness) that was incurred
      under the first paragraph of this Section 4.09 or clauses (2), (3), (4),
      (5) or this clause (6) of this paragraph (b);

            (7) the incurrence by the Company or any Restricted Subsidiary of
      intercompany Indebtedness between or among the Company and any Restricted
      Subsidiary; provided, however, that:

                  (i) if the Company or a Guarantor is the obligor on such
            Indebtedness, such Indebtedness is expressly subordinated to the
            prior payment in full in cash of all Obligations with respect to the
            Notes or the Subsidiary Guarantees, as the case may be; and;

                  (ii)(A) any subsequent issuance or transfer of Equity
            Interests that results in any such Indebtedness being held by a
            Person other than the Company or a Restricted Subsidiary and (B) any
            subsequent sale or other transfer of any such Indebtedness to a
            Person that is not either the Company or a Restricted Subsidiary
            shall be deemed, in each case, to constitute an incurrence of

                                       42


            such Indebtedness by the Company or such Restricted Subsidiary, as
            the case may be, that was not permitted by this clause (7);

            (8) the incurrence of any Physician Support Obligations by the
      Company or any Restricted Subsidiary;

            (9) the incurrence of Indebtedness of the Company or any Restricted
      Subsidiary consisting of guarantees, indemnities, holdbacks or obligations
      in respect of purchase price adjustments in connection with the
      acquisition or disposition of assets, including without limitation, shares
      of Capital Stock of Restricted Subsidiaries or contingent payment
      obligations incurred in connection with the acquisition of assets which
      are contingent on the performance of the assets acquired, other than
      guarantees of Indebtedness incurred by any Person acquiring all or any
      portion of such assets or shares of Capital Stock of such Restricted
      Subsidiary for the purpose of financing such acquisition;

            (10) the incurrence of Indebtedness of the Company or any Restricted
      Subsidiary represented by (i) letters of credit for the account of the
      Company or any Restricted Subsidiary or (ii) other obligations to
      reimburse third parties pursuant to any surety bond or other similar
      arrangements, which letters of credit or other obligations, as the case
      may be, are intended to provide security for workers' compensation claims,
      payment obligations in connection with sales tax and insurance or other
      similar requirements in the ordinary course of business;

            (11) the incurrence by the Company or any Restricted Subsidiary of
      Hedging Obligations that are incurred in the normal course of business and
      consistent with past business practices for the purpose of fixing or
      hedging currency or interest rate risk (including with respect to any
      floating rate Indebtedness that is permitted by the terms of this
      Indenture to be outstanding in connection with the conduct of their
      respective businesses) and not for speculative purposes;

            (12) the Guarantee by the Company or any of the Guarantors of
      Indebtedness of the Company or a Restricted Subsidiary that was permitted
      to be incurred by another provision of this Section 4.09;

            (13) the incurrence by the Company's Unrestricted Subsidiaries of
      Non-recourse Debt; provided, however, that if any such Indebtedness ceases
      to be Non-recourse Debt of an Unrestricted Subsidiary, such event shall be
      deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of
      the Company that was not permitted by this clause (13); and

            (14) the incurrence by the Company or any Guarantor of additional
      Indebtedness in an aggregate principal amount (or accreted value, as
      applicable) at any one time outstanding, including all Permitted
      Refinancing Indebtedness incurred to refund, refinance or replace any
      Indebtedness incurred pursuant to this clause (14), not to exceed $35.0
      million.

            (c) For purposes of determining compliance with this Section 4.09,
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (1) through (14) above or
is entitled to be incurred pursuant to Section 4.09(a), in each case, as of the
date of incurrence thereof, the Company shall, in its sole discretion, classify
(or later reclassify in whole or in part, in its sole discretion) such item of
Indebtedness in any manner that complies with this Section 4.09 and such
Indebtedness will be treated as having been incurred pursuant to such clauses or
paragraph (a) hereof, as the case may be, designated by the Company.
Indebtedness under Credit Facilities outstanding on the date on which the Notes
are first issued and authenticated under this Indenture will be deemed to have
been incurred on such date in reliance of the exception provided by clause (1)
of Section 4.09(b). Accrual of interest or dividends, the accretion of accreted
value or liquidation preference and the payment of interest or dividends in the
form of additional Indebtedness or Disqualified Stock will not be deemed to be
an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes
of this Section 4.09.

                                       43


SECTION 4.10. RESTRICTED PAYMENTS.

            (a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly:

            (1) declare or pay any dividend or make any other payment or
      distribution (A) on account of the Company's or any Restricted
      Subsidiary's Equity Interests (including, without limitation, any payment
      in connection with any merger or consolidation involving the Company or
      any Restricted Subsidiary) or (B) to the direct or indirect holders of the
      Company's or any Restricted Subsidiary's Equity Interests in their
      capacity as such (other than dividends or distributions (i) payable in
      Equity Interests (other than Disqualified Stock) of the Company or (ii) to
      the Company or a wholly owned Restricted Subsidiary or to all holders of
      Capital Stock of such Restricted Subsidiary on a pro rata basis);

            (2) purchase, redeem or otherwise acquire or retire for value
      (including, without limitation, in connection with any merger or
      consolidation involving the Company) any Equity Interests of the Company
      or any Restricted Subsidiary (other than from the Company or any
      Restricted Subsidiary);

            (3) make any payment on or with respect to, or purchase, redeem,
      defease or otherwise acquire or retire for value any Subordinated
      Obligations, except a payment of interest or principal at the Stated
      Maturity thereof; or

            (4) make any Restricted Investment (all such payments and other
      actions set forth in these clauses (1) through (4) above being
      collectively referred to as "Restricted Payments"),

            unless, at the time of and after giving effect to such Restricted
      Payment:

                  (i) no Default or Event of Default has occurred and is
            continuing; and

                  (ii)the Company would, at the time of such Restricted Payment
            and after giving pro forma effect thereto as if such Restricted
            Payment had been made at the beginning of the most recently ended
            four-quarter period, have been permitted to incur at least $1.00 of
            additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
            test set forth in Section 4.09(a) hereof; and

                  (iii) such Restricted Payment, together with the aggregate
            amount of all other Restricted Payments made by the Company and the
            Restricted Subsidiaries after the date of this Indenture (excluding
            Restricted Payments permitted by clauses (2), (3) and (4) of
            paragraph (b) hereof), is less than the sum, without duplication,
            of:

                        (A) 50% of the Consolidated Net Income of the Company
                  for the period (taken as one accounting period) since June 30,
                  2003 to the end of the Company's most recently ended fiscal
                  quarter for which internal financial statements are available
                  at the time of such Restricted Payment (or, if such
                  Consolidated Net Income for such period is a deficit, less
                  100% of such deficit), plus

                        (B) 100% of the aggregate net cash proceeds received by
                  the Company since June 30, 2003 as a contribution to its
                  common equity capital or from the issue or sale of Equity
                  Interests of the Company (other than Disqualified Stock) or
                  from the issue or sale of convertible or exchangeable
                  Disqualified Stock or convertible or exchangeable debt
                  securities of the Company, in either case, that have been
                  converted into or exchanged for such Equity Interests of the
                  Company (other than Equity Interests or Disqualified Stock or
                  debt securities) sold to a Subsidiary of the Company), plus

                                       44


                        (C) to the extent that any Restricted Investment that
                  was made after the date of this Indenture is sold for cash or
                  otherwise liquidated or repaid for cash, the lesser of (i) the
                  cash proceeds with respect to such Restricted Investment (less
                  the cost of disposition, if any) and (ii) the initial amount
                  of such Restricted Investment, plus

                        (D) in case, after the date hereof, any Unrestricted
                  Subsidiary has been redesignated as a Restricted Subsidiary
                  under the terms of this Indenture or has been merged,
                  consolidated or amalgamated with or into, or transfers or
                  conveys assets to, or is liquidated into the Company or a
                  Restricted Subsidiary, an amount equal to the lesser of (1)
                  the net book value at the date of the redesignation,
                  combination or transfer of the aggregate Investments made by
                  the Company and the Restricted Subsidiaries in the
                  Unrestricted Subsidiary (or of the assets transferred or
                  conveyed, as applicable), and (2) the fair market value of the
                  Investments owned by the Company and the Restricted
                  Subsidiaries in such Unrestricted Subsidiary at the time of
                  the redesignation, combination or transfer (or of the assets
                  transferred or conveyed, as applicable).

            (b) So long as no Default or Event of Default has occurred and is
continuing or would be caused thereby, the preceding provisions will not
prohibit:

            (1) the payment of any dividend within 60 days after the date of
      declaration of the dividend, if at the date of declaration the dividend
      payment would have complied with the provisions of this Indenture;

            (2) the redemption, repurchase, retirement, defeasance or other
      acquisition of any Subordinated Obligations of the Company or any
      Guarantor or of any Equity Interests of the Company in exchange for, or
      out of the net cash proceeds of the substantially concurrent sale (other
      than to a Restricted Subsidiary) of, Equity Interests of the Company
      (other than Disqualified Stock); provided, however, that the amount of any
      such net cash proceeds that are utilized for any such redemption,
      repurchase, retirement, defeasance or other acquisition will be excluded
      from clause (iii)(B) of the preceding paragraph;

            (3) the redemption, repurchase, retirement, defeasance or other
      acquisition of any Subordinated Obligations of the Company or any
      Guarantor with the net cash proceeds from an incurrence of Permitted
      Refinancing Indebtedness; provided, however, that the amount of any such
      net cash proceeds that are utilized for any such redemption, repurchase,
      retirement, defeasance or other acquisition will be excluded from clause
      (iii)(B) of the preceding paragraph;

            (4) the redemption, repurchase or other acquisition or retirement
      for value of any Equity Interests of the Company or any Restricted
      Subsidiary (i) held by any member of the Company's (or any Restricted
      Subsidiary's) management pursuant to any management equity subscription
      plan or agreement, stock option or stock purchase plan or agreement or
      employee benefit plan as may be adopted by the Company from time to time
      or pursuant to any agreement with any director or officer in existence on
      the date of this Indenture or (ii) from an employee of the Company upon
      the termination of such employee's employment with the Company; provided,
      however, that the aggregate price paid for all such repurchased, redeemed,
      acquired or retired Equity Interests in reliance on this clause (4) may
      not exceed $5.0 million in any twelve-month period;

            (5) repurchases, acquisitions or retirements of Capital Stock of the
      Company deemed to occur upon the exercise of stock options or similar
      rights under employee benefit plans of the Company or its Subsidiaries if
      such Capital Stock represents all or a portion of the exercise price
      thereof; and

            (6) other Restricted Payments in an aggregate amount since the Issue
      Date not to exceed $30.0 million.

                                       45


            (c) The amount of all Restricted Payments (other than cash) will be
the fair market value on the date of the Restricted Payment of the assets,
property or securities proposed to be transferred or issued by the Company or
such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any assets or securities that are required to
be valued by this Section 4.10 will be determined by the Board of Directors
whose resolution with respect thereto will be delivered to the Trustee. The
Board of Directors' determination must be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if the fair market value exceeds $20.0 million. Not later than the date
of making any Restricted Payment, the Company will deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.10 were computed, together with a copy of any fairness opinion or appraisal
required by this Indenture. If the Company or a Restricted Subsidiary makes a
Restricted Payment which at the time of the making of such Restricted Payment
would in the good faith determination of the Company be permitted under the
provisions of this Indenture, such Restricted Payment shall be deemed to have
been made in compliance with this Indenture notwithstanding any subsequent
adjustments made in good faith to the Company financial statements affecting
Consolidated Net Income of the Company for any period.

SECTION 4.11. LIENS.

            The Company will not, and will not permit any Restricted Subsidiary
to, create, incur or assume any consensual Liens of any kind against or upon any
of their respective properties or assets, or any proceeds, income or profit
therefrom that secure Senior Subordinated Indebtedness or Subordinated
Obligations; provided that:

            (a) in the case of Liens securing Subordinated Obligations, the
      Notes are secured by a Lien on such property, assets, proceeds, income or
      profit that is senior in priority to such Liens; and

            (b) in the case of Liens securing Senior Subordinated Indebtedness,
      the Notes are equally and ratably secured by a Lien on such property,
      assets, proceeds, income or profit.

SECTION 4.12. ASSET SALES.

            The Company will not, and will not permit any Restricted Subsidiary
to, consummate an Asset Sale unless:

            (a) the Company (or the Restricted Subsidiary, as the case may be)
      receives consideration at the time of the Asset Sale at least equal to the
      fair market value (evidenced by a resolution of the Board of Directors set
      forth in an Officers' Certificate delivered to the Trustee) of the assets
      sold, leased, transferred, conveyed or otherwise disposed of or Equity
      Interests of any Restricted Subsidiary issued, sold, transferred, conveyed
      or otherwise disposed of;

            (b) at least 75% of the consideration received in the Asset Sale by
      the Company or such Restricted Subsidiary is in the form of cash. For
      purposes of this clause (b), each of the following will be deemed to be
      cash:

                  (i) any liabilities, as shown on the Company's or such
            Restricted Subsidiary's most recent balance sheet, of the Company or
            any Restricted Subsidiary (other than contingent liabilities and
            liabilities that are by their terms subordinated to the notes or any
            Subsidiary Guarantee) that are assumed by the transferee of any such
            assets pursuant to a customary novation agreement that releases the
            Company or such Restricted Subsidiary from further liability;

                  (ii)any securities, notes or other obligations received by the
            Company or any such Restricted Subsidiary from such transferee that
            are converted by the Company or such Restricted Subsidiary into cash
            within 90 days, to the extent of the cash received in that
            conversion; and

                                       46


                  (iii) with respect to any sale of Capital Stock of a
            Restricted Subsidiary to one or more Qualified Physicians,
            promissory notes or similar obligations from such physicians or
            health care professionals; provided that the aggregate amount of
            such promissory notes or other similar obligations held by the
            Company and its Restricted Subsidiaries shall not exceed $5.0
            million outstanding at any one time; and

            (c) the Company delivers an Officers' Certificate to the Trustee
      certifying that such Asset Sale complies with the foregoing clauses (a)
      and (b).

            Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply those Net Proceeds (or any portion thereof) at its
option:

            (1) to repay Senior Debt of the Company and any Guarantor (other
      than Indebtedness owed to the Company, any Guarantor or any Affiliate of
      the Company) and, if the Senior Debt repaid is revolving credit
      Indebtedness, to correspondingly reduce commitments with respect thereto
      if so required pursuant to the terms of the Credit Agreement governing
      such revolving credit Indebtedness;

            (2) to acquire all or substantially all of the assets of, or all of
      the Voting Stock of, another Person engaged in a Permitted Business; or

            (3) to acquire other long-term assets or property that are used in a
      Permitted Business

            Pending the final application of any Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest the Net
Proceeds in any manner that is not prohibited by this Indenture.

            Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the preceding paragraph will constitute "EXCESS PROCEEDS." When
the aggregate amount of Excess Proceeds exceeds $7.5 million, the Company will
make an offer to all Holders of Notes to purchase the maximum principal amount
of Notes and, if the Company is required to do so under the terms of any other
Indebtedness that is pari passu with the Notes, such other Indebtedness on a pro
rata basis with the Notes, that may be purchased out of the Excess Proceeds (an
"ASSET SALE OFFER"). The offer price in any Asset Sale Offer will be equal to
100% of principal amount plus accrued and unpaid interest and Additional
Interest, if any, to the date of purchase, and will be payable in cash. If any
Excess Proceeds remain after consummation of the purchase of all properly
tendered and not withdrawn Notes pursuant to an Asset Sale Offer, the Company
may use such remaining Excess Proceeds for any purpose not otherwise prohibited
by this Indenture. If the aggregate principal amount of Notes and other pari
passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of
Excess Proceeds, the Trustee will select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds will be reset at zero.

            The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of this Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
compliance.

SECTION 4.13. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
              SUBSIDIARIES.

            The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:

                                       47


            (a) pay dividends or make any other distributions on its Capital
      Stock to the Company or any Restricted Subsidiary, or with respect to any
      other interest or participation in, or measured by, its profits, or pay
      any indebtedness owed to the Company or any Restricted Subsidiary;

            (b) make loans or advances to the Company or any Restricted
      Subsidiary; or

            (c) transfer any of its properties or assets to the Company or any
      Restricted Subsidiary.

            However, the preceding restrictions will not apply to encumbrances
or restrictions existing under or by reason of:

            (1) agreements governing Existing Indebtedness, Credit Facilities
      (including the Credit Agreement) and other agreements relating to the
      Financing Transactions as in effect on the date of this Indenture and any
      amendments, modifications, restatements, renewals, increases, supplements,
      refundings, replacements or refinancings of those agreements; provided
      that the amendments, modifications, restatements, renewals, increases,
      supplements, refundings, replacement or refinancings are no more
      restrictive, taken as a whole, with respect to such dividend and other
      payment restrictions than those contained in those agreements on the date
      of this Indenture;

            (2) this Indenture, the Notes and the Subsidiary Guarantees;

            (3) agreements related to HUD Financing and any amendments of those
      agreements;

            (4) applicable law;

            (5) any instrument governing Indebtedness or Capital Stock of a
      Person acquired by the Company or any Restricted Subsidiary as in effect
      at the time of such acquisition (except to the extent such Indebtedness or
      Capital Stock was incurred in connection with or in contemplation of such
      acquisition), which encumbrance or restriction is not applicable to any
      Person, or the properties or assets of any Person, other than the Person,
      or the property or assets of the Person, so acquired; provided that, in
      the case of Indebtedness, such Indebtedness was permitted by the terms of
      this Indenture to be incurred;

            (6) customary non-assignment provisions in leases and other
      contracts entered into in the ordinary course of business and consistent
      with industry practices;

            (7) purchase money obligations for property acquired in the ordinary
      course of business that impose restrictions on that property of the nature
      described in clause (c) of the first paragraph of this Section 4.13;

            (8) any agreement for the sale or other disposition of a Restricted
      Subsidiary or the assets of a Restricted Subsidiary that restricts
      distributions by that Restricted Subsidiary pending its sale or other
      disposition or the sale or other disposition of its assets;

            (9) Permitted Refinancing Indebtedness; provided, however, that the
      restrictions contained in the agreements governing such Permitted
      Refinancing Indebtedness are not materially more restrictive, taken as a
      whole, than those contained in the agreements governing the Indebtedness
      being refinanced;

            (10) Liens securing Indebtedness otherwise permitted to be incurred
      under Section 4.11 hereof; and

                                       48


            (11)provisions with respect to the disposition or distribution of
      assets or property in joint venture agreements, asset sale agreements,
      stock sale agreements and other similar agreements entered into in the
      ordinary course of business.

SECTION 4.14. AFFILIATE TRANSACTIONS.

            The Company will not, and will not permit any Restricted Subsidiary
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or Guarantee with, or for the benefit of, any Affiliate (each, an
"AFFILIATE TRANSACTION"), unless:

            (a) the Affiliate Transaction (i) is evidenced in writing if it
      involves transactions of $2.5 million or more and (ii) is on terms that
      are no less favorable to the Company or the relevant Restricted Subsidiary
      than those that would have been obtained in a comparable transaction by
      the Company or such Restricted Subsidiary with an unrelated Person; and

            (b) the Company delivers to the Trustee:

                  (i) with respect to any Affiliate Transaction or series of
            related Affiliate Transactions involving aggregate consideration in
            excess of $5.0 million, a resolution of the Board of Directors set
            forth in an Officers' Certificate certifying that such Affiliate
            Transaction complies with this Section 4.14 and that such Affiliate
            Transaction has been approved by a majority of the disinterested
            members of the Board of Directors; and

                  (ii) with respect to any Affiliate Transaction or series of
            related Affiliate Transactions involving aggregate consideration in
            excess of $10.0 million, an opinion as to the fairness to the
            Company or such Restricted Subsidiary from a financial point of view
            issued by an accounting, appraisal or investment banking firm of
            national standing.

            The following items will not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of the prior paragraph:

            (1) transactions between or among the Company and/or any Restricted
      Subsidiary;

            (2) sales of Equity Interests (other than Disqualified Stock) to
      Affiliates of the Company;

            (3) reasonable and customary directors' fees, indemnification and
      similar arrangements, consulting fees, employee salaries, bonuses or
      employment agreements, compensation or employee benefit arrangements and
      incentive arrangements with any officer, director or employee of the
      Company or a Restricted Subsidiary entered into in the ordinary course of
      business;

            (4) any transactions made in compliance with Section 4.10 hereof;

            (5) loans and advances to non-executive officers and employees of
      the Company or any Restricted Subsidiary in the ordinary course of
      business in accordance with the past practices of the Company or any
      Restricted Subsidiary; and

            (6) any agreement as in effect as of the date of this Indenture or
      any amendment thereto so long as any such amendment is not more
      disadvantageous to the Holders in any material respect than the original
      agreement as in effect on the date of this Indenture.

SECTION 4.15. ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES.

            The Company:

                                       49


            (a) will not, and will not permit any Restricted Subsidiary to,
      transfer, convey, sell, lease or otherwise dispose of any Capital Stock of
      any Restricted Subsidiary to any Person (other than to the Company or to
      any Restricted Subsidiary), unless:

                  (i) such transfer, conveyance, sale, lease or other
            disposition is of all the Capital Stock of such Restricted
            Subsidiary, and

                  (ii) the Net Proceeds from such transfer, conveyance, sale,
            lease or other disposition are applied in accordance with Section
            4.12 hereof;

      provided, however, that this clause (a) will not apply to any pledge of
      Capital Stock of any Restricted Subsidiary securing any Permitted Debt or
      any exercise of remedies in connection therewith; provided that the Lien
      securing such Permitted Debt is not prohibited by Section 4.11 hereof;

            (b) will not permit any Restricted Subsidiary to issue any of its
      Equity Interests (other than, if necessary, shares of its Capital Stock
      constituting directors' qualifying shares) to any Person other than the
      Company or any Restricted Subsidiary;

provided, however, that clauses (a) and (b) shall not prohibit any issuance,
sale or other disposition of Common Stock of a Restricted Subsidiary to one or
more Qualified Physicians if, immediately after giving effect thereto, such
Restricted Subsidiary would remain a Restricted Subsidiary and the Company will,
directly or indirectly, retain at least 80% of the Capital Stock of such
Restricted Subsidiary, and the Net Proceeds from such issuance, sale or other
disposition are applied in accordance with Section 4.12 hereof.

SECTION 4.16. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.

            The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if that designation would not cause
a Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by the Company and its Restricted Subsidiaries in the Subsidiary properly
designated will be deemed to be an Investment made as of the time of the
designation and will reduce the amount available for (x) Restricted Payments
under the first paragraph of Section 4.10 hereof, or (y) Permitted Investments,
as determined by the Company. That designation will only be permitted if the
Investment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. The Board of
Directors may redesignate any Unrestricted Subsidiary to be a Restricted
Subsidiary if the redesignation would not cause a Default.

            Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary will be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.10 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the requirements specified in the
definition of "Unrestricted Subsidiary," it will thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary will be deemed to be incurred by a Restricted Subsidiary as of
such date and, if such Indebtedness is not permitted to be incurred as of such
date under Section 4.09 hereof, the Company will be in default of such covenant.
The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation will be
deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation will only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and (ii) no
Default or Event of Default would be in existence following such designation.

SECTION 4.17. REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL.

            (a) Upon the occurrence of a Change of Control, the Company shall,
within 10 days of a Change of Control, make an offer in cash (the "CHANGE OF
CONTROL OFFER") pursuant to the procedures set forth in Section

                                       50


3.09. Each Holder shall have the right to accept such offer and require the
Company to repurchase all or any portion (equal to $1,000 or an integral
multiple of $1,000) of such Holder's Notes pursuant to the Change of Control
Offer at a purchase price, in cash, equal to 101% of the aggregate principal
amount of Notes repurchased, plus accrued and unpaid interest (the "CHANGE OF
CONTROL PURCHASE PRICE") on the Notes repurchased, to the Purchase Date (subject
to the right of Holders of record on the relevant Regular Record Date) to
receive interest to, but excluding, the Purchase Date).

            (b) Prior to complying with any of the provisions of this "Change of
Control" covenant, but in any event within 90 days following a Change of
Control, the Company will either repay all outstanding Senior Debt or obtain the
requisite consents, if any, under all agreements governing outstanding Senior
Debt to permit the repurchase of Notes required by this covenant. The Company
will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment Date.

            (c) The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all notes properly tendered and not withdrawn
under the Change of Control Offer.

SECTION 4.18. FUTURE SUBSIDIARY GUARANTORS.

            If the Company or any Restricted Subsidiary acquires or creates
another Subsidiary after the date of this Indenture that (1) is formed under the
laws of the United States or any State of the United States or the District of
Columbia and in which the Company or any Restricted Subsidiary has made an
Investment of at least $0.1 million or (2) incurs, guarantees or otherwise
provides direct credit support for any Indebtedness of the Company or any of the
Company's Domestic Subsidiaries, then that newly acquired or created Subsidiary
will become a Guarantor and execute a supplemental indenture and deliver an
Opinion of Counsel satisfactory to the Trustee within 30 business days of the
later of (x) the date on which it was acquired or created and (y) the date the
Company or any Restricted Subsidiary has made an Investment of at least $0.1
million; provided, however, that the foregoing shall not apply to (i) HUD
Financing Subsidiaries, (ii) PSI Surety, Inc. and (iii) Subsidiaries that have
properly been designated as Unrestricted Subsidiaries in accordance with this
Indenture. The Subsidiary Guarantee of any such newly acquired or created
Subsidiary that becomes a Guarantor will be subordinated to all Indebtedness
under the Credit Agreement and all other Senior Debt of such Guarantor to the
same extent as the Notes are subordinated to the Senior Debt of the Company.

SECTION 4.19. BUSINESS ACTIVITIES.

            The Company will not, and will not permit any Subsidiary to, engage
in any business other than Permitted Businesses, except to such extent as would
not be material to the Company and its Subsidiaries taken as a whole.

SECTION 4.20. LIMITATION ON LAYERING.

            The Company will not incur, create, issue, assume, Guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt of the Company and senior in any respect in
right of payment to the Notes; provided, however, that no Indebtedness of the
Company will be deemed to be contractually subordinated in right of payment
solely by virtue of being unsecured. No Guarantor will incur, create, issue,
assume, Guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to the Senior Debt of such Guarantor
and senior in any respect in right of payment to such Guarantor's Subsidiary
Guarantee; provided, however, that no Indebtedness of a Guarantor will be deemed
to be contractually subordinated in right of payment solely by virtue of being
unsecured.

                                       51


                                   ARTICLE 5.

                                   SUCCESSORS

SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.

            (a) Neither the Company nor any Guarantor may, directly or
indirectly: (1) consolidate or merge with or into another Person (whether or not
the Company or such Guarantor, as the case may be, is the surviving corporation)
or (2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company or any Guarantor,
in one or more related transactions, to another Person, unless:

       (i) either

                  (A) the Company or such Guarantor, as the case may be, shall
            be the Surviving Person; or

                  (B) the Person formed by or surviving any such consolidation
            or merger (if other than the Company or such Guarantor, as the case
            may be) or to which such sale, assignment, transfer, conveyance or
            other disposition has been made shall be a corporation organized and
            existing under the laws of the United States of America, any State
            thereof or the District of Columbia;

       (ii)except as otherwise described with respect to the release of
      Subsidiary Guarantees of Guarantors pursuant to Article 10, the Person
      formed by or surviving any such consolidation or merger (if other than the
      Company or such Guarantor, as the case may be) or the Person to which such
      sale, assignment, transfer conveyance or other disposition has been made
      assumes, by supplemental indenture in form reasonably satisfactory to the
      Trustee, executed and delivered to the Trustee by such Person, the
      obligations of the Company or such Guarantor, as the case may be, under
      this Indenture, the Notes and the Subsidiary Guarantees;

       (iii) immediately after such transaction, no Default or Event of
      Default exists; and

       (iv) except with respect to a consolidation or merger of the Company
      with or into a Guarantor, or a Guarantor with or into another Guarantor,
      the Company or such Guarantor, as the case may be, or the Person formed by
      or surviving any such consolidation or merger (if other than the Company
      or such Guarantor), or to which such sale, assignment, transfer,
      conveyance or other disposition has been made will, on the date of such
      transaction after giving pro forma effect thereto and any related
      financing transactions as if the same had occurred at the beginning of the
      applicable four-quarter period, be permitted to incur at least $1.00 of
      additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test
      set forth in Section 4.09(a) hereof.

            (b) Notwithstanding the preceding clause (iv), any Restricted
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company or a Guarantor, and
notwithstanding the preceding clause (ii), any Guarantor may transfer real
property that is the subject of a HUD Financing to a HUD Financing Subsidiary in
connection with a HUD Financing permitted to be incurred pursuant to Section
4.09.

            (c) The Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person.

SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.

            Except as described with respect to the release of Subsidiary
Guarantees of Guarantors pursuant to Article 10, the Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of
the Company or a Guarantor, as applicable, under this Indenture; provided,
however, that the predecessor entity shall

                                       52


not be released from any of the obligations or covenants under this Indenture,
including with respect to the payment of the Notes and obligations under the
Subsidiary Guarantee, as the case may be, in the case of:

            (a) a sale, transfer, assignment, conveyance or other disposition
      (unless such sale, transfer, assignment, conveyance or other disposition
      is of all or substantially all of the assets of the Company, taken as a
      whole, or

            (b) a lease.

                                   ARTICLE 6.

                              DEFAULTS AND REMEDIES

SECTION 6.01. EVENTS OF DEFAULT.

            Each of the following constitutes an "Event of Default" with respect
to the Notes:

            (a) default for 30 days in the payment when due of interest on, or
      Additional Interest with respect to, the Notes (whether or not prohibited
      by Article 12 hereof);

            (b) default in the payment when due of the principal of, or premium,
      if any, on, any of the Notes when the same becomes due and payable at its
      Stated Maturity, upon acceleration, redemption, optional redemption,
      required repurchase or otherwise (whether or not prohibited by Article 12
      hereof);

            (c) failure by the Company or any Restricted Subsidiary to comply
      with Section 5.01 hereof;

            (d) failure by the Company or any Restricted Subsidiary to comply
      with Section 4.09, Section 4.10, Section 4.12 or Section 4.17 hereof, and
      such failure continues for 30 days after written notice is given to the
      Company as provided below; provided, however, that a default under the
      Existing Senior Subordinated Notes arising out of a result of the failure
      of the Company to comply with the provisions Section 4.09 or Section 4.10
      hereof shall be a default under Section 4.09 or Section 4.10 of this
      Indenture as applicable notwithstanding the 30-day grace period provided
      for in this clause (d);

            (e) failure by the Company or any Restricted Subsidiary to comply
      with any other covenant or agreement in the Notes or in this Indenture
      (other than a failure that is the subject of the foregoing clause (a),
      (b), (c) or (d)), and such failure continues for 60 days after written
      notice is given to the Company as provided below;

            (f) a default under any mortgage, indenture or instrument under
      which there may be issued or by which there may be secured or evidenced
      any Indebtedness for money borrowed by the Company or any Restricted
      Subsidiary (or the payment of which is guaranteed by the Company or any
      Restricted Subsidiary) whether such Indebtedness or Guarantee now exists,
      or is created after the date of this Indenture, if that default:

                  (i) is caused by a failure to pay principal of, or interest or
            premium, if any, on such Indebtedness prior to the expiration of the
            grace period provided in such Indebtedness on the date of such
            default (a "PAYMENT DEFAULT"); or

                  (ii) results in the acceleration of such Indebtedness prior to
            its express maturity,

      and, in each case, the principal amount of any such Indebtedness, together
      with the principal amount of any other such Indebtedness under which there
      has been a Payment Default or the maturity of which has been so
      accelerated, aggregates $5.0 million or more, so long as the Existing
      Senior Subordinated Notes remain outstanding, and $10.0 million or more
      thereafter;

                                       53


            (g) failure by the Company or any Restricted Subsidiary to pay final
      judgments aggregating in excess of $5.0 million, so long as the Existing
      Senior Subordinated Notes remain outstanding, and $10.0 million or more
      thereafter, which judgments are not paid, discharged or stayed for a
      period of 60 days;

            (h) except as permitted by this Indenture, any Subsidiary Guarantee
      of a Guarantor shall be held in any judicial proceeding to be
      unenforceable or invalid or shall cease for any reason to be in full force
      and effect or any Guarantor, or any Person acting on behalf of any
      Guarantor, shall deny or disaffirm its obligations under its Subsidiary
      Guarantee;

            (i) the Company or any of its Significant Subsidiaries or any group
      of Subsidiaries that, when taken together, would constitute a Significant
      Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

                  (A) commences a voluntary case or gives notice of intention to
            make a proposal under any Bankruptcy Law;

                  (B) consents to the entry of an order for relief against it in
            an involuntary case or consents to its dissolution or winding up;

                  (C) consents to the appointment of a receiver, interim
            receiver, receiver and manager, liquidator, Trustee or custodian of
            it or for all or substantially all of its property;

                  (D) makes a general assignment for the benefit of its
            creditors; or

                  (E) admits in writing its inability to pay its debts as they
            become due or otherwise admits its insolvency; and

            (j) a court of competent jurisdiction enters an order or decree
      under any Bankruptcy Law that:

                  (A) is for relief against the Company or any of its
            Significant Subsidiaries or any group of Subsidiaries that, when
            taken together, would constitute a Significant Subsidiary in an
            involuntary case; or

                  (B) appoints a receiver, interim receiver, receiver and
            manager, liquidator, Trustee or custodian of the Company or any of
            its Significant Subsidiaries or any group of Subsidiaries that, when
            taken together, would constitute a Significant Subsidiary or for all
            or substantially all of the property of the Company or any of its
            Significant Subsidiaries or any group of Subsidiaries that, when
            taken together, would constitute a Significant Subsidiary; or

                  (C) orders the liquidation of the Company or any of its
            Significant Subsidiaries or any group of Subsidiaries that, when
            taken together, would constitute a Significant Subsidiary;

      and such order or decree remains unstayed and in effect for 60 consecutive
      days.

SECTION 6.02. ACCELERATION.

            If any Event of Default (other than those of the type described in
Section 6.01(i) or (j)) occurs and is continuing, the Trustee may, and the
Trustee upon the request of Holders of 25% in principal amount of the the
outstanding Notes shall, or the Holders of at least 25% in principal amount of
outstanding Notes may, declare the principal of all the Notes, together with all
accrued and unpaid interest, premium, if any, to be due and payable by

                                       54


notice in writing to the Company and the Trustee specifying the respective Event
of Default and that such notice is a notice of acceleration (the "ACCELERATION
NOTICE"), and the same shall become immediately due and payable.

            In the case of an Event of Default specified in Section 6.01 (i) or
(j), all outstanding Notes shall become due and payable immediately without any
further declaration or other act on the part of the Trustee or the Holders.
Holders may not enforce this Indenture or the Notes except as provided in this
Indenture.

            At any time after a declaration of acceleration with respect to the
Notes, the Holders of a majority in principal amount of the Notes then
outstanding (by notice to the Trustee) may rescind and cancel such declaration
and its consequences if:

            (a) the rescission would not conflict with any judgment or decree of
      a court of competent jurisdiction;

            (b) all existing Defaults and Events of Default have been cured or
      waived except nonpayment of principal of or interest on the Notes that has
      become due solely by reason of such declaration of acceleration;

            (c) to the extent the payment of such interest is lawful, interest
      (at the same rate specified in the Notes) on overdue installments of
      interest and overdue payments of principal which has become due otherwise
      than by such declaration of acceleration has been paid;

            (d) the Company has paid the Trustee its reasonable compensation and
      reimbursed the Trustee for its reasonable expenses, disbursements and
      advances; and

            (e) in the event of the cure or waiver of an Event of Default of the
      type described in Section 6.01(i) or (j), the Trustee has received an
      Officers' Certificate and Opinion of Counsel that such Event of Default
      has been cured or waived.

            In the case of an Event of Default with respect to the Notes
occurring by reason of any willful action or inaction taken or not taken by the
Company or on the Company's behalf with the intention of avoiding payment of the
premium that the Company would have been required to pay if the Company had then
elected to redeem the Notes pursuant to Section 3.07 hereof, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs by reason of any willful action or inaction taken or not taken by the
Company or on the Company's behalf with the intention of avoiding the premium
required upon a redemption of the Notes, then the premium specified in Section
3.07 (a) or (c), as applicable, shall also become immediately due and payable to
the extent permitted by law upon acceleration of the Notes.

SECTION 6.03. OTHER REMEDIES.

            If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.

            The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies shall be
cumulative to the extent permitted by law.

SECTION 6.04. WAIVER OF DEFAULTS.

            The Holders of at least a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes, waive any existing Default or Event of Default, and its
consequences, except a continuing Default or Event of Default (i) in the payment
of the principal of,

                                       55


premium, if any, or interest, on the Notes and (ii) in respect of a covenant or
provision which under this Indenture cannot be modified or amended without the
consent of the Holder of each Note affected by such modification or amendment.
In the event of any Event of Default specified in clause (f) of Section 6.01,
such Event of Default and all consequences of that Event of Default, including
without limitation any acceleration or resulting payment default, shall be
annulled, waived and rescinded, automatically and without any action by the
Trustee or the Holders of the Notes, if within 60 days after the Event of
Default arose:

            (a) the Indebtedness that is the basis for the Event of Default has
      been discharged;

            (b) the holders of such Indebtedness have rescinded or waived the
      acceleration, notice or action, as the case may be, giving rise to the
      Event of Default; or

            (c) the default that is the basis for such Event of Default has been
      cured.

Upon any waiver of a Default or Event of Default, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed cured for
every purpose of this Indenture but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.

SECTION 6.05. CONTROL BY MAJORITY.

            Subject to Section 7.01, Section 7.02(f), Section 7.02(i) (including
the Trustee's receipt of the security or indemnification described therein) and
Section 7.07 hereof, in case an Event of Default shall occur and be continuing,
the Holders of at least a majority in aggregate principal amount of the Notes
then outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Notes. The
Trustee shall be entitled to take any other action deemed proper by the Trustee
which is not inconsistent with such direction or this Indenture.

SECTION 6.06. LIMITATION ON SUITS.

            No Holder shall have any right to institute any proceeding with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any remedy thereunder, unless:

            (a) such Holder has previously given to the Trustee written notice
      of a continuing Event of Default or the Trustee receives the notice from
      the Company,

            (b) Holders of at least 25% in aggregate principal amount of the
      Notes then outstanding have made written request and offered reasonable
      indemnity to the Trustee to institute such proceeding as Trustee, and

            (c) the Trustee shall not have received from the Holders of a
      majority in aggregate principal amount of the Notes then outstanding a
      written direction inconsistent with such request and shall have failed to
      institute such proceeding within 60 days.

            The preceding limitations shall not apply to a suit instituted by a
Holder for enforcement of payment of principal of, and premium, if any, or
interest on, a Note on or after the respective due dates for such payments set
forth in such Note.

            A Holder may not use this Indenture to affect, disturb or prejudice
the rights of another Holder or to obtain a preference or priority over another
Holder.

SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.

            Notwithstanding any other provision of this Indenture (including
Section 6.06) other than as set forth in Article 12 hereof, the right of any
Holder to receive payment of principal, premium, if any, and interest on

                                       56



the Notes held by such Holder, on or after the respective due dates expressed in
the Notes (including in connection with an offer to purchase), or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.

SECTION 6.08. COLLECTION SUIT BY TRUSTEE.

            If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee shall be authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, and interest then due and owing
(together with interest on overdue principal and, to the extent lawful,
interest) and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.

            The Trustee shall be authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee and its agents and counsel,
and any other amounts due the Trustee under Section 7.07 hereof out of the
estate in any such proceeding, shall be denied for any reason, payment of the
same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, moneys, securities and any other properties that the Holders may
be entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.

SECTION 6.10. PRIORITIES.

            Subject to Article 12 hereof, if the Trustee collects any money
pursuant to this Article 6, it shall pay out the money in the following order:

            First: to the Trustee, its agents and attorneys for amounts due
      under Section 7.07 hereof, including payment of all compensation, expenses
      and liabilities incurred, and all advances made, by the Trustee and the
      costs and expenses of collection;

            Second: to Holders for amounts due and unpaid on the Notes for
      principal, premium, if any, and interest ratably, without preference or
      priority of any kind, according to the amounts due and payable on the
      Notes for principal, premium, if any, and interest, respectively; and

            Third: to the Company or to such party as a court of competent
      jurisdiction shall direct.

            The Trustee may fix a record date and payment date for any payment
to Holders pursuant to this Section 6.10.

                                       57


SECTION 6.11. UNDERTAKING FOR COSTS.

            In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 shall not apply to a suit by the Trustee, a suit by the
Company, a suit by a Holder pursuant to Section 6.07 hereof, or a suit by
Holders of more than 10% in principal amount of the then outstanding Notes.

                                   ARTICLE 7.

                                     TRUSTEE

SECTION 7.01. DUTIES OF TRUSTEE.

            (a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.

            (b)   Except during the continuance of an Event of Default:

                  (1) the duties of the Trustee shall be determined solely by
            the express provisions of this Indenture and the Trustee need
            perform only those duties that are specifically set forth in this
            Indenture and no others, and no implied covenants or obligations
            shall be read into this Indenture against the Trustee; and

                  (2) in the absence of bad faith on its part, the Trustee may
            conclusively rely, as to the truth of the statements and the
            correctness of the opinions expressed therein, upon certificates or
            opinions furnished to the Trustee and conforming to the requirements
            of this Indenture. However, in the case of any such certificates or
            opinions which by any provisions hereof are specifically required to
            be furnished to the Trustee, the Trustee shall examine the
            certificates and opinions to determine whether or not they conform
            to the requirements of this Indenture (but need not confirm or
            investigate the accuracy of mathematical calculations or other facts
            stated therein).

            (c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

                  (1) this paragraph does not limit the effect of paragraph (b)
            of this Section;

                  (2) the Trustee shall not be liable for any error of judgment
            made in good faith by a Responsible Officer, unless it is proved
            that the Trustee was negligent in ascertaining the pertinent facts;
            and

                  (3) the Trustee shall not be liable with respect to any action
            it takes or omits to take in good faith in accordance with a
            direction received by it pursuant to Section 6.05 hereof.

            (d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.01.

            (e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability.

                                       58


            (f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregate from other funds except
to the extent required by law.

SECTION 7.02. RIGHTS OF TRUSTEE.

            Subject to TIA Section 315:

            (a) The Trustee may conclusively rely upon any document believed by
      it to be genuine and to have been signed or presented by the proper
      Person. The Trustee need not investigate any fact or matter stated in any
      such document.

            (b) Before the Trustee acts or refrains from acting, it may require
      an Officers' Certificate or an Opinion of Counsel or both. The Trustee
      shall not be liable for any action it takes or omits to take in good faith
      in reliance on such Officers' Certificate or Opinion of Counsel. The
      Trustee may consult with counsel and the written advice of such counsel or
      any Opinion of Counsel shall be full and complete authorization and
      protection from liability in respect of any action taken, suffered or
      omitted by it hereunder in good faith and in reliance thereon.

            (c) The Trustee shall not be liable for any action it takes or omits
      to take in good faith that it believes to be authorized or within the
      rights or powers conferred upon it by this Indenture.

            (d) Unless otherwise specifically provided in this Indenture, any
      demand, request, direction or notice from the Company shall be sufficient
      if signed by an Officer of the Company.

            (e) The Trustee shall not be deemed to have notice of any Default or
      Event of Default unless a Responsible Officer of the Trustee has actual
      knowledge thereof or unless written notice of any event which is in fact
      such a Default or Event of Default is received by a Responsible Officer of
      the Trustee at the Corporate Trust Office of the Trustee from the Company
      or the Holders of 25% in aggregate principal amount of the outstanding
      Notes, and such notice references the specific Default or Event of
      Default, the Notes and this Indenture.

            (f) The Trustee shall not be required to give any bond or surety in
      respect of the performance of its power and duties hereunder.

            (g) The Trustee shall have no duty to inquire as to the performance
      of the Company's covenants herein.

            (h) The Trustee may execute any of the trusts or powers hereunder or
      perform any duties hereunder either directly or by or through agents or
      attorneys and the Trustee shall not be responsible for any misconduct or
      negligence on the part of any agent or attorney appointed with due care by
      it hereunder.

            (i) The Trustee will be under no obligation to exercise any of the
      rights or powers vested in it by this Indenture at the request or
      direction of any of the Holders unless such Holders have offered to the
      Trustee reasonable security or indemnity against the costs, expenses and
      liabilities that might be incurred by it in compliance with such request
      or direction.

            (j) The rights, privileges, immunities and benefits given to the
      Trustee hereunder, including without limitation, its right to be
      indemnified, are extended to, and shall be enforceable by, the Trustee in
      each of its capacities hereunder, and to each agent, custodian and other
      Person employed by the Trustee consistent with the terms of this Indenture
      to act hereunder.

            (k) Any permissive right or authority granted to the Trustee shall
      not be construed as a mandatory duty.

                                       59


SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.

            The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as Trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee shall also be subject to Sections 7.10 and
7.11 hereof.

SECTION 7.04. TRUSTEE'S DISCLAIMER.

            The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

SECTION 7.05. NOTICE OF DEFAULTS.

            If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders.

SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.

            Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders a brief report dated as of such reporting date
that complies with TIA Section 313(a) (but if no event described in TIA Section
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA Section
313(b)(2) to the extent applicable. The Trustee shall also transmit by mail all
reports as required by TIA Section 313(c).

            A copy of each report at the time of its mailing to the Holders
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange and any delisting thereof.

SECTION 7.07. COMPENSATION AND INDEMNITY.

            The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.

            The Company shall indemnify the Trustee (in its capacity as Trustee)
or any predecessor Trustee (in its capacity as Trustee) against any and all
losses, claims, damages, penalties, fines, liabilities or expenses, including
incidental and out-of-pocket expenses and reasonable attorneys fees (for
purposes of this Article, "LOSSES") incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Holder or any other Person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent such losses may be attributable to its
negligence, bad faith or willful misconduct. The Trustee shall notify the
Company

                                       60


promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder, to the extent the Company has not been materially prejudiced thereby.
The Company shall defend the claim, and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel if the Trustee has been
reasonably advised by counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
Company and in the reasonable judgment of such counsel it is advisable for the
Trustee to engage separate counsel, and the Company shall pay the reasonable
fees and expenses of such separate counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld. The Company need not reimburse any expense or indemnify against any
loss incurred by the Trustee through the Trustee's own willful misconduct,
negligence or bad faith.

            The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture, the resignation or removal of
the Trustee and payment in full of the Notes through the expiration of the
applicable statute of limitations.

            To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal, premium,
if any, and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.

            When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(i) or (j) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

SECTION 7.08. REPLACEMENT OF TRUSTEE.

            A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.

            The Trustee may resign in writing at any time upon 30 days' prior
notice to the Company and be discharged from the trust hereby created by so
notifying the Company. The Holders of a majority in aggregate principal amount
of the then outstanding Notes may remove the Trustee by so notifying the Trustee
and the Company in writing. The Company may remove the Trustee if:

            (a) the Trustee fails to comply with Section 7.10 hereof;

            (b) the Trustee is adjudged bankrupt or insolvent or an order for
      relief is entered with respect to the Trustee under any Bankruptcy Law;

            (c) a custodian or public officer takes charge of the Trustee or its
      property; or

            (d) the Trustee becomes incapable of acting.

            If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.

            If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in aggregate principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

                                       61


            If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10 hereof, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

            A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. Subject to the Lien provided for in Section 7.07 hereof,
the retiring Trustee shall promptly transfer all property held by it as Trustee
to the successor Trustee; provided, however, that all sums owing to the Trustee
hereunder shall have been paid. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.

            In the case of an appointment hereunder of a separate or successor
Trustee with respect to the Notes, the Company, the Guarantors, any retiring
Trustee and each successor or separate Trustee with respect to the Notes shall
execute and deliver a supplemental indenture hereto (1) which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of any retiring Trustee with respect to the
Notes as to which any such retiring Trustee is not retiring shall continue to be
vested in such retiring Trustee and (2) that shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustee co-trustees of the same trust and that each such
separate, retiring or successor Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any such other Trustee.

SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.

            If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another corporation
or banking association, the successor corporation or banking association without
any further act shall, if such successor corporation or banking association is
otherwise eligible hereunder, be the successor Trustee.

SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.

            There shall at all times be a Trustee hereunder that is a Person
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50.0
million (or a wholly-owned subsidiary of a bank or trust company, or of a bank
holding company, the principal subsidiary of which is a bank or trust company
having a combined capital and surplus of at least $50.0 million) as set forth in
its most recent published annual report of condition.

            This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).

SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

            The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

                                       62


                                   ARTICLE 8.

                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.

            The Company may, at its option and at any time, elect to have either
Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance
with the conditions set forth in this Article 8.

SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.

            Upon the Company's exercise under Section 8.01 of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04, be deemed to have been discharged
from its obligations with respect to all outstanding Notes on the date the
conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE") and
each Guarantor shall be released from all of its obligations under its
Guarantee. For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Debt represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 and the other Sections of this Indenture referred
to in (a) and (b) below, and to have satisfied all its other obligations under
the Notes and this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive,
solely from the trust fund described in Section 8.04, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
or interest on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Article 2 and Sections 4.01 and
4.02, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's and the Guarantors' obligations in connection
therewith and (d) the provisions of this Article 8 relating to Legal Defeasance.
If the Company exercises under Section 8.01 the option applicable to this
Section 8.02, subject to the satisfaction of the conditions set forth in Section
8.04, payment of the Notes may not be accelerated because of an Event of
Default. Subject to compliance with this Article 8, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03.

SECTION 8.03. COVENANT DEFEASANCE.

            Upon the Company's exercise under Section 8.01 of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04, be released from its obligations
under the covenants contained in Sections 4.08 through 4.20 hereof, and the
operation of Section 5.01(a)(iv), with respect to the outstanding Notes on and
after the date the conditions set forth in Section 8.04 are satisfied
(hereinafter, "COVENANT DEFEASANCE") and each Guarantor shall be released from
all of its obligations under its Guarantee with respect to such covenants in
connection with such outstanding Notes and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. If the
Company exercises under Section 8.01 the option applicable to this Section 8.03,
subject to the satisfaction of the conditions set forth in Section 8.04, payment
of the Notes may not be accelerated because of an Event of Default specified in
clause (c) (with respect to the covenants contained in Section 5.01(a)(iv)),
clause (d) (with respect to the covenants contained in Sections 4.09, 4.10, 4.12
and 4.17), clause (e) (with respect to the covenants contained in Sections 4.08
and 4.11 through 4.20), (f), (g), (h) and (i) (but in the case of (h) and (i) of
Section 6.01, with respect to Significant Subsidiaries only).

                                       63



SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

            The following shall be the conditions to the application of either
Section 8.02 or 8.03 to the outstanding Notes.

            Legal Defeasance or Covenant Defeasance may be exercised only if:

            (a) the Company irrevocably deposits with the Trustee, in trust (the
      "DEFEASANCE TRUST"), for the benefit of the Holders, cash in U.S. dollars,
      non-callable U.S. Government Securities, or a combination of cash in U.S.
      dollars and non-callable U.S. Government Securities, in an amount
      sufficient, in the opinion of a nationally recognized firm of independent
      public accountants, to pay the principal of, or premium, if any, and
      interest on the outstanding Notes on the Stated Maturity or on the next
      redemption date, as the case may be, and the Company shall specify whether
      the Notes are being defeased to maturity or to such particular redemption
      date;

            (b) in the case of Legal Defeasance under Section 8.02 hereof, the
      Company shall deliver to the Trustee an Opinion of Counsel to the Trustee
      confirming that (i) the Company has received from, or there has been
      published by, the Internal Revenue Service a ruling or (ii) subsequent to
      the Issue Date, there has been a change in the applicable federal income
      tax law, in either case to the effect that, and based thereon such Opinion
      of Counsel shall confirm that, the Holders of the outstanding Notes will
      not recognize income, gain or loss for federal income tax purposes as a
      result of such Legal Defeasance and will be subject to federal income tax
      on the same amounts, in the same manner and at the same times as would
      have been the case if such Legal Defeasance had not occurred;

            (c) in the case of Covenant Defeasance under Section 8.03 hereof,
      the Company shall deliver to the Trustee an Opinion of Counsel to the
      Trustee confirming that the Holders of the outstanding Notes will not
      recognize income, gain or loss for federal income tax purposes as a result
      of such Covenant Defeasance and will be subject to federal income tax on
      the same amounts, in the same manner and at the same times as would have
      been the case if such Covenant Defeasance had not occurred;

            (d) no Default or Event of Default shall have occurred and be
      continuing on the date of such deposit (other than a Default or Event of
      Default resulting from the borrowing of funds to be applied to such
      deposit);

            (e) such Legal Defeasance or Covenant Defeasance shall not result in
      a breach or violation of, or constitute a default under, any material
      agreement or instrument (other than this Indenture) to which the Company
      or any Subsidiary is a party or by which the Company or any Subsidiary is
      bound;

            (f) the Company shall deliver to the Trustee an Officers'
      Certificate stating that the deposit was not made by the Company with the
      intent of preferring the Holders over other creditors of the Company with
      the intent of defeating, hindering, delaying or defrauding such other
      creditors; and

            (g) the Company delivers to the Trustee an Officers' Certificate and
      an Opinion of Counsel, each stating that all conditions precedent relating
      to the Legal Defeasance or the Covenant Defeasance have been complied
      with.

SECTION 8.05. DEPOSITED CASH AND U.S. GOVERNMENT SECURITIES TO BE HELD IN TRUST;
              OTHER MISCELLANEOUS PROVISIONS.

            Subject to Section 8.06, all cash and non-callable U.S. Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 in respect of the outstanding Notes shall be
held in trust and applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to the

                                       64



Holders of all sums due and to become due thereon in respect of principal,
premium, if any, and interest but such cash and securities need not be
segregated from other funds except to the extent required by law.

            The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable U.S.
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

            Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any cash or non-callable U.S. Government Securities held by it as
provided in Section 8.04 which, in the opinion of a nationally recognized firm
of independent certified public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the certification delivered under
Section 8.04(a)), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

SECTION 8.06. REPAYMENT TO COMPANY.

            The Trustee shall promptly, and in any event, no later than five (5)
Business Days, pay to the Company after request therefor, any excess money held
with respect to the Notes at such time in excess of amounts required to pay any
of the Company's Obligations then owing with respect to the Notes.

            Any cash or non-callable U.S. Government Securities deposited with
the Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal, premium, if any, or interest on any Note and remaining
unclaimed for one year after such principal, premium, if any, or interest has
become due and payable shall be paid to the Company on its written request or
(if then held by the Company) shall be discharged from such trust; and the
Holder shall thereafter, as an unsecured creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such cash and securities, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in The New York Times and The
Wall Street Journal (national edition), notice that such cash and securities
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such cash and securities then remaining shall be repaid to
the Company.

SECTION 8.07. REINSTATEMENT.

            If the Trustee or Paying Agent is unable to apply any cash or
non-callable U.S. Government Securities in accordance with Section 8.02 or 8.03,
as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 until such time as the Trustee or Paying Agent is permitted
to apply all such cash and securities in accordance with Section 8.02 or 8.03,
as the case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders to receive such payment from the cash and securities held by the
Trustee or Paying Agent.

                                   ARTICLE 9.

                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.

            Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
without the consent of any Holder to:

                                       65


            (a) cure any ambiguity, defect or inconsistency;

            (b) provide for uncertificated Notes in addition to or in place of
      certificated Notes; provided that the uncertificated Notes are issued in
      registered form for purposes of Section 163(f) of the Code, or in a manner
      such that the uncertificated Notes are described in Section 163(f)(2)(B)
      of the Code;

            (c) provide for the assumption by a Surviving Person of the
      obligations of the Company under this Indenture as contemplated by Article
      5 hereof;

            (d) make any change that would provide any additional rights or
      benefits to the Holders or that does not adversely affect the legal rights
      hereunder of any such Holder;

            (e) provide for or confirm the issuance of Additional Notes in
      accordance with this Indenture;

            (f) to comply with any requirement of the Commission in order to
      effect or maintain the qualification of this Indenture under the TIA;

            (g) add additional Guarantees or additional obligors with respect to
      the Notes or release Guarantors from Subsidiary Guarantees as permitted by
      the terms of this Indenture; or

            (h) secure the Notes.

            Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee will join with the Company and the Guarantors in the execution of
any amended or supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
that may be therein contained, but the Trustee will not be obligated to enter
into such amended or supplemental indenture that affects its own rights, duties
or immunities under this Indenture or otherwise.

SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.

            Except as provided below in this Section 9.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture and the Notes
with the consent of the Holders of at least a majority in aggregate principal
amount of the Notes, including Additional Notes, if any, then outstanding voting
as a single class (including, without limitation, consents obtained in
connection with a purchase of or tender offer or exchange offer for the Notes),
and, subject to Sections 6.04 and 6.07, any existing Default or Event of Default
(except a continuing Default or Event of Default in (i) the payment of
principal, premium, if any, or interest on the Notes and (ii) in respect of a
covenant or provision which under this Indenture cannot be modified or amended
without the consent of the Holder of each Note affected by such modification or
amendment) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of at least a majority in aggregate
principal amount of the Notes, including Additional Notes, if any, then
outstanding voting as a single class (including consents obtained in connection
with a purchase of or tender offer or exchange offer for the Notes).

            Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental indenture, and
upon receipt by the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders as aforesaid and the documents described in Section 7.02
hereof, the Trustee will join with the Company and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee will not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.

            Without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

                                       66


            (a) reduce the principal amount of Notes whose Holders must consent
      to an amendment, supplement or waiver;

            (b) reduce the principal of, or change the Stated Maturity of, any
      Note or alter the provisions with respect to the redemption or repurchase
      of the Notes relating to Section 4.17 (including the applicable
      definitions);

            (c) reduce the rate of, or change the time for payment of, interest,
      if any, on, any Note;

            (d) waive a Default or Event of Default in the payment of principal
      of, or interest or premium, or Additional Interest, if any, on the Notes
      (except a rescission of acceleration of the Notes by the Holders of at
      least a majority in aggregate principal amount of the Notes and a waiver
      of the payment default that resulted from such acceleration);

            (e) make any Note payable in currency other than that stated in the
      Note;

            (f) make any change in the provisions (including applicable
      definitions) of this Indenture relating to waivers of past Defaults or the
      rights of Holders of Notes to receive payments of principal of, or
      interest or premium or Additional Interest, if any, on, such Holder's
      Notes;

            (g) waive a redemption or repurchase payment with respect to any
      Note (including a payment required by the provisions of Section 4.12 and
      Section 4.17 hereof);

            (h) make any change in any Subsidiary Guarantees that would
      adversely affect the Holders or release any Guarantor from any of its
      obligations under its Subsidiary Guarantee or the Indenture, except in
      accordance with the provisions of Article 10 hereof;

            (i) make any change to Article 12 hereof (including applicable
      definitions) that would adversely affect the Holders;

            (j) make any change in this Section 9.02.

            The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Persons entitled to consent to any
supplemental indenture. If a record date is fixed, the Holders on such record
date, or their duly designated proxies, and only such Persons, shall be entitled
to consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 120 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
cancelled and of no further effect.

            It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.

            After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holder of each Note affected
thereby to such Holder's address appearing in the Security Register a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental indenture
or waiver.

SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.

            Every amendment or supplement to this Indenture or the Notes shall
be set forth in an amended or supplemental indenture that complies with the TIA
as then in effect.

                                       67


SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.

            Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion thereof that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder or subsequent Holder may revoke the
consent as to its Note or portion thereof if the Trustee receives written notice
of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver shall become effective in
accordance with its terms and thereafter shall bind every Holder.

SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.

            The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.

            Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.

SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.

            The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
None of the Company nor any Guarantor may sign an amendment or supplemental
indenture until its board of directors (or committee serving a similar function)
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and that such amended or supplemental
indenture is the legal, valid and binding obligations of the Company enforceable
against it in accordance with its terms, subject to customary exceptions and
that such amended or supplemental indenture complies with the provisions hereof
(including Section 9.03).

                                   ARTICLE 10.

                                   GUARANTEES

SECTION 10.01. GUARANTEE.

            Subject to this Article 10, the Guarantors hereby unconditionally
guarantee to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns: (a) the due and punctual
payment of the principal of, premium, if any, and interest on the Notes, subject
to any applicable grace period, whether at Stated Maturity, by acceleration,
redemption or otherwise, the due and punctual payment of interest on the overdue
principal of and premium, if any, and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee under this Indenture, the Registration Rights
Agreement or any other agreement with or for the benefit of the Holders or the
Trustee, all in accordance with the terms hereof and thereof; and (b) in case of
any extension of time of payment or renewal of any Notes or any of such other
obligations, that same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration pursuant to Section 6.02, redemption or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.

            Each Guarantor hereby agrees that its obligations with regard to its
Guarantee shall be joint and several, unconditional, irrespective of the
validity or enforceability of the Notes or the obligations of the Company

                                       68


under this Indenture, the absence of any action to enforce the same, the
recovery of any judgment against the Company or any other obligor with respect
to this Indenture, the Notes or the Obligations of the Company under this
Indenture or the Notes, any action to enforce the same or any other
circumstances (other than complete performance) which might otherwise constitute
a legal or equitable discharge or defense of a Guarantor. Each Guarantor
further, to the extent permitted by law, waives and relinquishes all claims,
rights and remedies accorded by applicable law to guarantors and agrees not to
assert or take advantage of any such claims, rights or remedies, including but
not limited to:

            (a) any right to require any of the Trustee, the Holders or the
      Company (each a "BENEFITED PARTY"), as a condition of payment or
      performance by such Guarantor, to

                  (1) proceed against the Company, any other guarantor
            (including any other Guarantor) of the Obligations under the
            Guarantees or any other Person,

                  (2) proceed against or exhaust any security held from the
            Company, any such other guarantor or any other Person,

                  (3) proceed against or have resort to any balance of any
            deposit account or credit on the books of any Benefited Party in
            favor of the Company or any other Person, or

                  (4) pursue any other remedy in the power of any Benefited
            Party whatsoever;

            (b) any defense arising by reason of the incapacity, lack of
      authority or any disability or other defense of the Company including any
      defense based on or arising out of the lack of validity or the
      unenforceability of the Obligations under the Guarantees or any agreement
      or instrument relating thereto or by reason of the cessation of the
      liability of the Company from any cause other than payment in full of the
      Obligations under the Guarantees;

            (c) any defense based upon any statute or rule of law which provides
      that the obligation of a surety must be neither larger in amount nor in
      other respects more burdensome than that of the principal;

            (d) any defense based upon any Benefited Party's errors or omissions
      in the administration of the Obligations under the Guarantees, except
      behavior which amounts to bad faith;

            (e) (1) any principles or provisions of law, statutory or otherwise,
            which are or might be in conflict with the terms of the Guarantees
            and any legal or equitable discharge of such Guarantor's obligations
            hereunder,

                  (2) the benefit of any statute of limitations affecting such
            Guarantor's liability hereunder or the enforcement hereof,

                  (3) any rights to set-offs, recoupments and counterclaims and

                  (4) promptness, diligence and any requirement that any
            Benefited Party protect, secure, perfect or insure any security
            interest or lien or any property subject thereto;

            (f) notices, demands, presentations, protests, notices of protest,
      notices of dishonor and notices of any action or inaction, including
      acceptance of the Guarantees, notices of Default under the Notes or any
      agreement or instrument related thereto, notices of any renewal, extension
      or modification of the Obligations under the Guarantees or any agreement
      related thereto, and notices of any extension of credit to the Company and
      any right to consent to any thereof;

            (g) to the extent permitted under applicable law, the benefits of
      any "One Action" rule and

                                       69


            (h) any defenses or benefits that may be derived from or afforded by
      law which limit the liability of or exonerate guarantors or sureties, or
      which may conflict with the terms of the Guarantees. Except to the extent
      expressly provided herein, including Sections 8.02, 8.03 and 10.05, each
      Guarantor hereby covenants that its Guarantee shall not be discharged
      except by complete performance of the obligations contained in its
      Guarantee and this Indenture.

            If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantors or any custodian, trustee, liquidator
or other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

            Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 6.02
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (y) in the event of any declaration of acceleration of
such obligations as provided in Section 6.02 hereof, such obligations (whether
or not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Guarantee.

SECTION 10.02. LIMITATION ON GUARANTOR LIABILITY.

            (a) Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the guarantee
of such Guarantor not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law to the extent
applicable to any guarantee. To effectuate the foregoing intention, the Trustee,
the Holders and the Guarantors hereby irrevocably agree that each Guarantor's
liability shall be that amount from time to time equal to the aggregate
liability of such Guarantor under the guarantee, but shall be limited to the
lesser of (a) the aggregate amount of the Company's obligations under the Notes
and this Indenture or (b) the amount, if any, which would not have (1) rendered
the Guarantor "insolvent" (as such term is defined in the Federal Bankruptcy
Code and in the Debtor and Creditor Law of the State of New York) or (2) left it
with unreasonably small capital at the time its guarantee with respect to the
Notes was entered into, after giving effect to the incurrence of existing Debt
immediately before such time; provided, however, it shall be a presumption in
any lawsuit or proceeding in which a Guarantor is a party that the amount
guaranteed pursuant to the guarantee with respect to the Notes is the amount
described in clause (a) above unless any creditor, or representative of
creditors of the Guarantor, or debtor in possession or Trustee in bankruptcy of
the Guarantor, otherwise proves in a lawsuit that the aggregate liability of the
Guarantor is limited to the amount described in clause (b).

            (b) In making any determination as to the solvency or sufficiency of
capital of a Guarantor in accordance with the proviso of Section 10.02(a), the
right of each Guarantor to contribution from other Guarantors and any other
rights such Guarantor may have, contractual or otherwise, shall be taken into
account.

SECTION 10.03. EXECUTION AND DELIVERY OF GUARANTEE.

            To evidence its Guarantee set forth in Section 10.01, each Guarantor
hereby agrees that a notation of such Guarantee in substantially the form
included in Exhibit E attached hereto shall be endorsed by an Officer of such
Guarantor on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Guarantor by its President or one
of its Vice Presidents.

            Each Guarantor hereby agrees that its Guarantee set forth in Section
10.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guarantee.

                                       70


            If an Officer whose signature is on this Indenture or on the
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Guarantee is endorsed, the Guarantee shall be valid
nevertheless.

            The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of the Guarantors.

            The Company hereby agrees that it shall cause each Person that
becomes obligated to provide a Guarantee pursuant to Section 4.18 to execute a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, pursuant to which such Person provides the guarantee set forth in this
Article 10 and otherwise assumes the obligations and accepts the rights of a
Guarantor under this Indenture, in each case with the same effect and to the
same extent as if such Person had been named herein as a Guarantor. The Company
also hereby agrees to cause each such new Guarantor to evidence its guarantee by
endorsing a notation of such guarantee on each Note as provided in this Section
10.03.

SECTION 10.04. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.

            Except as otherwise provided in Section 10.05, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
Surviving Person) another Person whether or not affiliated with such Guarantor
unless:

            (a) subject to Section 10.05, the Person formed by or surviving any
      such consolidation or merger (if other than a Guarantor or the Company)
      unconditionally assumes all the obligations of such Guarantor, pursuant to
      a supplemental indenture in form and substance reasonably satisfactory to
      the Trustee, under this Indenture, the Guarantee and any Registration
      Rights Agreements on the terms set forth herein or therein; and

            (b) the Guarantor complies with the requirements of Article 5
      hereof.

            In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Guarantees
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Guarantees theretofore and thereafter issued in accordance with
the terms of this Indenture as though all of such Guarantees had been issued at
the date of the execution hereof.

            Except as set forth in Articles 4 and 5, and notwithstanding clauses
(a) and (b) above, nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.

SECTION 10.05. RELEASES FOLLOWING MERGER, CONSOLIDATION OR SALE OF ASSETS, ETC.

            In the event of a sale or other disposition of all or substantially
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the Capital Stock of any
Guarantor, in each case to a Person that is not (either before or after giving
effect to such transactions) a Restricted Subsidiary of the Company, then such
Guarantor (in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the Capital Stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) shall
be released and relieved of any obligations under its Guarantee; provided that
the net proceeds of such sale or other disposition shall be applied in
accordance with the applicable provisions of this Indenture, including without
limitation Section

                                       71


4.12. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary in
accordance with the provisions of Section 4.16, such Subsidiary shall be
released and relieved of any obligations under its Subsidiary Guarantee. Upon
delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture, including
without limitation Section 4.12, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Guarantee.

            Any Guarantor not released from its obligations under its Guarantee
shall remain liable for the full amount of principal of and interest on the
Notes and for the other obligations of any Guarantor under this Indenture as
provided in this Article 10.

                                   ARTICLE 11.

                           SATISFACTION AND DISCHARGE

SECTION 11.01. SATISFACTION AND DISCHARGE.

            This Indenture shall be discharged and shall cease to be of further
effect, except as to surviving rights of registration of transfer or exchange of
the Notes, as to all Notes issued hereunder, when:

            (a) either:

                  (i) all Notes that have been previously authenticated and
            delivered (except lost, stolen or destroyed Notes that have been
            replaced or paid and Notes for whose payment money has previously
            been deposited in trust or segregated and held in trust by the
            Company and is thereafter repaid to the Company or discharged from
            the trust) have been delivered to the Trustee for cancellation; or

                  (ii) all notes that have not been delivered to the Trustee for
            cancellation have become due and payable by reason of the mailing of
            a notice of redemption or otherwise or will become due and payable
            within one year, and the Company has irrevocably deposited or caused
            to be deposited with the Trustee as trust funds in trust solely for
            the benefit of the Holders, cash in U.S. dollars, non-callable U.S.
            Government Securities, or a combination of cash in U.S. dollars and
            non-callable U.S. Government Securities, in such amounts as will be
            sufficient without consideration of any reinvestment of interest, to
            pay and discharge the entire indebtedness on the notes not delivered
            to the trustee for cancellation for principal, premium and
            Additional Interest, if any, and accrued interest to the date of
            maturity or redemption;

            (b) no Default or Event of Default shall have occurred and be
      continuing on the date of such deposit or shall occur as a result of such
      deposit and such deposit will not result in a breach or violation of, or
      constitute a default under, any other instrument to which the Company or
      any other Guarantor is a party or by which the Company or any other
      Guarantor is bound;

            (c) the Company has paid or caused to be paid all sums payable by it
      hereunder;

            (d) the Company has delivered irrevocable instructions to the
      Trustee to apply the deposited money toward the payment of the Notes at
      Stated Maturity or the redemption date, as the case may be; and

            (e) the Company shall have delivered to the Trustee an Officers'
      Certificate and Opinion of Counsel stating that all conditions precedent
      relating to the satisfaction and discharge of this Indenture have been
      satisfied.

                                       72


SECTION 11.02. DEPOSITED CASH AND U.S. GOVERNMENT SECURITIES TO BE HELD IN
               TRUST; OTHER MISCELLANEOUS PROVISIONS.

            Subject to Section 11.03, all cash and non-callable U.S. Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 11.02, the
"Trustee") pursuant to Section 11.01 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest but
such cash and securities need not be segregated from other funds except to the
extent required by law.

            The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed or assessed against the Trustee with respect to money
deposited with the Trustee pursuant to Section 11.01 hereof.

SECTION 11.03. REPAYMENT TO COMPANY.

            Any cash or non-callable U.S. Government Securities deposited with
the Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest on, any Note and
remaining unclaimed for two years after such principal, and premium, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company) shall be discharged from such trust; and the
Holder shall thereafter, as an unsecured creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such cash and securities, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in The New York Times and The
Wall Street Journal (national edition), notice that such cash and securities
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such cash and securities then remaining shall be repaid to
the Company.

                                   ARTICLE 12.

                                  SUBORDINATION

SECTION 12.01. AGREEMENT TO SUBORDINATE.

            The Company and each Guarantor agrees, and each Holder by accepting
a Note agrees, that the Indebtedness evidenced by, and all "payments" on and
"distributions" on or with respect to, the Notes (including any obligation to
repurchase the Notes) and any Subsidiary Guarantees, is subordinated in right of
payment, to the extent and in the manner provided in this Article 12, to the
prior payment in full in cash of all Senior Debt (including interest, fees and
expenses accruing on or after the commencement of any bankruptcy proceeding
whether or not post-filing interest is allowed in such proceeding at the rate as
specified in the documents evidencing the applicable Senior Debt outstanding on
the date hereof or hereafter created, incurred, assumed or guaranteed). This
Article 12 shall constitute a continuing agreement with all Persons who become
holders of, or continue to hold Senior Debt, and such provisions are made for
the benefit of the holders of Senior Debt.

SECTION 12.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.

            Upon any payment or distribution of the assets of the Company or a
Guarantor to creditors of the Company or the relevant Guarantor (1) in a
liquidation or dissolution of the Company or the relevant Guarantor, (2) in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or the relevant Guarantor or its respective property,
(3) in an assignment for the benefit of creditors of the Company or the relevant
Guarantor or (4) any marshaling of assets and liabilities of the Company or the
relevant Guarantor, the holders of Senior Debt shall be entitled to receive
payment in full in cash of all Obligations due in respect of such Senior Debt
(including interest, fees and expenses accruing on or after the commencement of
any bankruptcy

                                       73


proceeding whether or not post-filing interest is allowed in such proceeding at
the rate specified in the documents evidencing the applicable Senior Debt),
before the Holders shall be entitled to receive any payment with respect to the
Notes or Subsidiary Guarantees, and until all Obligations with respect to Senior
Debt are paid in full in cash, any payment or distribution to which the Holders
would be entitled but for this Article 12 shall be made to the holders of Senior
Debt (except that Holders may receive and retain Permitted Junior Securities and
payments made from the trust described under Article 8 or Section 11.02 if such
funds were deposited in accordance with, and to the extent permitted by, this
Article 12).

SECTION 12.03. DEFAULT ON DESIGNATED SENIOR DEBT.

            (a) Neither the Company nor any Guarantor may make any payment in
respect of the Notes (except in Permitted Junior Securities or from the trust
described under Article 8 hereof) if:

                  (1) a payment Default on Designated Senior Debt occurs and is
            continuing beyond any applicable grace period; or

                  (2) any other default occurs and is continuing on any series
            of Designated Senior Debt that permits holders of that series of
            Designated Senior Debt to accelerate its maturity and the Trustee
            receives a notice of such other default (a "PAYMENT BLOCKAGE
            NOTICE") from the Company or (i) with respect to Designated Senior
            Debt arising under the Credit Agreement, from the agent for the
            lenders thereunder, or (ii) with respect to any other Designated
            Senior Debt, from the holders of any such Designated Senior Debt.

            (b) Payments on the Notes or the guarantees may and shall be
resumed:

                  (1) in the case of a payment Default on Designated Senior
            Debt, upon the earlier of (i) the date on which such default is
            cured or waived or (ii) the date on which such Designated Senior
            Debt has been discharged and paid in full; and

                  (2) in the case of a nonpayment Default on Designated Senior
            Debt, upon the earliest of (i) the date on which such nonpayment
            Default is cured or waived, (ii) 179 days after the date on which
            the applicable Payment Blockage Notice is received, unless the
            maturity of any Designated Senior Debt has been accelerated, (iii)
            the date on which such payment blockage period shall have been
            terminated by written notice to the Trustee by the party initiating
            such payment blockage period or (iv) the date on which such
            Designated Senior Debt has been discharged or paid in full in cash.

            (c) No new Payment Blockage Notice shall be delivered unless and
until (i) 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice and (ii) all scheduled payments of principal, interest
and premium on the Notes that have come due have been paid in full in cash. No
nonpayment default on Designated Senior Debt that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the Trustee shall be, or
can be made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been waived for a period of not less than 90 days. Following
the expiration of any period during which the Company or the Guarantors are
prohibited from making payments on the Notes pursuant to a Payment Blockage
Notice, the Company or the Guarantors shall be obligated to resume making any
and all required payments in respect of the Notes, including any missed
payments, unless a payment default on Designated Senior Debt exists or the
maturity of any Designated Senior Debt has been accelerated, and such
acceleration remains in full force and effect.

            (d) The Company shall give prompt written notice to the Trustee of
any default in the payment of any Senior Debt or any acceleration under any
Senior Debt or under any agreement pursuant to which Senior Debt may have been
issued. Failure to give such notice shall not affect the subordination of the
Notes to the Senior Debt or the application of the other provisions provided in
this Article 12.

                                       74


            (e) So long as any Indebtedness is outstanding under the Credit
Agreement, only the agent under such Credit Agreement shall be permitted to
deliver a Payment Blockage Notice or to otherwise act as the Representative of
the holders of Designated Senior Debt.

SECTION 12.04. ACCELERATION OF NOTES.

            If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt (including,
without limitation, the agent under the Credit Agreement) or the Representative
of the acceleration.

SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER.

            In the event that the Trustee receives or is holding, or any Holder
receives, any payment with respect to the Notes or any Subsidiary Guarantee of
the Notes (other than in Permitted Junior Securities or from the trust described
under Article 8 hereof), when (i) such payment is prohibited by Section 12.02 or
12.03 hereof and (ii) the Trustee or the Holder has actual knowledge that the
payment is prohibited, such payment or distribution shall be held by the Trustee
or such Holder, in trust for the benefit of, and shall be paid forthwith over
and delivered to, the holders of Senior Debt as their interests may appear or
their Representative under the Credit Agreement or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to the Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in cash in accordance with their terms, after giving effect
to any concurrent payment or distribution to or for the holders of Senior Debt.

            With respect to the holders of Senior Debt, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 12, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall mistakenly pay over or distribute to or on behalf of Holders or
the Company, any Guarantor, or any other Person money or assets to which any
holders of Senior Debt shall be entitled by virtue of this Article 12, unless a
Responsible Officer of the Trustee has received a Payment Blockage Notice and
such payment is made as a result of the willful misconduct or gross negligence
of the Trustee.

SECTION 12.06. NOTICE BY THE COMPANY.

            The Company shall promptly notify the Trustee and the Paying Agent
of any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes or guarantees to violate this Article 12, but failure
to give such notice shall not affect the subordination of the Notes or the
guarantees to the Senior Debt as provided in Article 12.

SECTION 12.07. SUBROGATION.

            After all Senior Debt is paid in full in cash and until the Notes
are paid in full, Holders shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt. A distribution made
under this Article 12 to holders of Senior Debt that otherwise would have been
made to Holders is not, as between the Company and Holders, a payment by the
Company on the Notes.

            If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 12 shall have been
applied, pursuant to the provisions of this Article 12, to the payment of all
amounts payable under the Senior Debt, then and in such case the Holders shall
be entitled to receive from the holders of such Senior Debt at the time
outstanding any payments or distributions received by such holders of such
Senior Debt in excess of the amount sufficient to pay all amounts payable under
or in respect of such Senior Debt in full in cash; provided, however, that such
payments or distributions shall be paid first pro rata to Holders that
previously paid amounts and then pro rata to all Holders.

                                       75



SECTION 12.08. RELATIVE RIGHTS.

            This Article 12 defines the relative rights of Holders and holders
of Senior Debt. Nothing in this Indenture shall:

            (a) impair, as between the Company and Holders, the Obligation of
      the Company, which is absolute and unconditional, to pay principal,
      premium and interest on the Notes in accordance with their terms;

            (b) affect the relative rights of Holders and creditors of the
      Company other than their rights in relation to holders of Senior Debt; or

            (c) prevent the Trustee or any Holder from exercising its available
      remedies upon a Default, subject to the rights of holders and owners of
      Senior Debt to receive distributions and payments otherwise payable to
      Holders.

            If the Company fails because of this Article 12 to pay principal,
premium and interest on a Note on the due date, the failure is still a Default.

SECTION 12.09. SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY.

            No right of any holder of Senior Debt to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or by the failure of the Company to comply with
this Indenture.

            Subject to the other provisions of this Indenture, the holders of
the Senior Debt may, at any time and from time to time, without the consent of
or notice to the Trustee or the Holders, without incurring responsibility to the
Holders, and without impairing or releasing the subordination provided in this
Article 12, or the obligations hereunder of the Holders to the holders of the
Senior Debt, do any one or more of the following: (a) change in the manner,
place, or terms of payment, or extend the time of payment of, or renew or alter,
Senior Debt or any instrument evidencing the same or any agreement under which
the Senior Debt is outstanding or secured; (b) sell, exchange, release, or
otherwise deal with any property pledged, mortgaged, or otherwise securing the
Senior Debt; (c) release any Person liable in any manner for the collection of
Senior Debt; and (d) exercise or refrain from exercising any rights against the
Company, the Guarantor or any other Person; provided, however, that this
provision shall not in any way permit the Company or any Guarantor to take any
action otherwise prohibited by this Indenture.

SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.

            Whenever a distribution is to be made or a notice given to holders
of Senior Debt, the distribution may be made and the notice given to their
Representative.

            Upon any payment or distribution of assets of the Company or any
Guarantor referred to in this Article 12, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of the Representative for the purpose of
ascertaining the Persons entitled to participate in such distribution (so long
as the existence of the subordination provisions of this Article 12 have been
brought to the attention of such court or Representative), the holders of the
Senior Debt and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 12.

SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.

            Notwithstanding the provisions of this Article 12 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge or
notice of the existence of any facts that would prohibit the making of any
payment to or distribution by the Trustee, and the Trustee and the Paying Agent
may continue to make payments on the Notes, unless and until the Trustee shall
have received at the Corporate Trust Office of the Trustee

                                       76


no later than three (3) Business Days prior to the due date of such payment
written notice of facts that would cause the payment of any principal, premium
and interest with respect to the Notes to violate this Article 12 and, prior to
the receipt of any such written notice, the Trustee, shall be entitled in all
respects conclusively to presume that no such fact exists. Unless the Trustee
shall have received the notice provided for in the preceding sentence, the
Trustee shall have full power and authority to receive such payment and to apply
the same to the purpose for which it was received, and shall not be affected by
any notice to the contrary which may be received by it on or after such date.
Only the Company or a Representative may give the notice. Nothing in this
Article 12 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.

            The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.

SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.

            Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to acknowledge and effectuate the subordination as
provided in this Article 12, and appoints the Trustee to act as the Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, a Representative of Designated Senior Debt is hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes and the Trustee shall have no liability therefor.

SECTION 12.13. TRUST MONEYS NOT SUBORDINATED.

            Notwithstanding anything contained herein to the contrary, payments
from cash or the proceeds of U.S. Government Securities held in trust under
Article 8 or Section 11.02 hereof by the Trustee (or other qualifying trustee)
not in violation of Section 12.03 hereof for the payment of principal of (and
premium, if any) and interest on the Notes shall not be subordinated to the
prior payment of any Senior Debt or subject to the restrictions set forth in
this Article 12, and none of the Holders shall be obligated to pay over any such
amount to the Issuers or any Holder of Senior Debt or any other creditor of the
Company.

SECTION 12.14. PAYMENT AND DISTRIBUTION.

            For purposes of this Article 12, the term "payment" and/or
"distribution" means any payment or distribution (whether direct or indirect,
whether in cash, property, securities, or otherwise, and whether obtained or
distributed by set-off, liquidation, bankruptcy distribution, settlement, or
otherwise) made by any Person (including, without limitation, any payments or
distributions made pursuant to Section 4.17 or by any court or governmental body
or agency, any trustee in bankruptcy, or any liquidating trustee) with respect
to any Note or any guarantees or otherwise under this Indenture, including,
without limitation, payment of principal, premium or interest, on the Notes or
any payments under or with respect to any note guarantees, any depositing of
funds with the Trustee or any Paying Agent (including, without limitation, a
deposit in respect of defeasance or redemption, any payment on account of any
optional or mandatory redemptions or repurchase provisions, any payment or
recovery on any claim under this Indenture, any note guarantees, any Note, or
relating to or arising out of the offer, sale, or purchase of any Note (whether
for rescission or damages and whether based on contract, tort, duty imposed by
law, or any other theory of liability); provided that, for the purposes of this
Article 12, all Obligations now or hereafter existing under any Senior Debt,
(including, without limitation, the Credit Agreement, any Hedging Obligations or
agreements with respect to the issuance of letters of credit) shall not be
deemed to have been paid in full unless the holders thereof shall have received
payment in full and all commitments thereunder and all letters of credit issued
thereunder have expired.

SECTION 12.15. NO CLAIMS.

            No Holder shall have any claim to any property or assets of the
Company, any Guarantor, or any Subsidiary of the Company or any Guarantor,
unless and until the Senior Debt shall have been fully paid in cash.

                                       77


SECTION 12.16. ACKNOWLEDGEMENT OF HOLDERS.

            Each Holder by accepting a Note or a guarantee acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and consideration to each holder of Senior Debt, whether such
Senior Debt was created or acquired before or after the issuance of the Notes or
the guarantees, to acquire and continue to hold, or to continue to hold, such
Senior Debt, and such holder of Senior Debt shall be deemed conclusively to have
relied on such subordination provisions in acquiring and continuing to hold, or
in continuing to hold, such Senior Debt.

                                   ARTICLE 13.

                                  MISCELLANEOUS

SECTION 13.01. TRUST INDENTURE ACT CONTROLS.

            If any provision of this Indenture limits, qualifies or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the provision required by the TIA shall control.

SECTION 13.02. NOTICES.

            Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in person or mailed by first
class mail (registered or certified, return receipt requested), facsimile
transmission or overnight air courier guaranteeing next-day delivery, to the
other's address:

            If to the Company:

            Psychiatric Solutions, Inc.
            840 Crescent Centre Drive, Suite 460
            Franklin, Tennessee  37067
            Attention:  Brent Turner
            Telecopier No.:  (615) 312-5711

            With a copy to:

            Waller Lansden Dortch & Davis, PLLC
            511 Union Street, Suite 2100
            Nashville, Tennessee  37219-8966
            Attention:  Gerald Mace, Esq.
            Telecopier No.:  (615) 244-

            If to the Trustee:

            Wachovia Bank, National Association
            NC5780
            230 Fourth Avenue North
            Nashville, Tennessee  37219
            Attention:   Corporate Trust Administration
            Telecopier No.:  (615) 341-3927

            The Company or the Trustee, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.

            All notices and communications (other than those sent to the Trustee
or Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if sent by
facsimile transmission; and

                                       78


the next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next-day delivery. All notices and communications to
the Trustee or Holders shall be deemed duly given and effective only upon
receipt.

            Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next-day delivery to its address shown on the Security
Register. Any notice or communication shall also be so mailed to any Person
described in TIA Section 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.

            If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

            If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.

            Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).

SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

            Upon any request or application by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee:

            (a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and

            (b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.

SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

            Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:

            (a) a statement that the Person making such certificate or opinion
      has read such covenant or condition;

            (b) a brief statement as to the nature and scope of the examination
      or investigation upon which the statements or opinions contained in such
      certificate or opinion are based;

            (c) a statement that, in the opinion of such Person, he or she has
      made such examination or investigation as is necessary to enable such
      Person to express an informed opinion as to whether or not such covenant
      or condition has been complied with; and

            (d) a statement as to whether or not, in the opinion of such Person,
      such condition or covenant has been complied with.

                                       79


With respect to matters of fact, an Opinion of Counsel may rely on an Officers'
Certificate, certificates of public officials or reports or opinions of experts.

SECTION 13.06. RULES BY TRUSTEE AND AGENTS.

            The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
               STOCKHOLDERS.

            No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or of the Guarantors under the
Notes, this Indenture, the Guarantees or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. The waiver and release
may not be effective to waive or release liabilities under the federal
securities laws.

SECTION 13.08. GOVERNING LAW.

            THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

            This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.

SECTION 13.10. SUCCESSORS.

            All covenants and agreements of the Company in this Indenture and
the Notes shall bind its successors. All covenants and agreements of the Trustee
in this Indenture shall bind its successors.

SECTION 13.11. SEVERABILITY.

            In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 13.12. COUNTERPART ORIGINALS.

            The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.

            The Table of Contents, Cross-Reference Table and Headings in this
Indenture have been inserted for convenience of reference only, are not to be
considered a part of this Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.

SECTION 13.14. QUALIFICATION OF THIS INDENTURE.

            The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of any Registration Rights Agreement and shall pay
all reasonable costs and expenses (including

                                       80


attorneys' fees and expenses for the Company, the Trustee and the Holders)
incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of this Indenture and the Notes and printing this
Indenture and the Notes. The Trustee shall be entitled to receive from the
Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.

                         [Signatures on following page]

                                       81


                               SIGNATURES

Dated as of July 6, 2005

                                 PSYCHIATRIC SOLUTIONS, INC.

                                 By:    /s/ Joey A. Jacobs
                                    -------------------------------------
                                 Name:  Joey A. Jacobs
                                 Title: President and Chief Executive Officer

                                 GUARANTORS:

                                 PSYCHIATRIC SOLUTIONS HOSPITALS, INC.
                                 INFOSCRIBER CORPORATION
                                 COLLABORATIVE CARE CORPORATION
                                 PSYCHIATRIC SOLUTIONS OF ALABAMA, INC.
                                 PSYCHIATRIC SOLUTIONS OF TENNESSEE, INC.
                                 SOLUTIONS CENTER OF LITTLE ROCK, INC.
                                 PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA, INC.
                                 PSI COMMUNITY MENTAL HEALTH AGENCY
                                   MANAGEMENT, INC.
                                 PSYCHIATRIC MANAGEMENT RESOURCES, INC.
                                 PSI-EAP, INC.
                                 SUNSTONE BEHAVIORAL HEALTH, INC.
                                 THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC.
                                 PSI CEDAR SPRINGS HOSPITAL, INC.
                                 PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC.
                                 AERIES HEALTHCARE CORPORATION
                                 AERIES HEALTHCARE OF ILLINOIS, INC.
                                 PSI HOSPITALS, INC.
                                 PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS,
                                   INC.
                                 BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
                                 EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
                                 GREAT PLAINS HOSPITAL, INC.
                                 GULF COAST TREATMENT CENTER, INC.
                                 HAVENWYCK HOSPITAL INC.
                                 H.C. CORPORATION
                                 HSA HILL CREST CORPORATION
                                 HSA OF OKLAHOMA, INC.
                                 MICHIGAN PSYCHIATRIC SERVICES, INC.
                                 RAMSAY MANAGED CARE, INC.
                                 RAMSAY TREATMENT SERVICES, INC.
                                 PREMIER BEHAVIORAL SOLUTIONS, INC.
                                 PREMIER BEHAVIORAL SOLUTIONS OF ALABAMA, INC.
                                 PREMIER BEHAVIORAL SOLUTIONS OF FLORIDA, INC.
                                 RAMSAY YOUTH SERVICES OF GEORGIA, INC.
                                 RAMSAY YOUTH SERVICES PUERTO RICO, INC.
                                 PSYCHIATRIC SOLUTIONS OF SOUTH CAROLINA, INC.



                                 RHCI SAN ANTONIO, INC.
                                 TRANSITIONAL CARE VENTURES, INC.
                                 TRANSITIONAL CARE VENTURES (TEXAS), INC.
                                 BRENTWOOD ACQUISITION, INC.
                                 BRENTWOOD ACQUISITION-SHREVEPORT, INC.
                                 CANYON RIDGE HOSPITAL, INC.
                                 LAURELWOOD CENTER, INC.
                                 PEAK BEHAVIORAL HEALTH SERVICES, INC.
                                 PSI PRIDE INSTITUTE, INC.
                                 PSI SUMMIT HOSPITAL, INC.
                                 PSYCHIATRIC SOLUTIONS OF ARIZONA, INC.
                                 PSYCHIATRIC SOLUTIONS OF LEESBURG, INC.
                                 PSYCHIATRIC SOLUTIONS OF VIRGINIA, INC.
                                 TUCSON HEALTH SYSTEMS, INC.
                                 WHISPER RIDGE OF STAUNTON, INC.
                                 FORT LAUDERDALE HOSPITAL, INC.
                                 WELLSTONE HOLDINGS, INC.
                                 ARDENT HEALTH SERVICES, INC.
                                 BEHAVIORAL HEALTHCARE CORPORATION
                                 BHC ALHAMBRA HOSPITAL, INC.
                                 BHC BELMONT PINES HOSPITAL, INC.
                                 BHC CEDAR CREST RTC, INC.
                                 BHC CEDAR VISTA HOSPITAL, INC.
                                 BHC CLINICAS DEL ESTE HOSPITAL, INC.
                                 BHC COLUMBUS HOSPITAL, INC.
                                 BHC FAIRFAX HOSPITAL, INC.
                                 BHC FORT LAUDERDALE HOSPITAL, INC.
                                 BHC FOX RUN HOSPITAL, INC.
                                 BHC FREMONT HOSPITAL, INC.
                                 BHC GULF COAST MANAGEMENT GROUP, INC.
                                 BHC HEALTH SERVICES OF NEVADA, INC.
                                 BHC HERITAGE OAKS HOSPITAL, INC.
                                 BHC HOSPITAL HOLDINGS, INC.
                                 BHC INTERMOUNTAIN HOSPITAL, INC.
                                 BHC LEBANON HOSPITAL, INC.
                                 BHC MANAGEMENT HOLDINGS, INC.
                                 BHC MILLWOOD HOSPITAL, INC.
                                 BHC MONTEVISTA HOSPITAL, INC.
                                 BHC OF NORTHERN INDIANA, INC.
                                 BHC PACIFIC GATEWAY HOSPITAL, INC.
                                 BHC PACIFIC SHORES HOSPITAL, INC.
                                 BHC PACIFIC VIEW RTC, INC.
                                 BHC PINNACLE POINTE HOSPITAL, INC.
                                 BHC PROPERTIES, INC.
                                 BHC ROSS HOSPITAL, INC.
                                 BHC SAN JUAN CAPESTRANO HOSPITAL, INC.
                                 BHC SIERRA VISTA HOSPITAL, INC.
                                 BHC SPIRIT OF ST. LOUIS HOSPITAL, INC.
                                 BHC STREAMWOOD HOSPITAL, INC.
                                 BHC VALLE VISTA HOSPITAL, INC.
                                 BHC VISTA DEL MAR HOSPITAL, INC.



                                 BHC WINDSOR HOSPITAL, INC.
                                 COMMUNITY PSYCHIATRIC CENTERS OF TEXAS, INC.
                                 INDIANA PSYCHIATRIC INSTITUTES, INC.
                                 MESILLA VALLEY HOSPITAL, INC.
                                 MESILLA VALLEY MENTAL HEALTH ASSOCIATES, INC.

                                 By: /s/ Joey A. Jacobs
                                     -------------------------------------------
                                     Name:  Joey A. Jacobs
                                     Title: President

                                 THERAPEUTIC SCHOOL SERVICES, LLC
                                 PSI TEXAS HOSPITALS, LLC
                                 WELLSTONE REGIONAL HOSPITAL ACQUISITION, LLC
                                 PSI CROSSINGS, LLC
                                 PALMETTO BEHAVIORAL HEALTH SYSTEM, L.L.C
                                 PALMETTO LOWCOUNTRY BEHAVIORAL HEALTH, L.L.C.
                                 PALMETTO PEE DEE BEHAVIORAL HEALTH, L.L.C.
                                 AHS CUMBERLAND HOSPITAL, LLC
                                 BHC CANYON RIDGE HOSPITAL, LLC
                                 BHC MANAGEMENT SERVICES, LLC
                                 BHC MANAGEMENT SERVICES OF INDIANA, LLC
                                 BHC MANAGEMENT SERVICES OF KENTUCKY, LLC
                                 BHC MANAGEMENT SERVICES OF LOUISIANA, LLC
                                 BHC MANAGEMENT SERVICES OF NEW MEXICO, LLC
                                 BHC MANAGEMENT SERVICES OF PENNSYLVANIA, LLC
                                 BHC MANAGEMENT SERVICES OF STREAMWOOD, LLC
                                 BHC MANAGEMENT SERVICES OF TULSA, LLC
                                 BHC MESILLA VALLEY HOSPITAL, LLC (F/K/A BHC
                                   NEWCO 1, LLC)
                                 BHC NEWCO 2, LLC
                                 BHC NEWCO 3, LLC
                                 BHC NEWCO 4, LLC
                                 BHC NEWCO 5, LLC
                                 BHC NEWCO 6, LLC
                                 BHC NEWCO 7, LLC
                                 BHC NEWCO 8, LLC
                                 BHC NEWCO 9, LLC
                                 BHC NEWCO 10, LLC
                                 BHC NORTHWEST PSYCHIATRIC HOSPITAL, LLC
                                 BHC PHYSICIAN SERVICES OF KENTUCKY, LLC
                                 COLUMBUS HOSPITAL , LLC
                                 LEBANON HOSPITAL, LLC
                                 NORTHERN INDIANA HOSPITAL, LLC
                                 VALLE VISTA, LLC
                                 WILLOW SPRINGS, LLC
                                 RED ROCK SOLUTIONS, LLC

                                 By:   /s/ Joey A. Jacobs
                                       -----------------------------------------
                                       Name:  Joey A. Jacobs
                                       Title: President



                                 H.C. PARTNERSHIP

                                 BY: H.C. CORPORATION, AS GENERAL PARTNER

                                 By: /s/ Joey A. Jacobs
                                     -------------------------------------------
                                     Name:  Joey A. Jacobs
                                     Title: President

                                 BY: HSA HILL CREST CORPORATION, AS GENERAL
                                     PARTNER

                                 By: /s/ Joey A. Jacobs
                                     -------------------------------------------
                                     Name:  Joey A. Jacobs
                                     Title: President

                                 MILLWOOD HOSPITAL, L.P.
                                 TEXAS CYPRESS CREEK HOSPITAL, L.P.
                                 TEXAS WEST OAKS HOSPITAL, L.P.
                                 NEURO INSTITUTE OF AUSTIN, L.P.
                                 TEXAS LAUREL RIDGE HOSPITAL, L.P.
                                 TEXAS OAKS PSYCHIATRIC HOSPITAL, L.P.
                                 TEXAS SAN MARCOS TREATMENT CENTER, L.P.

                                 BY: PSI TEXAS HOSPITALS, LLC, AS GENERAL
                                     PARTNER

                                 BY: PSYCHIATRIC SOLUTIONS HOSPITAL, INC., AS
                                     SOLE MEMBER

                                 By: /s/ Joey A. Jacobs
                                     -------------------------------------------
                                     Name:  Joey A. Jacobs
                                     Title: President



                                BHC OF INDIANA GENERAL PARTNERSHIP

                                BY: BHC COLUMBUS HOSPITAL, INC.
                                    BHC LEBANON HOSPITAL, INC.
                                    BHC OF NORTHERN INDIANA, INC.
                                    BHC VALLE VISTA HOSPITAL, INC., ITS PARTNERS

                                By: /s/ Joey A. Jacobs
                                    -------------------------------------------
                                    Name:  Joey A. Jacobs
                                    Title: President

                                BLOOMINGTON MEADOWS, G.P.

                                BY: BHC OF INDIANA GENERAL PARTNERSHIP, ITS
                                    PARTNER

                                BY: BHC COLUMBUS HOSPITAL, INC.
                                    BHC LEBANON HOSPITAL, INC.
                                    BHC OF NORTHERN INDIANA, INC.
                                    BHC VALLE VISTA HOSPITAL, INC., ITS PARTNERS

                                By: /s/ Joey A. Jacobs
                                    -------------------------------------------
                                Name:  Joey A. Jacobs
                                Title: President

                                BY: INDIANA PSYCHIATRIC INSTITUTES, INC., ITS
                                    PARTNER

                                By: /s/ Joey A. Jacobs
                                    -------------------------------------------
                                Name:  Joey A. Jacobs
                                Title: President

                                MESILLA VALLEY GENERAL PARTNERSHIP

                                BY:     MESILLA VALLEY HOSPITAL, INC.
                                        MESILLA VALLEY MENTAL HEALTH
                                        ASSOCIATES, INC., ITS PARTNERS

                                By:     /s/ Joey A. Jacobs
                                   --------------------------------------------
                                Name:  Joey A. Jacobs
                                Title: President



TRUSTEE:

WACHOVIA BANK, NATIONAL ASSOCIATION

By:  /s/ Myra B. Staggs
     ----------------------------------------
Name:  Myra B. Staggs
Title: AVP




                                                                       EXHIBIT A
================================================================================

                                 (Face of Note)

                    7.75% SENIOR SUBORDINATED NOTES DUE 2015

                                                            CUSIP  _____________
NO.___                                                            $_____________

                           PSYCHIATRIC SOLUTIONS, INC.

promises to pay to CEDE & CO., INC. or registered assigns, the principal sum of
_________________ Dollars ($______________) on July 15, 2015.

Interest Payment Dates: January 15 and July 15.

Record Dates: January 1 and July 1.

Dated: ______________, 20[ ].



      IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officer.

                                         PSYCHIATRIC SOLUTIONS, INC.

                                         By:____________________________________
                                            Name:
                                            Title:

This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Trustee

By:___________________________
   Authorized Signatory

Dated _____________, 20__



                                 (Back of Note)

                    7.75% SENIOR SUBORDINATED NOTES DUE 2015

[Insert the Global Note Legend, if applicable pursuant to the terms of the
Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the terms of the
Indenture]

            Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.

      1. INTEREST. PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation (the
"COMPANY"), promises to pay interest on the principal amount of this Note at
7.75% per annum until maturity and shall pay Additional Interest, if any, as
provided in Section 5 of the Registration Rights Agreement. The Company shall
pay interest semi-annually on January 15 and July 15 of each year, or if any
such day is not a Business Day, on the next succeeding Business Day (each an
"INTEREST PAYMENT DATE"). Interest on the Notes shall accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from [_______], 2005; provided, however, that if there is no existing Default in
the payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be the first of January 15
or July 15 to occur after the date of issuance, unless such January 15 or July
15 occurs within one calendar month of such date of issuance, in which case the
first Interest Payment Date shall be the second of January 15 and July 15 to
occur after the date of issuance. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time at a rate that is 1% per annum
in excess of the interest rate then in effect under the Indenture and this Note;
it shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest and Additional Interest,
if any (without regard to any applicable grace periods), from time to time at
the same rate to the extent lawful. Interest shall be computed on the basis of a
360-day year of twelve 30-day months.

      2. METHOD OF PAYMENT. The Company shall pay interest on the Notes (except
defaulted interest) to the Persons in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the January 1 or
July 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium, if any, and
interest and Additional Interest, if any, at the office or agency of the Company
maintained for such purpose, or, at the option of the Company, payment of
interest may be made by check mailed to the Holders at their addresses set forth
in the Security Register; provided, however, that payment by wire transfer of
immediately available funds shall be required with respect to principal of and
interest and Additional Interest, if any, and premium, if any, on, all Global
Notes and all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

      3. PAYING AGENT AND REGISTRAR. Initially, Wachovia Bank, National
Association, the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.

      4. INDENTURE. The Company issued the Notes under an Indenture dated as of
July 6, 2005 ("INDENTURE") among the Company, the guarantors party thereto (the
"GUARANTORS") and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling.


      5. OPTIONAL REDEMPTION.

            (a) Except as set forth in clauses (b) and (c) of this Paragraph 5,
the Notes will not be redeemable at the option of the Company prior to July 15,
2010. Starting on that date, the Company may redeem all or a portion of the
Notes, at once or over time, after giving the required notice under the
Indenture at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest and Additional
Interest, if any, on the Notes redeemed, to the applicable redemption date
(subject to the right of Holders of record on the relevant Regular Record Date
to receive interest due on the relevant Interest Payment Date), if redeemed
during the twelve-month period commencing on July 15 of the years indicated
below:



Year                                                                                                    Percentage
                                                                                                        ----------
                                                                                                     
2010.............................................................................................         103.875%
2011.............................................................................................         102.583%
2012.............................................................................................         101.292%
2013 and thereafter..............................................................................         100.000%


            (b) At any time and from time to time prior to July 15, 2008, the
Company may redeem up to 35% of the aggregate principal amount of the Notes
(including Additional Notes) issued under this Indenture at a redemption price
(expressed as a percentage of principal amount) equal to 107.750% of the
principal amount thereof, plus accrued and unpaid interest and Additional
Interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on the
relevant Interest Payment Date) with the net cash proceeds of any Equity
Offering of common stock of the Company; provided, however, that (i) at least
65% of the aggregate principal amount of the Notes initially issued under this
Indenture (excluding Notes held by the Company and its Subsidiaries) remains
outstanding immediately after giving effect to such redemption and (ii) any such
redemption shall be made within 120 days of such Equity Offering.

            (c) At any time prior to July 15, 2010, the Company may redeem all
or any portion of the Notes, at once or over time, after giving the required
notice under the indenture at a redemption price equal to the greater of:

            (i)   100% of the principal amount of the notes to be redeemed, and

            (ii)  the sum of the present values of (1) the redemption price of
                  the notes at July 15, 2010 (as set forth above) and (2) the
                  remaining scheduled payments of interest from the redemption
                  date through July 15, 2010, but excluding accrued and unpaid
                  interest through the redemption date, discounted to the
                  redemption date (assuming a 360 day year consisting of twelve
                  30 day months), at the Treasury Rate plus 50 basis points,

plus, in either case, accrued and unpaid interest, including Additional
Interest, if any, to but excluding the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date).

            (d) Any notice to holders of Notes of such a redemption shall
include the appropriate calculation of the redemption price, but need not
include the redemption price itself. The actual redemption price, calculated as
described above, shall be set forth in an Officers' Certificate delivered to the
Trustee no later than two business days prior to the redemption date.

            (e) Any prepayment pursuant to this paragraph shall be made pursuant
to the provisions of Sections 3.01 through 3.06 of the Indenture.

      6. MANDATORY REDEMPTION. Except as set forth in Sections 4.12 and 4.17 of
the Indenture, the Company shall not be required to make mandatory redemption or
sinking fund payments with respect to, or Offer to Purchase, the Notes.


      7. REPURCHASE AT OPTION OF HOLDER.

            (a) Upon the occurrence of a Change of Control, each Holder shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple of $1,000) of such Holder's Notes (a "CHANGE OF
CONTROL OFFER") at a purchase price, in cash, equal to 101% of the aggregate
principal amount of the Notes repurchased, plus accrued and unpaid interest and
Additional Interest, if any, on the Notes repurchased to the purchase date
(subject to the right of Holders of record on the relevant Regular Record Date
to receive interest to, but excluding, the Purchase Date).

            (b) If the Company or one of its Restricted Subsidiaries consummates
any Asset Sales, any Net Proceeds from Asset Sales that are not applied or
invested as provided in Section 4.12 of the Indenture will constitute "EXCESS
PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $7.5 million,
the Company will make an offer to all Holders of Notes to purchase the maximum
principal amount of Notes and, if the Company is required to do so under the
terms of any other Indebtedness that is pari passu with the Notes, such other
Indebtedness on a pro rata basis with the Notes, that may be purchased out of
the Excess Proceeds (an "ASSET SALE OFFER"). The offer price in any Asset Sale
Offer will be equal to 100% of principal amount plus accrued and unpaid interest
and Additional Interest, if any, to the date of purchase, and will be payable in
cash. If any Excess Proceeds remain after consummation of the purchase of all
properly tendered and not withdrawn Notes pursuant to an Asset Sale Offer, the
Company may use such remaining Excess Proceeds for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and
other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the Trustee will select the Notes and such other pari
passu Indebtedness to be purchased on a pro rata basis. Upon completion of each
Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. Holders
of Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.

      8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.

      9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
This Note shall represent the aggregate principal amount of outstanding Notes
from time to time endorsed hereon and the aggregate principal amount of Notes
represented hereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company need not exchange or register the transfer of any Note or portion of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, the Company need not exchange or register the
transfer of any Notes for a period beginning at the opening of business 15 days
before the day of any selection of Notes for redemption, or during the period
between a record date (including a Regular Record Date) and the next succeeding
Interest Payment Date.

      10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.

      11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Company, the Guarantors and the Trustee may amend or supplement the Indenture
and the Notes with the consent of the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes, including Additional
Notes, if any, then outstanding voting as a single class (including, without
limitation, consents obtained in connection with a purchase of or tender offer
or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 of the
Indenture, any existing Default or Event of Default (except a continuing Default
or Event of Default in (i) the payment of principal, premium, if any, or
interest on the Notes and (ii) in respect of a covenant or provision which under
the Indenture cannot be modified or amended without the consent of the Holder of
each Note affected by such


modification or amendment) or compliance with any provision of the Indenture or
the Notes may be waived with the consent of the Holders of at least a majority
in aggregate principal amount of the Notes, including Additional Notes, if any,
then outstanding voting as a single class (including consents obtained in
connection with a purchase of or tender offer or exchange offer for the Notes).

            Without the consent of any Holder, the Company, the Guarantors and
the Trustee may amend or supplement the Indenture or the Notes to (a) cure any
ambiguity, defect or inconsistency, (b) provide for uncertificated Notes in
addition to or in place of certificated Notes, provided that the uncertificated
Notes are issued in registered form for purposes of Section 163(f) of the Code,
or in a manner such that the uncertificated Notes are described in Section
163(f)(2)(B) of the Code; (c) provide for the assumption by a Surviving Person
of the obligations of the Company under the Indenture as contemplated by Article
5 of the Indenture, (d) make any change that would provide any additional rights
or benefits to the Holders or that does not adversely affect the legal rights
under the Indenture of any such Holder, (e) provide for or confirm the issuance
of Additional Notes, (f) comply with any requirement of the Commission in order
to effect or maintain the qualification of the Indenture under the TIA, (g) add
additional Guarantees or additional obligors with respect to the Notes or
release Guarantors from Guarantees as permitted by the terms of the Indenture or
(h) secure the Notes.

      12. DEFAULTS AND REMEDIES. Each of the following is an Event of Default
under the Indenture: (a) default for 30 days in the payment when due of interest
on, or Additional Interest with respect to, the Notes; (b) default in the
payment when due of the principal of, or premium, if any, on, any of the Notes
when the same becomes due and payable at its Stated Maturity, upon acceleration,
redemption, optional redemption, required repurchase or otherwise (whether or
not prohibited by Article 12 of the Indenture); (c) failure by the Company or
any Restricted Subsidiary to comply with Section 5.01 of the Indenture; (d)
failure by the Company or any Restricted Subsidiary to comply with Section 4.09,
4.10, 4.12 or Section 4.17 of the Indenture, and such failure continues for 30
days after written notice is given to the Company as provided in the Indenture;
provided, however, that a default under the Existing Senior Subordinated Notes
arising as a result of the failure of the Company to comply with Section 4.09 or
Section 4.10 of the Indenture shall be a default under Section 4.09 or Section
4.10 of the Indenture as applicable notwithstanding the 30-day grace period
provided for in this clause (d); (e) failure by the Company or any Restricted
Subsidiary to comply with any other covenant or agreement in the Notes or in the
Indenture (other than a failure that is the subject of the foregoing clause (a),
(b), (c) or (d)), and such failure continues for 60 days after written notice is
given to the Company as provided in the Indenture; (f) a default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any Restricted Subsidiary (or the payment of which is guaranteed by
the Company or any Restricted Subsidiary) whether such Indebtedness or Guarantee
now exists, or is created after the date of the Indenture, if that default (i)
is caused by a failure to pay principal of, or interest or premium, if any, on
such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "PAYMENT DEFAULT"), or (ii) results
in the acceleration of such Indebtedness prior to its express maturity, and in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more so long as the Existing Senior Subordinated Notes are
remain outstanding, and $10.0 million or more thereafter; (g) failure by the
Company or any Restricted Subsidiary to pay final judgments aggregating in
excess of $5.0 million, so long as the Existing Senior Subordinated Notes are
remain outstanding, and $10.0 million or more thereafter, which judgments are
not paid, discharged or stayed for a period of 60 days; (h) except as permitted
by the Indenture, any Subsidiary Guarantee of a Guarantor shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor shall deny or disaffirm its
obligations under its Subsidiary Guarantee; and (i) certain events of
bankruptcy, insolvency or reorganization affecting the Company or any of its
Significant Subsidiaries.

            If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency described in the Indenture, all outstanding Notes shall become due
and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may
withhold from Holders notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest or Additional Interest) if it determines that withholding notice is in
their interest. The Holders of


a majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture,
except a continuing Default or Event of Default (i) in the payment of the
principal of, premium, if any, or interest on, the Notes and (ii) in respect of
a covenant or provision which under the Indenture cannot be modified or amended
without the consent of the Holder of each Note affected by such modification or
amendment. The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.

      13. SUBORDINATION. Payment of principal, interest and premium and
Additional Interest, if any, on the Notes is subordinated to the prior payment
of Senior Debt on the terms provided in the Indenture.

      14. TRUSTEE DEALINGS WITH COMPANY. Subject to certain limitations, the
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Company or any Affiliate of the Company
with the same rights it would have if it were not Trustee.

      15. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or of any
Guarantor, as such, shall have any liability for any obligations of the Company
or any Guarantor under the Indenture, the Notes, the Guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability.

      16. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

      17. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

      18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes that are Initial Notes shall have all the rights set forth in the
Registration Rights Agreement, dated as of July 6, 2005, between the Company and
the parties named on the signature pages thereto or, in the case of Additional
Notes, Holders of Restricted Global Notes and Restricted Definitive Notes shall
have the rights set forth in one or more registration rights agreement, if any,
among the Company and the other parties thereto, relating to rights given by the
Company to the purchasers of any Additional Notes.

      19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.

            The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:

            Psychiatric Solutions, Inc.
            840 Crescent Centre Drive, Suite 460
            Franklin, Tennessee  37067
            Attention:  Brent Turner
            Telecopier No.:  (615) 312-5711


      20. GOVERNING LAW. The internal law of the State of New York shall govern
and be used to construe this Note without giving effect to applicable principals
of conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.


                       Option of Holder to Elect Purchase

If you want to elect to have this Note purchased by the Company pursuant to
Section 4.12 or 4.17 of the Indenture, check the box below:

[ ]      Section 4.12

[ ]      Section 4.17

If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.12 or Section 4.17 of the Indenture, state the amount you
elect to have purchased: $_____________________

Date:____________________        Your Signature:________________________________
                                 (Sign exactly as your name appears on the Note)

                                 Tax Identification No.:

                                 _______________________________________________

                                 SIGNATURE GUARANTEE:

                                 _______________________________________________

                                 Signatures must be guaranteed by an "eligible
                                 guarantor institution" meeting the requirements
                                 of the Registrar, which requirements include
                                 membership or participation in the Security
                                 Transfer Agent Medallion Program ("STAMP") or
                                 such other "signature guarantee program" as may
                                 be determined by the Registrar in addition to,
                                 or in substitution for, STAMP, all in
                                 accordance with the Securities Exchange Act of
                                 1934, as amended.



                                 ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to

________________________________________________________________________________
            (Insert assignee's social security or other tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint_________________________________________________________
as agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: ______________
                                 Your Signature:________________________________
                                 (Sign exactly as your name appears on the face
                                 of this Note)

                                 Signature Guarantee:__________________________*

      * Participant in a recognized Signature Guarantee Medallion Program.



              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

            The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:



                                                                       Principal Amount
                            Amount of                                 of this Global Note       Signature of
                           decrease in         Amount of increase       following such      authorized signatory
                        Principal Amount      in Principal Amount        decrease (or           of Trustee or
Date of Exchange       of this Global Note    of this Global Note          increase)           Note Custodian
- ----------------       -------------------    -------------------     -------------------   --------------------
                                                                                




                                TABLE OF CONTENTS



                                                                                                             PAGE
                                                                                                          
ARTICLE 1.            DEFINITIONS AND INCORPORATION BY REFERENCE ......................................        1

         Section 1.01.              Definitions .......................................................        1

         Section 1.02.              Other Definitions .................................................       18

         Section 1.03.              Incorporation by Reference of Trust Indenture Act .................       18

         Section 1.04.              Rules of Construction .............................................       19

ARTICLE 2.            THE NOTES .......................................................................       19

         Section 2.01.              Form and Dating ...................................................       19

         Section 2.02.              Execution and Authentication ......................................       20

         Section 2.03.              Registrar and Paying Agent ........................................       21

         Section 2.04.              Paying Agent to Hold Money in Trust ...............................       21

         Section 2.05.              Holder Lists ......................................................       21

         Section 2.06.              Transfer and Exchange .............................................       21

         Section 2.07.              Replacement Notes .................................................       31

         Section 2.08.              Outstanding Notes .................................................       32

         Section 2.09.              Treasury Notes ....................................................       32

         Section 2.10.              Temporary Notes ...................................................       32

         Section 2.11.              Cancellation ......................................................       32

         Section 2.12.              Payment of Interest; Defaulted Interest ...........................       33

         Section 2.13.              CUSIP or ISIN Numbers .............................................       33

         Section 2.14.              Additional Interest ...............................................       33

         Section 2.15.              Issuance of Additional Notes ......................................       33

         Section 2.16.              Record Date .......................................................       34

ARTICLE 3.            REDEMPTION AND PREPAYMENT .......................................................       34

         Section 3.01.              Notices to Trustee ................................................       34

         Section 3.02.              Selection of Notes to Be Redeemed .................................       34

         Section 3.03.              Notice of Redemption ..............................................       34

         Section 3.04.              Effect of Notice of Redemption ....................................       35

         Section 3.05.              Deposit of Redemption Price .......................................       35

         Section 3.06.              Notes Redeemed in Part ............................................       36

         Section 3.07.              Optional Redemption ...............................................       36

         Section 3.08.              Mandatory Redemption ..............................................       37

         Section 3.09.              Offer To Purchase .................................................       37

ARTICLE 4.            COVENANTS .......................................................................       39

         Section 4.01.              Payment of Notes ..................................................       39


                                       i


                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                                             PAGE
                                                                                                          
         Section 4.02.              Maintenance of Office or Agency ...................................       39

         Section 4.03.              Reports ...........................................................       40

         Section 4.04.              Compliance Certificate ............................................       40

         Section 4.05.              Taxes .............................................................       41

         Section 4.06.              Stay, Extension and Usury Laws ....................................       41

         Section 4.07.              Corporate Existence ...............................................       41

         Section 4.08.              Payments for Consent ..............................................       41

         Section 4.09.              Incurrence of Additional Debt and Issuance of Capital Stock .......       41

         Section 4.10.              Restricted Payments ...............................................       44

         Section 4.11.              Liens .............................................................       46

         Section 4.12.              Asset Sales .......................................................       46

         Section 4.13.              Dividend and Other Payment Restrictions Affecting Restricted
                                    Subsidiaries ......................................................       47

         Section 4.14.              Affiliate Transactions ............................................       49

         Section 4.15.              Issuances and Sales of Capital Stock of Restricted Subsidiaries ...       49

         Section 4.16.              Designation of Restricted and Unrestricted Subsidiaries ...........       50

         Section 4.17.              Repurchase at the Option of Holders Upon a Change of Control ......       50

         Section 4.18.              Future Subsidiary Guarantors ......................................       51

         Section 4.19.              Business Activities ...............................................       51

         Section 4.20.              Limitation on Layering ............................................       51

ARTICLE 5.            SUCCESSORS ......................................................................       52

         Section 5.01.              Merger, Consolidation or Sale of Assets ...........................       52

         Section 5.02.              Successor Corporation Substituted .................................       52

ARTICLE 6.            DEFAULTS AND REMEDIES ...........................................................       53

         Section 6.01.              Events of Default .................................................       53

         Section 6.02.              Acceleration ......................................................       54

         Section 6.03.              Other Remedies ....................................................       55

         Section 6.04.              Waiver of Defaults ................................................       55

         Section 6.05.              Control by Majority ...............................................       56

         Section 6.06.              Limitation on Suits ...............................................       56

         Section 6.07.              Rights of Holders to Receive Payment ..............................       56

         Section 6.08.              Collection Suit by Trustee ........................................       57

         Section 6.09.              Trustee May File Proofs of Claim ..................................       57

         Section 6.10.              Priorities ........................................................       57


                                       ii


                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                                             PAGE
                                                                                                          
         Section 6.11.              Undertaking for Costs .............................................       58

ARTICLE 7.            TRUSTEE .........................................................................       58

         Section 7.01.              Duties of Trustee .................................................       58

         Section 7.02.              Rights of Trustee .................................................       59

         Section 7.03.              Individual Rights of Trustee ......................................       60

         Section 7.04.              Trustee's Disclaimer ..............................................       60

         Section 7.05.              Notice of Defaults ................................................       60

         Section 7.06.              Reports by Trustee to Holders .....................................       60

         Section 7.07.              Compensation and Indemnity ........................................       60

         Section 7.08.              Replacement of Trustee ............................................       61

         Section 7.09.              Successor Trustee by Merger, etc. .................................       62

         Section 7.10.              Eligibility; Disqualification .....................................       62

         Section 7.11.              Preferential Collection of Claims Against Company .................       62

ARTICLE 8.            LEGAL DEFEASANCE AND COVENANT DEFEASANCE ........................................       63

         Section 8.01.              Option to Effect Legal Defeasance or Covenant Defeasance ..........       63

         Section 8.02.              Legal Defeasance and Discharge ....................................       63

         Section 8.03.              Covenant Defeasance ...............................................       63

         Section 8.04.              Conditions to Legal or Covenant Defeasance ........................       64

         Section 8.05.              Deposited Cash and U.S. Government Securities to be Held in
                                    Trust; Other Miscellaneous Provisions .............................       64

         Section 8.06.              Repayment to Company ..............................................       65

         Section 8.07.              Reinstatement .....................................................       65

ARTICLE 9.            AMENDMENT, SUPPLEMENT AND WAIVER ................................................       65

         Section 9.01.              Without Consent of Holders of Notes ...............................       65

         Section 9.02.              With Consent of Holders of Notes ..................................       66

         Section 9.03.              Compliance with Trust Indenture Act ...............................       67

         Section 9.04.              Revocation and Effect of Consents .................................       68

         Section 9.05.              Notation on or Exchange of Notes ..................................       68

         Section 9.06.              Trustee to Sign Amendments, etc ...................................       68

ARTICLE 10.           GUARANTEES ......................................................................       68

         Section 10.01.             Guarantee .........................................................       68

         Section 10.02.             Limitation on Guarantor Liability .................................       70

         Section 10.03.             Execution and Delivery of Guarantee ...............................       70

         Section 10.04.             Guarantors May Consolidate, etc., on Certain Terms ................       71


                                      iii


                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                                             PAGE
                                                                                                          
         Section 10.05.             Releases Following Merger, Consolidation or Sale of Assets, etc. ..       71

ARTICLE 11.           SATISFACTION AND DISCHARGE ......................................................       72

         Section 11.01.             Satisfaction and Discharge ........................................       72

         Section 11.02.             Deposited Cash and U.S. Government Securities to be Held in
                                    Trust; Other  Miscellaneous Provisions ............................       73

         Section 11.03.             Repayment to Company ..............................................       73

ARTICLE 12.           SUBORDINATION ...................................................................       73

         Section 12.01.             Agreement to Subordinate ..........................................       73

         Section 12.02.             Liquidation; Dissolution; Bankruptcy ..............................       73

         Section 12.03.             Default on Designated Senior Debt .................................       74

         Section 12.04.             Acceleration of Notes .............................................       75

         Section 12.05.             When Distribution Must Be Paid Over ...............................       75

         Section 12.06.             Notice by the Company .............................................       75

         Section 12.07.             Subrogation .......................................................       75

         Section 12.08.             Relative Rights ...................................................       76

         Section 12.09.             Subordination May Not Be Impaired by the Company ..................       76

         Section 12.10.             Distribution or Notice to Representative ..........................       76

         Section 12.11.             Rights of Trustee and Paying Agent ................................       76

         Section 12.12.             Authorization to Effect Subordination .............................       77

         Section 12.13.             Trust Moneys Not Subordinated .....................................       77

         Section 12.14.             Payment and Distribution ..........................................       77

         Section 12.15.             No Claims .........................................................       77

         Section 12.16.             Acknowledgement of Holders ........................................       78

ARTICLE 13.           MISCELLANEOUS ...................................................................       78

         Section 13.01.             Trust Indenture Act Controls ......................................       78

         Section 13.02.             Notices ...........................................................       78

         Section 13.03.             Communication by Holders of Notes with Other Holders of Notes .....       79

         Section 13.04.             Certificate and Opinion as to Conditions Precedent ................       79

         Section 13.05.             Statements Required in Certificate or Opinion .....................       79

         Section 13.06.             Rules by Trustee and Agents .......................................       80

         Section 13.07.             No Personal Liability of Directors, Officers, Employees and
                                    Stockholders ......................................................       80

         Section 13.08.             Governing Law .....................................................       80

         Section 13.09.             No Adverse Interpretation of Other Agreements .....................       80


                                       iv


                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                                             PAGE
                                                                                                          
         Section 13.10.             Successors ........................................................       80

         Section 13.11.             Severability ......................................................       80

         Section 13.12.             Counterpart Originals .............................................       80

         Section 13.13.             Table of Contents, Headings, etc. .................................       80

         Section 13.14.             Qualification of this Indenture ...................................       80


                                       v


                             CROSS-REFERENCE TABLE



TIA SECTION REFERENCE                                                                       INDENTURE
                                                                                            SECTION
                                                                                         
310(a)(1)...............................................................................    7.10
(a)(2)..................................................................................    7.10
(a)(3)..................................................................................    N.A.
(a)(4)..................................................................................    N.A.
(a)(5)..................................................................................    7.10
(b).....................................................................................    7.08, 7.10
(c).....................................................................................    N.A.
311(a)..................................................................................    7.11
(b).....................................................................................    7.11
(c).....................................................................................    N.A.
312(a)..................................................................................    2.05
(b).....................................................................................    12.03
(c).....................................................................................    12.03
313(a)..................................................................................    7.06
(b)(1)..................................................................................    N.A.
(b)(2)..................................................................................    7.06, 7.07
(c).....................................................................................    7.06, 12.02
(d).....................................................................................    7.06
314(a)..................................................................................    4.03, 4.04, 12.02
(b).....................................................................................    N.A.
(c)(1)..................................................................................    12.04
(c)(2)..................................................................................    12.04
(c)(3)..................................................................................    N.A.
(d).....................................................................................    N.A.
(e).....................................................................................    12.05
315(a)..................................................................................    7.01
(b).....................................................................................    7.05, 12.02
(c).....................................................................................    7.01
(d).....................................................................................    7.01
(e).....................................................................................    6.11
316(a) (last sentence)..................................................................    2.09
(a)(1)(A)...............................................................................    6.05
(a)(1)(B)...............................................................................    6.04
(a)(2)..................................................................................    N.A.
(b).....................................................................................    6.07
317(a)(1)...............................................................................    6.08
(a)(2)..................................................................................    6.09
(b).....................................................................................    2.04
318(a)..................................................................................    12.01


N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.

EX-4.3

                                                                     Exhibit 4.3

                           PSYCHIATRIC SOLUTIONS, INC.

                                  $220,000,000

                    7-3/4% SENIOR SUBORDINATED NOTES DUE 2015

                               PURCHASE AGREEMENT

                                                                   June 30, 2005

Citigroup Global Markets Inc.
As Representative of the Initial Purchasers
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Ladies and Gentlemen:

      Psychiatric Solutions, Inc., a corporation organized under the laws of
Delaware (the "COMPANY"), proposes to issue and sell to the several parties
named in Schedule I hereto (the "INITIAL PURCHASERS"), for whom you (the
"REPRESENTATIVE") are acting as representative, $220,000,000 aggregate principal
amount of its 7-3/4% Senior Subordinated Notes Due 2015 (the "NOTES", and
together with the Guarantees (as defined below), the "SECURITIES"). The
Securities are to be issued under an indenture (the "INDENTURE"), to be dated as
of the Closing Date (as defined below), among the Company, each of the
Guarantors (as defined below) and Wachovia Bank, National Association, as
trustee (the "TRUSTEE"). The Securities will have the benefit of a registration
rights agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated as of the
Closing Date, among the Company, each of the Guarantors and the Initial
Purchasers, pursuant to which the Company and the Guarantors will agree to
register a new series of notes (the "EXCHANGE NOTES") and related guarantees
(the "EXCHANGE GUARANTEES," and, together with the Exchange Notes, the "EXCHANGE
SECURITIES") under the Act (as defined in Section 18) subject to the terms and
conditions therein specified. Pursuant to the Registration Rights Agreement, the
Exchange Securities will be offered in exchange for the Securities. The Notes
will be fully and unconditionally guaranteed (the "GUARANTEES") by each of the
Company's direct and indirect domestic subsidiaries set forth on Schedule II
hereto (collectively, the "PSI GUARANTORS") and, as of the closing date of the
Acquisition (as defined below) by each of the additional subsidiaries as set
forth on Schedule III hereto (collectively, the "ADDITIONAL GUARANTORS," and
together with the PSI Guarantors, the "GUARANTORS"). To the extent there are no
additional parties listed on Schedule I other than you, the term Representative
as used herein shall mean you as the Initial Purchasers, and the terms
Representative and Initial Purchasers shall mean either the singular or plural
as the context requires. The use of the neuter in this Agreement shall include
the feminine and masculine wherever appropriate. Certain terms used herein are
defined in Section 18 hereof.

      The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities under the Act in reliance upon exemptions from
the registration requirements of the Act.



            In connection with the offering of the Notes, the Company and the
Guarantors will (i) consummate the transactions contemplated by the stock
purchase agreement, dated as of March 10, 2005, as amended to date (the "STOCK
PURCHASE AGREEMENT"), with Ardent Health Services LLC and Ardent Behavioral (as
defined in Section 18) relating to the acquisition by the Company of all of the
outstanding capital stock of Ardent Behavioral for approximately $560.0 million
(the "ACQUISITION"), to be funded partially by borrowings under the $150,000,000
senior unsecured term loan agreement, to be dated as of July 1, 2005, among the
Company, the guarantors parties thereto, Citicorp North America, Inc., as
administrative agent, Citigroup Global Markets Inc., as syndication agent and
documentation agent, and the lenders thereto (the "BRIDGE FACILITY") and (ii)
enter into the Second Amended and Restated Credit Agreement, to be dated as of
July 1, 2005, among the Company, the subsidiary guarantors party thereto, and
lenders and letters of credit issuer parties thereto, which will provide for a
new senior secured term loan facility of $325.0 million and a new senior secured
revolving credit facility of up to $150.0 million (the "NEW SENIOR SECURED
CREDIT FACILITIES," and together with the Stock Purchase Agreement, the "RELATED
DOCUMENTS"). The net proceeds from the sale of the Notes will be applied as
described in the "Use of Proceeds" section of the Final Memorandum (as defined
below). The Acquisition, the entering into of the Second Amended and Restated
Credit Agreement and the offering of the Notes are collectively referred to
herein as the "Transactions."

            In connection with the offer and sale of the Securities (the
"OFFERING"), the Company has prepared a preliminary offering memorandum, dated
June 24, 2005 (as amended or supplemented at the date thereof, including any and
all exhibits thereto and any information incorporated by reference therein, the
"PRELIMINARY MEMORANDUM"), and a final offering memorandum, dated June 30, 2005
(as amended or supplemented at the Execution Time, including any and all
exhibits thereto and any information incorporated by reference therein, the
"FINAL MEMORANDUM"). Each of the Preliminary Memorandum and the Final Memorandum
sets forth certain information concerning the Company, the Guarantors, and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Memorandum and the Final Memorandum, and any amendment or supplement
thereto, in connection with the offer and sale of the Securities by the Initial
Purchasers. Unless stated to the contrary, any references herein to the terms
"amend", "amendment" or "supplement" with respect to the Final Memorandum shall
be deemed to refer to and include any information filed under the Exchange Act
subsequent to the Execution Time that is incorporated by reference therein.

            1. Representations, Warranties and Agreements of the Company and the
Guarantors. The Company and the Guarantors, jointly and severally, represent and
warrant to each Initial Purchaser as set forth below in this Section 1.

            (a) The Preliminary Memorandum, at the date thereof, did not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. At the Execution Time and on the
Closing Date, the Final Memorandum did not and will not (and any amendment or
supplement thereto, at the date thereof and on the Closing Date, will not)
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
and the Guarantors make no representation or warranty as to the information
contained in or omitted from the Preliminary Memorandum or the Final Memorandum,
or any amendment or supplement thereto, in reliance upon and in conformity

                                       2



with information furnished in writing to the Company by or on behalf of the
Initial Purchasers through the Representative specifically for inclusion
therein.

            (b) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 4 and their compliance with the
agreements set forth therein, none of the Company, the Guarantors, any of their
respective Affiliates, or any person acting on its or their behalf has, directly
or indirectly, made offers or sales of any security, or solicited offers to buy
any security under circumstances that would require the registration of the
Securities under the Act.

            (c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 4 and their compliance with the
agreements set forth therein, none of the Company, the Guarantors, any of their
respective Affiliates, or any person acting on its or their behalf has offered
or sold the Securities by means of any general solicitation or general
advertising (within the meaning of Rule 502(c) under the Act) or engaged in any
directed selling efforts within the meaning of Rule 902 under the Act with
respect to the Securities, and the Company, the Guarantors and any person acting
on its or their behalf have complied with and will implement the offering
restrictions within the meaning of such Rule 902.

            (d) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Act.

            (e) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 4 and their compliance with the
agreements set forth therein, no registration under the Act of the Securities is
required for the offer and sale of the Securities to or by the Initial
Purchasers in the manner contemplated herein and in the Final Memorandum.

            (f) None of the Company, the Guarantors or any of its or their
respective subsidiaries has paid or agreed to pay to any person any compensation
for soliciting another to purchase the Securities (except as contemplated by
this Agreement).

            (g) None of the Company, the Guarantors or any of its or their
respective subsidiaries has, directly or indirectly, taken any action designed
to cause or which has constituted or which might reasonably be expected to cause
or result in, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.

            (h) Each of the Company, the Guarantors and its or their respective
subsidiaries has been duly incorporated and is validly existing as a
corporation, limited liability company or partnership in good standing under the
laws of its jurisdiction of organization, is duly qualified to own or lease, as
the case may be, and to operate its properties and to conduct its business as
described in the Final Memorandum and is duly qualified to do business as a
foreign corporation, limited liability company or partnership and is in good
standing under the laws of each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, except such
failures to qualify as are not, either individually or in the aggregate,
material to the Company, the Guarantors or any of its or their respective
subsidiaries, taken as a whole, affecting the management, condition, financial
or otherwise, stockholders'

                                       3



equity, results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole.

            (i) None of the Company, the Guarantors or any of its or their
respective subsidiaries (i) is in violation of its charter or by-laws, (ii) is
in default, and no event has occurred that, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance of
any term, covenant, condition or other obligation contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its properties or
assets is subject, except for such violations or defaults that (a) could not
reasonably be expected to have a material adverse effect on the performance of
this Agreement, the Indenture, the Registration Rights Agreement or the Related
Documents, or the consummation of any of the transactions contemplated hereby
and thereby or (b) could not reasonably be expected to have material adverse
effect on the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of business (clauses (a)
and (b) collectively, a "Material Adverse Effect"), or (iii) is in violation of
any law, ordinance, governmental rule, regulation or court decree to which it or
its property or assets may be subject or has failed to obtain or maintain any
license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business, except for such violations or defaults that do not have a Material
Adverse Effect.

            (j) The Company has an authorized capitalization as set forth in the
Final Memorandum. All of the issued shares of capital stock of the Company and
the Guarantors have been duly authorized and validly issued and are fully paid
and non-assessable; and all of the issued shares of capital stock of each
subsidiary of the Company are owned directly or indirectly by the Company or the
Guarantors, free and clear of all liens, encumbrances, equities or claims, other
than liens, encumbrances, equities or claims under or permitted by the New
Senior Secured Credit Facilities.

            (k) Each of the Company and the Guarantors has all requisite
corporate, limited liability company or partnership power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.

            (l) The Indenture has been duly authorized by the Company and each
of the Guarantors and, assuming due authorization, execution and delivery
thereof by the Trustee, when executed and delivered by the Company and each of
the Guarantors, will constitute a legal, valid and binding instrument
enforceable against the Company and each of the Guarantors in accordance with
its terms (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance, preference or
other laws affecting creditors' rights generally from time to time in effect and
to general principles of equity).

            (m) The Notes have been duly authorized by the Company and the
Guarantees have been duly authorized by the Guarantors and when duly executed by
the Company and each of the Guarantors and authenticated by the Trustee in
accordance with the provisions of the Indenture and delivered to, and paid for,
by the Initial Purchasers in accordance with the terms of this Agreement, the
Notes and the Guarantees will constitute legal, valid,

                                       4



binding and enforceable obligations of the Company and each of the Guarantors,
respectively, entitled to the benefits of the Indenture (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance, preference or other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity).

            (n) The Exchange Notes have been duly authorized by the Company and
the Exchange Guarantees have been duly authorized by the Guarantors and when
executed and authenticated in accordance with the provisions of the Indenture
and issued and delivered to the holders of the Securities in exchange therefor
as contemplated by the Registration Rights Agreement and the Indenture, will
have been duly executed and delivered by the Company and the Guarantors and will
constitute legal, valid and binding obligations of the Company and the
Guarantors, entitled to the benefits of the Indenture (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance, preference or other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity).

            (o) The Registration Rights Agreement has been duly authorized by
the Company and each of the Guarantors and, assuming due authorization,
execution and delivery thereof by the Initial Purchasers, when executed and
delivered by the Company and each of the Guarantors, will constitute a legal,
valid, binding and enforceable instrument of the Company and each of the
Guarantors (subject, as to the enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
preference or other laws affecting creditors' rights generally from time to time
in effect and to general principles of equity), provided that no representation
is made with respect to Section 5 thereof.

            (p) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, in the Indenture or in the Registration Rights
Agreement, except such as may be required under the blue sky laws of any
jurisdiction in which the Securities are offered and sold and, in the case of
the Registration Rights Agreement, such as will be obtained under the Act and
the Trust Indenture Act.

            (q) None of the execution, delivery and performance of this
Agreement, the Indenture, the Registration Rights Agreement, the Related
Documents, the issuance and sale of the Securities, or the consummation of any
of the transactions contemplated hereby or thereby, or the performance by the
Company or any Guarantors of its obligations hereunder or thereunder (i) will
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which the
Company, the Guarantors or any of its or their respective subsidiaries is a
party or by which the Company, the Guarantors or any of its or their respective
subsidiaries is bound or to which any of the property or assets of the Company,
the Guarantors or any of its or their respective subsidiaries is subject, except
for such conflicts, breaches, violations or defaults that do not have a Material
Adverse Effect or for which a waiver or consent has been obtained, (ii) will
result in any violation of the provisions of the charter or by-laws of the
Company, the Guarantors or any of its or their respective subsidiaries or (iii)
will violate any applicable statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, the Guarantors
or any of its or their respective subsidiaries or any

                                       5



of their properties or assets, except for such conflicts, breaches, violations
or defaults that do not have a Material Adverse Effect.

            (r) The historical financial statements of the Company (including
the related notes and supporting schedules) included in or incorporated by
reference in the Final Memorandum present fairly in all material respects the
financial condition and results of operations of the entities purported to be
shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved.

            (s) The historical financial statements of Ramsay Youth Services,
Inc. ("RAMSAY") (including the related notes and supporting schedules)
incorporated by reference in the Final Memorandum present fairly in all material
respects the financial condition and results of operations of the entities
purported to be shown thereby, at the dates and for the periods indicated, and
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved.

            (t) The historical financial statements of Northern Healthcare
Associates and subsidiaries ("NORTHERN HEALTHCARE") (including the related notes
and supporting schedules) incorporated by reference in the Final Memorandum
present fairly in all material respects the financial condition and results of
operations of the entities purported to be shown thereby, at the dates and for
the periods indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved.

            (u) The historical financial statements of Ardent Behavioral
(including the related notes and supporting schedules) included in the Final
Memorandum present fairly in all material respects the financial condition and
results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved.

            (v) The selected financial data set forth under the caption
"Selected Consolidated Financial and Operating Data" in the Final Memorandum
fairly present in all material respects, on the basis stated in the Final
Memorandum, the information included therein; the pro forma financial statements
included in the Final Memorandum include assumptions that provide a reasonable
basis for presenting the significant effects directly attributable to the
transactions and events described therein, the related pro forma adjustments
give appropriate effect to those assumptions, the pro forma adjustments reflect
the proper application of those adjustments to the historical financial
statement amounts in the pro forma financial statements included in the Final
Memorandum, the pro forma financial statements included in the Final Memorandum
comply as to form with the applicable accounting requirements of Regulation S-X
under the Act and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of those statements.

            (w) The other financial data, operating data and statistical
information and data included in or incorporated by reference in the Final
Memorandum is presented fairly in all material respects and, to the extent
derived therefrom, has been prepared on a basis consistent with such financial
statements and the books and records of the Company and its subsidiaries.

                                       6



            (x) Ernst & Young LLP, who has certified certain historical
financial statements of the Company and Ardent Behavioral, whose reports are
included or incorporated by reference in the Final Memorandum and who has
delivered (a) the initial letters referred to in Section 6(d)(i) hereof and (b)
the bring-down letters referred to in Section 6(e)(i) hereof, is an independent
registered public accounting firm as required by the Act during the periods
covered by the financial statements on which it reported that were or are
incorporated by reference in the Final Memorandum.

            (y) Deloitte & Touche LLP, who has certified certain historical
financial statements of Ramsay, whose report is incorporated by reference in the
Final Memorandum, is an independent registered public accounting firm as
required by the Act during the periods covered by the financial statements on
which it reported that were or are incorporated by reference in the Final
Memorandum.

            (z) Selznick & Company, LLP, who has certified certain historical
financial statements of Northern Healthcare, whose report is incorporated by
reference in the Final Memorandum and who has delivered (a) the initial letter
referred to in Section 6(d)(ii) hereof, and (b) the bring-down letter referred
to in Section 6(e)(ii) hereof, are independent public accountants as required by
the Act during the periods covered by the financial statements on which it
reported that were or are incorporated by reference in the Final Memorandum.

            (aa) Crowe Chizek and Company LLC, who has certified certain
historical financial statements of Brentwood, are independent public accountants
as required by the Act during the periods covered by the financial statements on
which it reported that were or are incorporated by reference in the Final
Memorandum.

            (bb) Each of the Company and the Guarantors (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls that
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.

            (cc) There are no legal or governmental proceedings pending to which
the Company, the Guarantors or any of its or their respective subsidiaries is a
party or of which any property or assets of the Company, the Guarantors or any
of its or their respective subsidiaries is the subject that, if determined
adversely to the Company, the Guarantors or any of its or their respective
subsidiaries, would reasonably be likely to have a Material Adverse Effect, and
to the best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.

            (dd) The Company, the Guarantors or each of their respective
subsidiaries own or possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the conduct of
their respective businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others, except for such
conflicts that do not or would not have a Material Adverse Effect.

                                       7



            (ee) The Company, the Guarantors or each of their respective
subsidiaries have good and marketable title to all real property and good title
to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described or incorporated by
reference in the Final Memorandum (exclusive of any amendment or supplement
thereto) and such as do not materially affect the value of the property of the
Company, the Guarantors or any of its or their respective subsidiaries taken as
a whole and do not materially interfere with the use made and proposed to be
made of such property by the Company, the Guarantors or any of its or their
respective subsidiaries; and all real property and buildings held under lease by
the Company, the Guarantors or any of its or their respective subsidiaries are
held by them under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company, the
Guarantors or any of its or their respective subsidiaries.

            (ff) There are no stamp or other issuance or transfer taxes or
duties or other similar fees or charges required to be paid in connection with
the execution and delivery of this Agreement or the issuance or sale by the
Company and the Guarantors of the Securities.

            (gg) No subsidiary of the Company or any of the Guarantors is
currently prohibited, directly or indirectly, from paying any dividends to the
Company or the Guarantors, from making any other distribution on such
subsidiary's capital stock, from repaying to the Company or the Guarantors any
loans or advances to such subsidiary from the Company or the Guarantors or from
transferring any of such subsidiary's property or assets to the Company or the
Guarantors or any other subsidiary of the Company or the Guarantors, except as
described in or contemplated in the Final Memorandum (exclusive of any amendment
or supplement thereto).

            (hh) The Company and the Guarantors and its or their respective
subsidiaries possess all licenses, certificates, permits and other
authorizations issued by the appropriate U.S. federal, state or non-U.S.
regulatory authorities necessary to conduct their respective businesses, and
neither the Company, the Guarantors nor any of its or their respective
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect, except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or supplement
thereto).

            (ii) The Company, the Guarantors and its and their respective
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

            (jj) Each of the Company, the Guarantors or its or their respective
subsidiaries has filed all federal, state and local income and franchise tax
returns required to be filed through the date hereof and has paid all taxes due
thereon, and no tax deficiency has been determined adversely to the Company, the
Guarantors or any of its or their respective subsidiaries

                                       8



that has had (nor does the Company, the Guarantors or any of its or their
respective subsidiaries have any knowledge of any tax deficiency that, if
determined adversely to the Company, the Guarantors or any of its or their
respective subsidiaries, might have) a Material Adverse Effect.

            (kk) The Company, the Guarantors and each of their subsidiaries
carry, or are covered by, insurance in such amounts and covering such risks as
is customary for companies engaged in similar businesses in similar industries.

            (ll) No labor disturbance by the employees of the Company, the
Guarantors or any of its or their respective subsidiaries exists or, to the
knowledge of the Company, the Guarantors or any of its or their respective
subsidiaries, is imminent that could be expected to have a Material Adverse
Effect.

            (mm) Each of the Company and the Guarantors is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company, the Guarantors or any of its or their respective
subsidiaries would have any liability; neither the Company, the Guarantors or
any of its or their respective subsidiaries has incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to the termination of,
or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "Code"); and each "pension plan" for
which the Company, the Guarantors or any of its or their respective subsidiaries
would have any liability that is intended to be qualified under Section 401(a)
of the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.

            (nn) Neither the Company or any of the Guarantors has taken any
action or omitted to take any action (such as issuing any press release relating
to any Securities without an appropriate legend) which may result in the loss by
any of the Initial Purchasers of the ability to rely on any stabilization safe
harbor provided by the Financial Services Authority under the Financial Services
and Markets Act 2000 (the "FSMA"). The Company and each of the Guarantors have
been informed of the guidance relating to stabilization provided by the
Financial Services Authority, in particular in Section MAR 2 Annex 2G of the
Financial Services Handbook.

            (oo) Set forth on Exhibit A hereto is a list of each employee
pension or benefit plan with respect to which the Company or any corporation
considered an affiliate of the Company within the meaning of Section 407(d)(7)
of ERISA is a party in interest or disqualified person.

            (pp) Neither the Company, the Guarantors or any of its or their
respective subsidiaries, nor any director, officer, agent, employee or other
person associated with or acting on behalf of the Company, the Guarantors or any
of its or their respective subsidiaries, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any

                                       9



provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.

            (qq) Except for such matters as would not, individually or in the
aggregate, either result in a Material Adverse Effect or require disclosure in
the Final Memorandum, the Company, the Guarantors and its or their respective
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) (1) are conducting and have conducted their businesses, operations and
facilities in compliance with Environmental Law (as defined below); (2) possess,
and are in compliance with, any and all permits, licenses or registrations
required under Environmental Law ("ENVIRONMENTAL PERMITS"); (3) will not require
material expenditures to maintain such compliance with Environmental Law or
their Environmental Permits or to remediate, clean up, abate or remove any
Hazardous Substance (as defined below); and (4) are not subject to any pending
or, to the best knowledge of the Company, the Guarantors or any of its or their
respective subsidiaries, threatened claim or other legal proceeding under any
Environmental Laws against the Company, the Guarantors or any of its or their
respective subsidiaries, and have not been named as a "potentially responsible
party" under or pursuant to any Environmental Law. As used in this paragraph,
"Environmental Law" means any and all applicable federal, state, local and
foreign laws, ordinances, regulations and common law, or any administrative or
judicial order, consent, decree or judgment thereof, relating to pollution or
the protection of human health or the environment, including, without
limitation, those related to (i) emissions, discharges, releases or threatened
releases of, or exposure to, Hazardous Substances, (ii) the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances, or (iii) the investigation,
remediation or cleanup of any Hazardous Substances. As used in this paragraph,
"Hazardous Substances" means pollutants, contaminants or hazardous, dangerous,
toxic, biohazardous or infectious substances, materials or wastes or any other
chemical substance regulated under Environmental Laws.

            (rr) Except as set forth or incorporated by reference in the Final
Memorandum (exclusive of any amendment or supplement thereto), neither the
Company, the Guarantors or any of its or their respective subsidiaries nor, to
the knowledge of the Company, any other person who has a direct or indirect
ownership or control interest in the Company, the Guarantors or any of its or
their respective subsidiaries or who is an officer, director, agent or managing
employee of the Company or any of its subsidiaries (1) has engaged in any
activities which are prohibited, or are cause for criminal or civil penalties
and/or mandatory or permissive exclusion from Medicare or Medicaid, under
Section 1320a-7, 1320a-7a, 1320a-7b, or 1395nn of Title 42 of the United States
Code, the federal TRICARE statute, the Federal False Claims Act 31 U.S.C.
Section 3729-3733, or the regulations promulgated pursuant to such statutes or
regulations or related state or local statutes or by generally recognized
professional standards of care or conduct, except for such activities as would
not, individually or in the aggregate, result in a Material Adverse Effect; (2)
has had a civil monetary penalty assessed against it under Section 1128A of the
Social Security Act ("SSA"); (3) is currently excluded from participation under
the Medicare program or a Federal Health Care Program (as that term is defined
in SSA Section 1128(B)(f)); or (4) has been convicted (as that term is defined
in 42 C.F.R. Section 1001.2) of any of the categories of offenses described in
SSA Section 1128(a) and (b)(1), (2) and (3).

            (ss) None of the Company, the Guarantors or any of their respective
subsidiaries is, or after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the Final
Memorandum will be required to register as an "investment company" as defined in
the Investment Company Act of 1940, as amended.

                                       10



            (tt) The minute books and records of the Company relating to
proceedings of its shareholders, board of directors and committees of its board
of directors made available to Weil, Gotshal & Manges LLP, counsel for the
Initial Purchasers, are the original minute books and records or are true,
correct and complete copies thereof, with respect to all proceedings of said
shareholders, board of directors and committees since December 14, 2004, through
the date hereof. In the event that definitive minutes have not been prepared
with respect to any proceedings of such shareholders, board of directors or
committees, the Company has provided Weil, Gotshal & Manges LLP with originals
or true, correct and complete copies of draft minutes or written agendas
relating thereto, which drafts and agendas, if any, reflect all events that
occurred in connection with such proceedings.

            (uu) The statements contained or incorporated by reference in (i)
the Final Memorandum under the captions "Description of the Notes", "Description
of Other Indebtedness", "Notice to Investors", "Plan of Distribution" and
"Material U.S. Federal Income Tax Considerations" and (ii) Item 1 of Part I of
the Company's Annual Report of Form 10-K for the fiscal year ended December 31,
2004 under the caption "Regulation and Other Factors", in each case as amended
and supplemented by statements contained in the Final Memorandum or documents
incorporated by reference in the Final Memorandum (exclusive in each case of any
amendment or supplement thereto) insofar as it purports to constitute a summary
of the terms of the Securities, legal matters, agreements, documents or
proceedings discussed therein and the statements incorporated by reference from
the Company's proxy statement filed with the Commission on April 22, 2005 under
the heading "Certain Relationships and Related Transactions" are accurate in all
material aspects.

            (vv) The Company is subject to and in full compliance with the
reporting requirements of Section 13 or 15(d) of the Exchange Act. All reports
filed by the Company with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act comply as to form in all material respects with the Exchange Act.

            (ww) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15 under the Exchange Act),
which (i) are designed to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported and is made known to the Company's
principal executive officer and its principal financial officer by others within
those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared; (ii) have been evaluated for
effectiveness as of the end of the last fiscal quarter; and (iii) are effective
in all material respects to perform the functions for which they were
established.

            (xx) Based on the evaluation of its disclosure controls and
procedures, the Company is not aware of (i) any significant deficiency in the
design or operation of internal controls which could adversely affect the
Company's ability to record, process, summarize and report financial data or any
material weaknesses in internal controls; or (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls.

            (yy) Since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in internal
controls or in other factors that

                                       11



could significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.

            (zz) There is and has been no failure on the part of the Company and
any of the Company's directors or officers, in their capacities as such, to
comply with any provision of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the "Sarbanes Oxley Act"),
including Section 402 related to loans and Section 302 and 906 related to
certifications.

            (aaa) Except as disclosed or incorporated by reference in the Final
Memorandum (exclusive of any amendment or supplement thereto), there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Initial Purchaser
for a brokerage commission, finder's fee or other like payment in connection
with this offering.

            (bbb) The market-related and industry data included or incorporated
by reference in the Final Memorandum are based upon estimates by the Company
derived from sources that the Company believes to be reliable and accurate.

            Any certificate signed by any officer of the Company or any
Guarantor and delivered to the Representative or counsel for the Initial
Purchasers in connection with the Offering shall be deemed a representation and
warranty by the Company or such Guarantor, as to matters covered thereby, to
each Initial Purchaser.

            2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
and the Guarantors agree to sell to each Initial Purchaser, and each Initial
Purchaser agrees, severally and not jointly, to purchase from the Company and
the Guarantors, at a purchase price of 98.0% of the principal amount thereof,
plus accrued interest, if any, from July 6, 2005 to the Closing Date, the
principal amount of Notes set forth opposite such Initial Purchaser's name in
Schedule I hereto.

            The Company acknowledges and agrees that the Initial Purchasers are
acting solely in the capacity of an arm's length contractual counterparty to the
Company with respect to the offering of Securities contemplated hereby
(including in connection with determining the terms of the Offering) and not as
a financial advisor or a fiduciary to, or an agent of, the Company or any other
person. Additionally, no Initial Purchaser is advising the Company or any other
person as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. The Company shall consult with its own advisors concerning such
matters and shall be responsible for making their own independent investigation
and appraisal of the transactions contemplated hereby, and the Initial
Purchasers shall have no responsibility or liability to the Company with respect
hereto. Any review by the Initial Purchasers of the Company, the transactions
contemplated hereby or other matters relating to such transactions will be
performed solely for the benefit of the Initial Purchasers and shall not be on
behalf of the Company.

            3. Delivery and Payment. Delivery of and payment for the Securities
shall be made at 10:00 A.M., New York City time, on July 6, 2005, or at such
time on such later date not more than three Business Days after the foregoing
date as the Representative shall designate, which date and time may be postponed
by agreement between the Representative and the Company or as provided in
Section 9 hereof (such date and time of delivery and payment for the

                                       12



Securities being herein called the "CLOSING DATE"). Delivery of the Securities
shall be made to the Representative for the respective accounts of the several
Initial Purchasers against payment by the several Initial Purchasers through the
Representative of the purchase price thereof to or upon the order of the Company
by wire transfer payable in same-day funds to the account specified by the
Company. The Securities shall be delivered in such names, forms and amounts as
the Initial Purchasers shall specify and delivery shall be made through the
facilities of The Depository Trust Company unless the Representative shall
otherwise instruct.

            4. Offering by the Initial Purchasers.

            (a) Each Initial Purchaser acknowledges that the Securities have not
been and will not be registered under the Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons,
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Act.

            (b) Each Initial Purchaser, severally and not jointly, represents
and warrants to and agrees with the Company and the Guarantors that:

                  (i) it has not offered or sold, and will not offer or sell,
any Securities within the United States or to, or for the account or benefit of,
U.S. persons (x) as part of their distribution at any time or (y) otherwise
until 40 days after the later of the commencement of the offering and the date
of closing of the offering except:

                        (A) to those it reasonably believes to be "qualified
institutional buyers" (as defined in Rule 144A under the Act) or

                        (B) in accordance with Rule 903 of Regulation S;

                  (ii) neither it nor any person acting on its behalf has made
or will make offers or sales of the Securities in the United States by means of
any form of general solicitation or general advertising (within the meaning of
Regulation D) in the United States;

                  (iii) in connection with each sale pursuant to Section
4(b)(i)(A), it has taken or will take reasonable steps to ensure that the
purchaser of such Securities is aware that such sale is being made in reliance
on Rule 144A;

                  (iv) neither it, nor any of its Affiliates nor any person
acting on its or their behalf has engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Securities;

                  (v) it has not entered and will not enter into any contractual
arrangement with any distributor (within the meaning of Regulation S) with
respect to the distribution of the Securities, except with its affiliates or
with the prior written consent of the Company;

                  (vi) it and its Affiliates have complied and will comply with
the offering restrictions requirement of Regulation S;

                                       13



                  (vii) at or prior to the confirmation of sale of Securities
(other than a sale of Securities pursuant to Section 4(b)(i)(A) of this
Agreement), it shall have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the distribution compliance period (within the meaning of Regulation S) a
confirmation or notice to substantially the following effect:

            "The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Act") and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons (i) as
part of their distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering and the date of closing of the
offering, except in either case in accordance with Regulation S or Rule 144A
under the Act. Terms used in this paragraph have the meanings given to them by
Regulation S."

                  (viii) it has not offered or sold and, prior to the date six
months after the date of issuance of the Securities, will not offer or sell any
Securities to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or as agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995;

                  (ix) it has complied and will comply with all applicable
provisions of the FSMA) with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom;

                  (x) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of section 21 of the FSMA)
received by it in connection with the issue or sale of any Securities, in
circumstances in which section 21(1) of the FSMA does not apply to the Company;
and

                  (xi) it is an "accredited investor" (as defined in Rule 501(a)
of Regulation D).

            5. Agreements. The Company and the Guarantors agree as set forth
below, jointly and severally, with the Initial Purchasers that:

            (a) The Company and the Guarantors will furnish to each Initial
Purchaser and to counsel for the Initial Purchasers, without charge, during the
period referred to in paragraph (c) below, as many copies of the Final
Memorandum and any amendments and supplements thereto as they may reasonably
request.

            (b) The Company and the Guarantors will not amend or supplement the
Final Memorandum, other than by filing documents under the Exchange Act that are
incorporated by reference therein, without the prior written consent of the
Representative; provided, however, that, prior to the completion of the
distribution of the Securities by the Initial Purchasers (as determined by the
Initial Purchasers), the Company will not file any document under the Exchange
Act that is incorporated by reference in the Final Memorandum unless, prior to
such proposed filing, the Company has furnished the Representative with a copy
of such document for

                                       14



their review and the Representative have not reasonably objected to the filing
of such document. The Company will promptly advise the Representative when any
document filed under the Exchange Act that is incorporated by reference in the
Final Memorandum shall have been filed with the Commission.

            (c) If at any time prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by the Representative), any
event occurs as a result of which the Final Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it should
be necessary to amend or supplement the Final Memorandum to comply with
applicable law, the Company and the Guarantors will promptly (i) notify the
Representative of any such event; (ii) subject to the requirements of paragraph
(b) of this Section 5, prepare an amendment or supplement that will correct such
statement or omission or effect such compliance; and (iii) supply any
supplemented or amended Final Memorandum to the several Initial Purchasers and
counsel for the Initial Purchasers without charge in such quantities as they may
reasonably request.

            (d) The Company and the Guarantors will arrange, if necessary, for
the qualification of the Securities for sale by the Initial Purchasers under the
laws of such jurisdictions as the Representative may designate and will maintain
such qualifications in effect so long as required for the sale of the
Securities; provided that in no event shall the Company be obligated to qualify
to do business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to service of process in suits, other than
those arising out of the Offering, in any jurisdiction where it is not now so
subject. The Company will promptly advise the Representative of the receipt by
the Company or any Guarantor of any notification with respect to the suspension
of the qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.

            (e) During the period of two years after the Closing Date, the
Company and the Guarantors will not, and will not permit any of its Affiliates
to, resell any Securities that have been acquired by any of them.

            (f) None of the Company, the Guarantors, their respective Affiliates
or any person acting on its or their behalf will, directly or indirectly, make
offers or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities.

            (g) None of the Company, the Guarantors, their respective Affiliates
or any person acting on its or their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities in the United States and
none of the Company, the Guarantors, their respective Affiliates, or any person
acting on its or their behalf will engage in any directed selling efforts with
respect to the Securities, and each of them will comply with the offering
restrictions requirement of Regulation S. Terms used in this paragraph have the
meanings given to them by Regulation S.

            (h) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act, the Company and the
Guarantors will, during any

                                       15



period in which they are not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, provide to each holder of such restricted securities
and to each prospective purchaser (as designated by such holder) of such
restricted securities, upon the request of such holder or prospective purchaser,
any information required to be provided by Rule 144A(d)(4) under the Act. Such
information will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders, from time to
time of such restricted securities.

            (i) The Company and the Guarantors will cooperate with the
Representative and use their respective best efforts to have the Securities
designated as PORTAL eligible securities in accordance with the rules and
regulations of the NASD and to permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.

            (j) The Company and the Guarantors will use the net proceeds
received from the sale of the Securities pursuant to this Agreement in the
manner specified in the Final Memorandum.

            (k) None of the Company, any of the Guarantors or any of its or
their respective subsidiaries will for a period of 90 days following the
Execution Time, without the prior written consent of Citigroup, directly or
indirectly, offer, sell, contract to sell, pledge, otherwise dispose of, or
enter into any transaction that is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Company or any
Affiliate of the Company or any person in privity with the Company or any
Affiliate of the Company, directly or indirectly, or announce the offering of,
any debt securities issued or guaranteed by the Company (other than the
Securities).

            (l) None of the Company, any of the Guarantors or any of its or
their respective subsidiaries will take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.

            (m) The Company and the Guarantors agree to pay the costs and
expenses relating to the following matters: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
issuance of the Securities; (ii) all expenses in connection with the
preparation, printing and filing of the Preliminary Memorandum and Final
Memorandum and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Initial Purchasers and dealers; (iii) the
cost of printing or producing this Agreement, the Indenture, the Registration
Rights Agreement, the Securities, the Blue Sky Memoranda, closing documents
(including, without limitation, any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iv) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 5(d) hereof, including, without limitation, the fees and disbursements
of counsel for the Initial Purchasers in connection with such qualification and
in connection with the Blue Sky surveys; (v) any fees charged by securities
rating services for rating the Securities; (vi) the cost related to the
preparation, printing, authentication, issuance, and

                                       16



delivery of certificates for the Securities; (vii) any stamp or transfer taxes
in connection with the original issuance and sale of the Securities; (viii) the
fees and expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; (ix) any cost incurred in connection with the designation of the
Securities for trading in the PORTAL; (x) investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the Notes,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, but shall not be responsible for any of the cost of any aircraft
chartered in connection with the road show; (xi) filing and fees and expenses in
connection with the filing of a registration statement with the Commission under
the Act and the qualification of an indenture under the Trust Indenture Act,
pursuant to the Registration Rights Agreement; and (xii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section.

            (n) The Company and the Guarantors will, for a period of twelve
months following the Execution Time, furnish to the Representative (i) all
reports or other communications (financial or other) generally made available to
stockholders, and deliver such reports and communications to the Representative
as soon as they are available, unless such documents are furnished to or filed
with the Commission or any securities exchange on which any class of securities
of the Company is listed and generally made available to the public and (ii)
such additional information concerning the business and financial condition of
the Company as the Representative may from time to time reasonably request (such
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to
stockholders).

            (o) The Company and the Guarantors will use their reasonable best
efforts to comply with all applicable securities and other laws, rules and
regulations, including, without limitation, provisions of the Sarbanes-Oxley Act
and rules and regulations of the NASD, and use its reasonable best efforts to
cause the respective directors and officers of the Company and each of the
Guarantors, in their capacities as such, to comply with such laws, rules and
regulations.

            (p) The Company and the Guarantors will not take any action or omit
to take any action (such as issuing any press release relating to any Securities
without an appropriate legend) which may result in the loss by any of the
Initial Purchases of the ability to rely on any stabilization safe harbor
provided by the Financial Services Authority under the FSMA.

            6. Conditions of Initial Purchasers' Obligations. The obligations of
the Initial Purchasers hereunder are subject to the accuracy of the
representations and warranties of the Company and the Guarantors contained
herein at the Execution Time and the Closing Date or in certificates of any
officer of the Company or the Guarantors delivered pursuant to the provisions
hereof, to the performance by the Company and the Guarantors of their covenants
and other obligations hereunder, and to the following further conditions:

            (a) Waller Lansden Dortch & Davis PLLC shall have furnished to the
Representative its written opinion, or letter or letters, as counsel to the
Company and the Guarantors, addressed to the Representative and dated the
Closing Date, substantially in the form of Exhibit B hereto.

                                       17



            (b) The Representative shall have received from Weil, Gotshal &
Manges LLP, counsel for the Initial Purchasers, such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the Securities, the
Indenture, the Registration Rights Agreement, the Final Memorandum and other
related matters as the Representative may reasonably require, and the Company
and the Guarantors shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such matters.

            (c) At time of the execution of this Agreement, the Representative
shall have received from:

                  (i) Ernst & Young LLP, two letters, one with respect to the
            financial information of the Company and the other with respect to
            the financial information of Ardent Behavioral, included or
            incorporated by reference in the Final Memorandum, each in form and
            substance satisfactory to the Representative, addressed to the
            Representative and dated the date hereof (A) confirming that it is
            an independent registered public accounting firm within the meaning
            of the Act and is in compliance with the applicable requirements
            relating to the qualification of accountants under Rule 2-01 of
            Regulation S-X of the Commission, (B) stating, as of the date hereof
            (or, with respect to matters involving changes or developments since
            the respective dates as of which specified financial information is
            given or incorporated by reference in the Final Memorandum, as of a
            date not more than five days prior to the date hereof), the
            conclusions and findings of such firm with respect to the financial
            information and other matters ordinarily covered by accountants'
            "comfort letters" to Representative in connection with registered
            public offering;

                  (ii) Selznick & Company, LLP, a letter with respect to the
            financial information of Northern Healthcare, in form and substance
            satisfactory to the Representative, addressed to the Initial
            Purchasers and dated the date hereof (A) confirming that they are
            independent public accountants with respect to Northern Healthcare,
            (B) stating, as of the date hereof, the conclusions and findings of
            such firm with respect to the financial information and other
            matters ordinarily covered by accountants' "comfort letters" to
            Initial Purchasers in connection with registered public offering;

            (d) With respect to the letters referred to in the immediately
preceding paragraph and delivered to the Representative concurrently with the
execution of this Agreement (each, an "INITIAL LETTER"), the Representative
shall have received a letter (each, a "BRING-DOWN LETTER") addressed to the
Representative and dated as of the Closing Date:

                  (i) Ernst & Young LLP, with respect to the financial
            information of the Company and Ardent Behavioral, incorporated by
            reference in the Final Memorandum, (A) confirming that it is an
            independent registered public accounting firm within the meaning of
            the Act and is in compliance with the applicable requirements
            relating to the qualification of accountants under Rule 2-01 of
            Regulation S-X of the Commission, (B) stating, as of the date of
            each of the bring-down letters (or, with respect to matters
            involving changes or developments since the respective dates as of
            which specified financial

                                       18



            information is given or incorporated by reference in the Final
            Memorandum, as of a date not more than five days prior to the date
            of each of the bring-down letters), the conclusions and findings of
            such firm with respect to the financial information and other
            matters covered by each of the initial letters and (C) confirming in
            all material respects the conclusions and findings set forth in each
            of the initial letters;

                  (ii) Selznick & Company, LLP, with respect to the financial
            information of Northern Healthcare, incorporated by reference in the
            Final Memorandum, (A) confirming that they are independent public
            accountants with respect to Northern Healthcare, (B) stating, as of
            the date of the bring-down letter, the conclusions and findings of
            such firm with respect to the financial information and other
            matters covered by the initial letter; and

            (e) The Company shall have furnished to the Representative a
certificate, dated the Closing Date, signed by the Chief Executive Officer and
Chief Accounting Officer of the Company stating, as applicable, that:

                  (i) The representations, warranties and agreements of the
            Company and the Guarantors contained herein, as applicable, are true
            and correct in all material respects (except with respect to
            representations, warranties and agreements already qualified by
            materiality) as if made on and as of the Closing Date (other than to
            the extent any such representation or warranty is made expressly to
            a certain date), and the Company and the Guarantors have performed
            all covenants and agreements and satisfied all conditions (after
            giving effect to all materiality qualifiers herein) on their part to
            be performed or satisfied hereunder, to the extent a party hereto,
            at or prior to the Closing Date; and the conditions set forth in
            Section 6 have been fulfilled; and

                  (ii) They have carefully examined the Final Memorandum
            (exclusive of any amendment or supplement thereto) and, in their
            opinion (A) as of the Closing Date, the Final Memorandum did not
            include, and as of its date and the Closing Date the Final
            Memorandum did not include any untrue statement of a material fact
            and did not omit to state a material fact required to be stated
            therein or necessary, in the light of the circumstances under which
            made, to make the statements therein not misleading, and (B) since
            the date of the Final Memorandum, no event has occurred which should
            have been set forth in an amendment to the Final Memorandum or
            supplement to the Final Memorandum.

            (f) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum (exclusive of any amendment
or supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (c) or (d) of this
Section 6; or (ii) any change, or any development involving a prospective
change, in or affecting the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto), the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the sole judgment of the
Representative, so material and adverse as to make it impractical or inadvisable
to proceed with

                                       19



the offering, sale or delivery of the Securities as contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).

            (g) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's securities by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Act) or any notice given of any intended or potential decrease
in any such rating or of a possible change in any such rating that does not
indicate the direction of the possible change.

            (h) Prior to the Closing Date, the Company shall have furnished to
the Representative such further information, certificates and documents as the
Representative may reasonably request.

            (i) The Representative shall have received a certificate from the
Company, at the time of the execution of this Agreement and on the Closing Date,
signed by the Chief Accounting Officer of the Company, in respect of the
financial data contained in footnote (1) to the Unaudited Pro Forma Condensed
Combined Income Statement for the twelve months ended March 31, 2005 and the
year ended December 31, 2004 relating to Brentwood, Northern Healthcare and each
of the hospitals consolidated under the column "Non-Significant Acquisitions"
stating, as applicable, that:

                  (1) The financial statements attached to the certificate are ,
      in fact, a true and accurate copy of the financial data for Brentwood,
      Northern Healthcare and each of the hospitals consolidated under the
      column "Non-Significant Acquisitions" used to create the data contained in
      footnote (1) to the Unaudited Pro Forma Condensed Combined Income
      Statement for the twelve months ended March 31, 2005 and the year ended
      December 31, 2004 (the "FINANCIAL STATEMENTS");

                  (2) As members of management of Brentwood, Northern Healthcare
      and each of the hospitals consolidated under the column "Non-Significant
      Acquisitions," he is responsible for the fair presentation of its
      financial statements and he believes the statements of financial position
      and results of operations are fairly presented in conformity with
      accounting principles generally accepted in the United States applied on a
      basis consistent with that of the preceding periods;

                  (3) There are no unadjusted audit differences identified
      during the current audit and pertaining to the period presented;

                  (4) No plans or intentions exist that may materially affect
      the carrying value or classification of assets and liabilities;

                  (5) There are no material transactions that have not been
      properly recorded in the accounting records underlying the Financial
      Statements;

                  (6) There are no material weaknesses in internal control,
      including any for which he believes the cost of corrective actions exceeds
      the benefits and there have been no significant changes in internal
      control since December 31, 2004;

                                       20



                  (7) No events or transactions have occurred since December 31,
      2004 or are pending that would have a material effect on the financial
      statements at that date or for the period then ended, or that are of such
      significance in relation to the affairs of Brentwood, Northern Healthcare
      or each of the hospitals consolidated under the column "Non-Significant
      Acquisitions" to require mention in a note to the Financial Statements or
      the pro forma financial statements contained in the Final Memorandum in
      order to make them not misleading regarding the respective financial
      position, results of operations, or cash flows of Brentwood, Northern
      Healthcare or each of the hospitals consolidated under the column
      "Non-Significant Acquisitions."

            (j) Prior to the Closing Date, the Acquisition shall have been
consummated.

            (k) Concurrently with the closing of the Offering, the Bridge
Facility shall be fully repaid and all obligations of the Company and the
guarantors thereunder shall be satisfied in full and discharged.

            If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representative and counsel
for the Initial Purchasers, this Agreement and all obligations of the Initial
Purchasers hereunder may be cancelled at, or at any time prior to, the Closing
Date by the Representative. Notice of such cancellation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.

            7. Reimbursement of Expenses. If the sale of the Securities provided
for herein is not consummated because any condition to the obligations of the
Initial Purchasers set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company or any Guarantor to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Initial Purchasers, the Company will reimburse the Initial
Purchasers severally through Citigroup on demand for all expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.

            8. Indemnification and Contribution. (a) Each of the Company and the
Guarantors agrees, jointly and severally, to indemnify and hold harmless each
Initial Purchaser, the directors, officers, employees, Affiliates and agents of
each Initial Purchaser and each person who controls any Initial Purchaser within
the meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other U.S. federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Memorandum, the Final Memorandum or
in any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company and the

                                       21



Guarantors will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Preliminary Memorandum, the Final Memorandum, or in any amendment thereof or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company or the Guarantors by or on behalf of any Initial
Purchaser through the Representative specifically for inclusion therein. This
indemnity agreement will be in addition to any liability that the Company or the
Guarantors may otherwise have.

      (b) Each Initial Purchaser severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the Guarantors, each of their respective
directors and officers, and each person who controls the Company or the
Guarantors within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company and the Guarantors to each
Initial Purchaser, but only with reference to written information relating to
such Initial Purchaser furnished to the Company and the Guarantors by or on
behalf of such Initial Purchaser through the Representative specifically for
inclusion in the Preliminary Memorandum, the Final Memorandum or in any
amendment or supplement thereto. This indemnity agreement will be in addition to
any liability that any Initial Purchaser may otherwise have. The Company and the
Guarantors acknowledge that (i) the statements set forth in the last paragraph
of the cover page regarding delivery of the Securities and (ii), under the
heading "Plan of Distribution", (x) the first sentence of the third paragraph,
the fifth paragraph related to proposed resales of the Securities by the Initial
Purchasers and the eighth paragraph, (y) the fifth and sixth sentences of the
ninth paragraph related to market-making activities and (z) the tenth paragraph
related to stabilization, syndicate covering transactions and penalty bids, in
each case in the Preliminary Memorandum and the Final Memorandum constitute the
only information furnished in writing by or on behalf of the Initial Purchasers
for inclusion in the Preliminary Memorandum, the Final Memorandum or in any
amendment or supplement thereto.

      (c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel (including
local counsel) of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel,
other than local counsel if not appointed by the indemnifying party, retained by
the indemnified party or parties except as set forth below); provided, however,
that such counsel shall be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel (including
local counsel) to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be

                                       22



legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party; (iii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action; or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle, compromise or consent
to the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and does not
include any statement as to or any admission of fault, culpability or failure to
act by or on behalf of any indemnified party.

      (d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Guarantors, jointly and severally, and
the Initial Purchasers severally agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending any loss, claim, damage,
liability or action) (collectively "LOSSES") to which the Company, each of the
Guarantors and one or more of the Initial Purchasers may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors on the one hand and by the Initial Purchasers on the
other from the offering of the Securities; provided, however, that in no case
shall any Initial Purchaser be responsible for any amount in excess of the
purchase discount or commission applicable to the Securities purchased by such
Initial Purchaser hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the
Guarantors, jointly and severally, and the Initial Purchasers severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Guarantors,
on the one hand, and the Initial Purchasers, on the other, in connection with
the statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by the Company and the
Guarantors shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by the Company, and benefits
received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions. Relative fault shall be determined by
reference to, among other things, whether any untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company and the Guarantors, on the one
hand, or the Initial Purchasers, on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, the Guarantors and the
Initial Purchasers agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation that
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligation to contribute
pursuant to this Section 8 shall be several in proportion to their respective
purchase obligations hereunder and not joint. For purposes of this Section 8,
each person who controls an Initial Purchaser within the meaning of either the
Act or the Exchange Act and each director, officer, employee, Affiliate and
agent of an Initial Purchaser shall have the same rights to contribution as

                                       23



such Initial Purchaser, and each person who controls the Company or any of the
Guarantors within the meaning of either the Act or the Exchange Act and each
officer and director of the Company or any of the Guarantors shall have the same
rights to contribution as the Company or any of the Guarantors, subject in each
case to the applicable terms and conditions of this paragraph (d).

            9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities set
forth in Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such nondefaulting Initial Purchasers do not purchase all
the Securities, this Agreement will terminate without liability to any
nondefaulting Initial Purchaser or the Company. In the event of a default by any
Initial Purchaser as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding five Business Days, as the
Representative shall determine in order that the required changes in the Final
Memorandum or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Initial Purchaser of
its liability, if any, to the Company or any nondefaulting Initial Purchaser for
damages occasioned by its default hereunder.

            10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representative, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the Nasdaq National Market or trading in securities generally
on the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on either the
New York Stock Exchange or the Nasdaq National Market; (ii) a banking moratorium
shall have been declared either by U.S. federal or New York State authorities;
or (iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the sole judgment of the Representative, impractical or inadvisable to
proceed with the Offering or delivery of the Securities as contemplated by the
Final Memorandum (exclusive of any amendment or supplement thereto).

            11. Additional Guarantors. On the Closing Date, the Company will
cause each of the Additional Guarantors to become a party to this Agreement by
causing each Additional Guarantor to execute a Guarantor Joinder Agreement in
the form attached hereto as Exhibit C and delivering an executed copy of such
Guarantor Joinder Agreement to the Initial Purchasers on the Closing Date,
whereupon each of the Additional Guarantors shall become jointly and severally
liable for all of the Company's obligations under Section 8 hereof; it being
acknowledged and agreed that the obligations of the Additional Guarantors under
Section 8

                                       24



hereof shall not be effective unless and until the Additional Guarantors execute
and deliver a Guarantor Joinder Agreement.

            12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company, the Guarantors or their respective officers and of the Initial
Purchasers set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Initial Purchasers or the Company, the Guarantors or any of the indemnified
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Securities. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancellation of this Agreement.

            13. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telefaxed to the Citigroup General Counsel (fax no.: (212)
816-7912) and confirmed to Citigroup at 388 Greenwich Street, New York, New York
10013, Attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or telefaxed to it at 840 Crescent Centre Drive, Suite 460 Franklin,
Tennessee 37067, Attention: Brent Turner (Fax: (615) 312-5711), with copy to
Waller Lansden Dortch & Davis, PLLC, 511 Union Street, Suite 2700, Nashville,
Tennessee 37219, Attention: Christopher L. Howard, Esq. (Fax: (615) 244-6804).

            14. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
indemnified persons referred to in Section 8 hereof and their respective
successors, and, except as expressly set forth in Section 5(h) hereof, no other
person will have any right or obligation hereunder.

            15. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York. The parties hereto each
hereby waive any right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement.

            16. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.

            17. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.

            18. Definitions. The terms that follow, when used in this Agreement,
shall have the meanings indicated.

            "Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

            "Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.

            "Ardent Behavioral" shall mean Ardent Health Services, Inc. and its
subsidiaries that operate the behavioral health care business of Ardent Health
Services, Inc.

                                       25



            "Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in The City of New York.

            "Citigroup" shall mean Citigroup Global Markets Inc.

            "Commission" shall mean the Securities and Exchange Commission.

            "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

            "Execution Time" shall mean, the date and time that this Agreement
is executed and delivered by the parties hereto.

            "NASD" shall mean the National Association of Securities Dealers,
Inc.

            "PORTAL" shall mean the Private Offerings, Resales and Trading
through Automated Linkages system of the NASD.

            "Regulation D" shall mean Regulation D under the Act.

            "Regulation S" shall mean Regulation S under the Act.

            "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated thereunder.

                                       26



            If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Guarantors and the several Initial Purchasers.

                                            Very truly yours,

                                            PSYCHIATRIC SOLUTIONS, INC.

                                            By:    /s/ Steven T. Davidson
                                                --------------------------------
                                                Name:  Steven T. Davidson
                                                Title: Chief Development Officer

                    SIGNATURE PAGE TO THE PURCHASE AGREEMENT



                           PSYCHIATRIC SOLUTIONS HOSPITALS, INC.
                           INFOSCRIBER CORPORATION
                           COLLABORATIVE CARE CORPORATION
                           PSYCHIATRIC SOLUTIONS OF ALABAMA, INC.
                           PSYCHIATRIC SOLUTIONS OF FLORIDA, INC.
                           PSYCHIATRIC SOLUTIONS OF TENNESSEE, INC.
                           SOLUTIONS CENTER OF LITTLE ROCK, INC.
                           PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA, INC.
                           PSI COMMUNITY MENTAL HEALTH AGENCY MANAGEMENT, INC.
                           PSYCHIATRIC MANAGEMENT RESOURCES, INC.
                           PSI-EAP, INC.
                           SUNSTONE BEHAVIORAL HEALTH, INC.
                           THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC.
                           PSI CEDAR SPRINGS HOSPITAL, INC.
                           PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC.
                           AERIES HEALTHCARE CORPORATION
                           AERIES HEALTHCARE OF ILLINOIS, INC.
                           PSI HOSPITALS, INC.
                           PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS, INC.
                           BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
                           EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
                           GREAT PLAINS HOSPITAL, INC.
                           GULF COAST TREATMENT CENTER, INC.
                           HAVENWYCK HOSPITAL INC.
                           H.C. CORPORATION
                           HSA HILL CREST CORPORATION
                           HSA OF OKLAHOMA, INC.
                           MICHIGAN PSYCHIATRIC SERVICES, INC.
                           RAMSAY MANAGED CARE, INC.
                           RAMSAY TREATMENT SERVICES, INC.
                           PREMIER BEHAVIORAL SOLUTIONS, INC.
                           PREMIER BEHAVIORAL SOLUTIONS OF ALABAMA, INC.
                           PREMIER BEHAVIORAL SOLUTIONS OF FLORIDA, INC.
                           RAMSAY YOUTH SERVICES OF GEORGIA, INC.

                    SIGNATURE PAGE TO THE PURCHASE AGREEMENT



                           RAMSAY YOUTH SERVICES PUERTO RICO, INC.
                           PREMIER BEHAVIORAL SOLUTIONS OF SOUTH CAROLINA, INC.
                           RHCI SAN ANTONIO, INC.
                           TRANSITIONAL CARE VENTURES, INC.
                           TRANSITIONAL CARE VENTURES (TEXAS), INC.
                           BRENTWOOD ACQUISITION, INC.
                           BRENTWOOD ACQUISITION-SHREVEPORT, INC.
                           CANYON RIDGE HOSPITAL, INC.
                           LAURELWOOD CENTER, INC.
                           PEAK BEHAVIORAL HEALTH SERVICES, INC.
                           PSI PRIDE INSTITUTE, INC.
                           PSI SUMMIT HOSPITAL, INC.
                           PSYCHIATRIC SOLUTIONS OF ARIZONA, INC.
                           PSYCHIATRIC SOLUTIONS OF LEESBURG, INC.
                           PSYCHIATRIC SOLUTIONS OF VIRGINIA, INC.
                           TUSCON HEALTH SYSTEMS, INC.
                           WHISPER RIDGE OF STAUNTON, INC.
                           FORT LAUDERDALE HOSPITAL, INC.

                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                           THERAPEUTIC SCHOOL SERVICES, LLC

                           BY: PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC., AS SOLE
                               MEMBER

                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                           PSI TEXAS HOSPITALS, LLC

                           BY: PSYCHIATRIC SOLUTIONS HOSPITALS,
                               INC., AS SOLE MEMBER

                                       29



                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                           H.C. PARTNERSHIP

                           BY: H.C. CORPORATION, AS GENERAL PARTNER

                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                           BY: HSA HILL CREST CORPORATION, AS GENERAL PARTNER

                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                           MILLWOOD HOSPITAL, L.P.
                           TEXAS CYPRESS CREEK HOSPITAL, L.P.
                           TEXAS WEST OAKS HOSPITAL, L.P.
                           NEURO INSTITUTE OF AUSTIN, L.P.
                           TEXAS LAUREL RIDGE HOSPITAL, L.P.
                           TEXAS OAKS PSYCHIATRIC HOSPITAL, L.P.
                           TEXAS SAN MARCOS TREATMENT CENTER, L.P.

                           BY: PSI TEXAS HOSPITALS, LLC, AS GENERAL PARTNER

                           BY: PSYCHIATRIC SOLUTIONS HOSPITAL, INC., AS SOLE
                               MEMBER

                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                                       30



                           PSI CROSSINGS, LLC

                           BY: LAURELWOOD CENTER, INC., AS SOLE MEMBER

                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                           PALMETTO BEHAVIORAL HEALTH SYSTEM, L.L.C.

                           BY: PSYCHIATRIC SOLUTIONS OF SOUTH CAROLINA, INC.,
                               AS SOLE MEMBER

                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                           PALMETTO LOWCOUNTRY BEHAVIORAL HEALTH, L.L.C.
                           PALMETTO PEE DEE BEHAVIORAL HEALTH, L.L.C.

                           BY: PALMETTO BEHAVIORAL HEALTH SYSTEM, L.L.C., AS
                               SOLE MEMBER

                           BY: PSYCHIATRIC SOLUTIONS OF SOUTH CAROLINA, INC.,
                               AS SOLE MEMBER

                           By:    /s/ Joey A. Jacobs
                               -------------------------------------------------

                           Name:  Joey A. Jacobs
                           Title: President

                                       31



The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

CITIGROUP GLOBAL MARKETS INC.

By:    /s/ Ross A. Mac Intyre
    ---------------------------
    Name:  Ross A. Mac Intyre
    Title: Managing Director

For itself and the other several
Initial Purchasers named in Schedule I
to the foregoing Agreement.

                    SIGNATURE PAGE TO THE PURCHASE AGREEMENT

EX-4.4

                                                                     EXHIBIT 4.4

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                            Dated as of July 6, 2005

                                      among

                          Psychiatric Solutions, Inc.,

          The Subsidiary Guarantors from time to time party hereto, and

                          Citigroup Global Markets Inc.
                         Banc of America Securities LLC
               Merrill, Lynch, Pierce, Fenner & Smith Incorporated
                           J.P. Morgan Securities Inc.
                              Lehman Brothers Inc.



                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

            This Exchange and Registration Rights Agreement (this "AGREEMENT")
is made and entered into as of July 6, 2005 by and among Psychiatric Solutions,
Inc., a Delaware corporation (the "COMPANY"), the Subsidiary Guarantors (as
defined herein) and Citigroup Global Markets Inc. on behalf of Banc of America
Securities LLC, Merrill, Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan
Securities Inc. and Lehman Brothers Inc. (collectively, the "INITIAL
PURCHASERS").

            This Agreement is made pursuant to the Purchase Agreement, dated
June 30, 2005 (the "PURCHASE AGREEMENT"), by and among the Company, the Existing
Subsidiary Guarantors (as defined herein) and the Initial Purchasers, which
provides for the sale by the Company to the Initial Purchasers of $220,000,000
aggregate principal amount of the Company's 7-3/4% Senior Subordinated Notes due
2015 (the "NOTES"). The Notes are, and the Exchange Notes (as defined herein)
will be, guaranteed on a senior subordinated basis by the Subsidiary Guarantors
(as defined herein). In order to induce the Initial Purchasers to purchase the
Notes, the Company and the Existing Subsidiary Guarantors have agreed to provide
the registration rights set forth in this Agreement. The execution and delivery
of this Agreement is a condition to the obligations of the Initial Purchasers
set forth in Section 7 of the Purchase Agreement.

            The parties hereby agree as follows:

      SECTION 1. DEFINITIONS

            As used in this Agreement, the following capitalized terms shall
have the following meanings:

            ADDITIONAL INTEREST: As defined in Section 5(a) hereof.

            ADDITIONAL SUBSIDIARY GUARANTOR: Any subsidiary of the Company that
executes a Guarantee under the Indenture after the date of this Agreement.

            ADVICE: As defined in Section 6(e) hereof.

            AGREEMENT: As defined in the preamble hereto.

            BLACKOUT PERIOD: As defined in Section 5(a) hereof.

            BLUE SKY APPLICATION: As defined in Section 8(a) hereof.

            BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.

            CLOSING DATE: The date of this Agreement.

            COMMISSION: The U.S. Securities and Exchange Commission.

                                       2



            COMPANY: As defined in the preamble hereto.

            CONSUMMATE: A Registered Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence of (i) the
filing and effectiveness under the Securities Act of the Exchange Offer
Registration Statement relating to the Exchange Notes to be issued in the
Exchange Offer, (ii) the maintenance of such Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the minimum period required pursuant to Section 3(b) hereof, and (iii) the
delivery by the Company to the Registrar under the Indenture of Exchange Notes
in the same aggregate principal amount as the aggregate principal amount of
Notes that were tendered by Holders thereof pursuant to the Exchange Offer.

            DAMAGES PAYMENT DATE: With respect to the Notes, each Interest
Payment Date.

            EFFECTIVENESS TARGET DATE: As defined in Section 5(a) hereof.

            EXCHANGE ACT: The U.S. Securities Exchange Act of 1934, as amended.

            EXCHANGE NOTES: The Company's 7-3/4% Senior Subordinated Notes due
2015 to be issued pursuant to the Indenture in the Exchange Offer, together with
the related Guarantees.

            EXCHANGE OFFER: The registration by the Company under the Securities
Act of the Exchange Notes on a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities validly
tendered in such exchange offer by such Holders.

            EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.

            EXISTING SUBSIDIARY GUARANTORS: The various Subsidiary Guarantors
signatory to the Indenture as of the date hereof.

            GUARANTEES: Guarantees by the Subsidiary Guarantors of the Company's
obligations under the Notes, the Exchange Notes and the Indenture.

            HOLDER: As defined in Section 2(b) hereof.

            INDENTURE: The Indenture, dated as of the date hereof, among the
Company, the Existing Subsidiary Guarantors and Wachovia Bank, National
Association, as trustee (the "Trustee"), pursuant to which the Notes and the
Exchange Notes are to be issued, as such Indenture may be amended or
supplemented from time to time in accordance with the terms thereof.

                                       3



            INITIAL PURCHASERS: As defined in the preamble hereto.

            INTEREST PAYMENT DATE: As defined in the Indenture and the Notes.

            NASD: National Association of Securities Dealers, Inc.

            NOTES: As defined in the preamble hereto.

            PERSON: An individual, partnership, corporation, limited liability
company, unincorporated organization, association, joint-stock company, trust,
joint venture, government or any agency or political subdivision thereof or any
other entity.

            PROSPECTUS: The prospectus included in a Registration Statement as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.

            PURCHASE AGREEMENT: As defined in the preamble hereto.

            RECORD HOLDER: With respect to any Damages Payment Date relating to
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.

            REGISTRATION DEFAULT: As defined in Section 5(a) hereof.

            REGISTRATION STATEMENT: Any Registration Statement of the Company
relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.

            SECURITIES ACT: The U.S. Securities Act of 1933, as amended.

            SHELF FILING DEADLINE: As defined in Section 4(a) hereof.

            SHELF REGISTRATION PERIOD: As defined in Section 4(a) hereof.

            SHELF REGISTRATION STATEMENT: As defined in Section 4(a) hereof.

            SUBSIDIARY GUARANTORS: The Additional Subsidiary Guarantors and the
Existing Subsidiary Guarantors.

            TIA: The U.S. Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.

                                       4



            TRANSFER RESTRICTED SECURITIES: Each Note or Exchange Note
(including the related Guarantees), as applicable, until the earliest to occur
of (a) the date on which such Note is exchanged by a person other than a
Broker-Dealer in the Exchange Offer in exchange for an Exchange Note, so long as
such person is not prohibited from reselling such Exchange Notes to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not sufficient for such purpose, (b) following
the exchange by a Broker-Dealer in the Exchange Offer of a Note for an Exchange
Note, the date on which that Exchange Note is sold to a purchaser who receives
from that Broker-Dealer on or prior to the date of such sale a copy of the
Prospectus contained in the Exchange Offer Registration Statement, (c) the date
on which such Note has been effectively registered under the Securities Act and
disposed of in accordance with a Shelf Registration Statement and (d) the date
on which such Note is eligible to be distributed to the public pursuant to Rule
144 under the Securities Act.

            UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.

      SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT

            (a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.

            (b) Holders of Transfer Restricted Securities. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such
Person owns Transfer Restricted Securities.

      SECTION 3. REGISTERED EXCHANGE OFFER

            (a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with) or one of the events set forth in Section
4(a)(ii) has occurred, the Company and the Subsidiary Guarantors shall (i) cause
to be filed with the Commission as soon as practicable after the Closing Date,
but in no event later than 90 days after the Closing Date, a Registration
Statement under the Securities Act relating to the Exchange Notes and the
Exchange Offer, (ii) use their reasonable best efforts to cause such
Registration Statement to be declared effective on or prior to 180 days after
the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Securities Act and (C) cause all necessary filings in
connection with the registration and qualification of the Exchange Notes to be
made under the blue sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer and (iv) upon the effectiveness of such
Registration Statement, commence the Exchange Offer. The Exchange Offer shall be
on the appropriate form permitting registration of the Exchange Notes to be
offered in

                                       5



exchange for the Transfer Restricted Securities and to permit resales of
Exchange Notes held by Broker-Dealers as contemplated by Section 3(c) below.

            (b) The Company and the Subsidiary Guarantors shall use their
reasonable best efforts to cause the Exchange Offer Registration Statement to be
effective continuously and shall keep the Exchange Offer open for a period of
not less than the minimum period required under applicable U.S. federal and
state securities laws to Consummate the Exchange Offer; provided, however, that
in no event shall such period be less than 20 business days. The Company and the
Subsidiary Guarantors shall cause the Exchange Offer to comply with all
applicable U.S. federal and state securities laws. No securities other than the
Exchange Notes and the Guarantees shall be included in the Exchange Offer
Registration Statement. The Company and the Subsidiary Guarantors shall use
their reasonable best efforts to cause the Exchange Offer to be Consummated 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission.

            (c) The Company and the Subsidiary Guarantors shall indicate in a
"Plan of Distribution" section of the Prospectus contained in the Exchange Offer
Registration Statement that any Broker-Dealer who holds Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed
to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a Prospectus meeting the requirements of the Securities Act
in connection with any resales of the Exchange Notes received by such
Broker-Dealer in the Exchange Offer, which Prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales by
Broker-Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer
except to the extent required by the Commission.

            The Company and the Subsidiary Guarantors shall use their reasonable
best efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented and amended as required by the provisions of Section
6(c) below to the extent necessary to ensure that it is available for resales of
Exchange Notes acquired by Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities, and to ensure that it
conforms with the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of at least 90 days after the Consummation of the Exchange
Offer.

                                       6



            The Company and the Subsidiary Guarantors shall provide sufficient
copies of the latest version of such Prospectus to Broker-Dealers promptly upon
request at any time during such 90-day period in order to facilitate such
resales.

      SECTION 4. SHELF REGISTRATION

            (a) Shelf Registration. If (i) the Company and the Subsidiary
Guarantors are not required to file an Exchange Offer Registration Statement or
cannot Consummate the Exchange Offer because the Exchange Offer is not permitted
by applicable U.S. law or Commission policy (after the procedures set forth in
Section 6(a) below have been complied with) or (ii) any Holder of Transfer
Restricted Securities shall notify the Company prior to the 20th day following
the Consummation of the Exchange Offer that such Holder (A) is prohibited by
applicable U.S. law or Commission policy from participating in the Exchange
Offer, (B) may not resell the Exchange Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and that the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) is a Broker-Dealer and holds
Notes acquired directly from the Company or one of its affiliates, then the
Company and the Subsidiary Guarantors shall:

            (x) use their reasonable best efforts to cause to be filed a
      Registration Statement pursuant to Rule 415 under the Securities Act,
      which may be an amendment to the Exchange Offer Registration Statement if
      permitted by the rules and regulations of the Commission (in either event,
      the "SHELF REGISTRATION STATEMENT") on or prior to the earliest to occur
      of (1) the 30th day after the date on which the Company determines that
      they are not required to file the Exchange Offer Registration Statement,
      or permitted to Consummate the Exchange Offer and (2) the 30th day after
      the date on which the Company receives notice from a Holder of Transfer
      Restricted Securities as contemplated by clause (ii) of paragraph (a)
      above (such earliest date being the "SHELF FILING DEADLINE"), which Shelf
      Registration Statement shall provide for resales of all Transfer
      Restricted Securities by the Holders which shall have provided the
      information required pursuant to Section 4(b) hereof; and

            (y) use their reasonable best efforts to cause such Shelf
      Registration Statement to be declared effective by the Commission on or
      before the 90th day after the Shelf Filing Deadline.

Subject to Section 5(b), the Company and the Subsidiary Guarantors shall use
their reasonable best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for resales of Notes or Exchange Notes by the Holders of Transfer
Restricted Securities entitled to the benefit of this Section 4(a), and to
ensure that it conforms with the requirements of this Agreement, the Securities
Act and the policies, rules and regulations of the Commission as announced from
time to time, for a period of at least two years following the Closing Date or
such

                                       7



shorter period that will terminate when all Notes or Exchange Notes covered by
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement (such period being the "SHELF REGISTRATION PERIOD").

            (b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. No Holder of Transfer Restricted Securities shall be entitled to
Additional Interest pursuant to Section 5 hereof unless and until such Holder
shall have used its reasonable best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.

      SECTION 5. ADDITIONAL INTEREST

            (a) If (i) any of the Registration Statements required by this
Agreement are not filed with the Commission on or prior to the date specified
for such filing in Sections 3(a) and 4(a), as applicable, (ii) any of such
required Registration Statements have not been declared effective by the
Commission on or prior to the date specified for such effectiveness in Sections
3(a) and 4(a), as applicable, (each, an "EFFECTIVENESS TARGET DATE"), (iii) the
Exchange Offer has not been Consummated within 30 business days, or longer, if
required by federal securities laws, after the Effectiveness Target Date with
respect to the Exchange Offer Registration Statement has been declared effective
or (iv) any Registration Statement required by this Agreement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable in connection with resales of Transfer Restricted Securities without
being succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself immediately declared
effective (except as permitted in paragraph (b); such period of time during
which any such Registration Statement is not effective or any such Registration
Statement or the related Prospectus is not usable being referred to as a
"BLACKOUT PERIOD") (each such event referred to in clauses (i) through (iv), a
"REGISTRATION DEFAULT"), the Company and the Subsidiary Guarantors, jointly and
severally, agree to pay additional interest ("ADDITIONAL INTEREST") to each
Holder of Transfer Restricted Securities adversely affected by such Registration
Default, in an amount equal to $.05 per week per $1,000 principal amount of
Transfer Restricted Securities held by such Holder with respect to the first
90-day period immediately following the occurrence of such Registration Default.
The amount of Additional Interest shall increase by an additional $.05 per week
per $1,000 principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period (or portion thereof) until all Registration
Defaults have been cured, up to a maximum amount of Additional Interest of $.50
per week per $1,000 principal amount of Transfer Restricted Securities.

                                       8



All accrued Additional Interest shall be paid to Record Holders by the Company
and the Subsidiary Guarantors in the same manner as interest is paid under the
Notes. Following the cure of all Registration Defaults relating to any
particular Transfer Restricted Securities, the accrual of Additional Interest
with respect to such Transfer Restricted Securities will cease.

            (b) A Registration Default referred to in Section 5(a)(iv) shall be
deemed not to have occurred and be continuing in relation to a Registration
Statement or the related Prospectus if (i) the Blackout Period has occurred
solely as a result of (x) the filing of a post-effective amendment to such Shelf
Registration Statement to incorporate annual audited financial information with
respect to the Company where such post-effective amendment is not yet effective
and needs to be declared effective to permit Holders to use the related
Prospectus or (y) the occurrence of other material events with respect to the
Company that would need to be described in such Registration Statement or the
related Prospectus and (ii) in the case of clause (y), the Company is proceeding
promptly and in good faith to amend or supplement (including by way of filing
documents under the Exchange Act which are incorporated by reference into the
Registration Statement) such Registration Statement and the related Prospectus
to describe such events; provided, however, that in any case if such Blackout
Period occurs for a continuous period in excess of 30 days, a Registration
Default shall be deemed to have occurred on the 31st day of such Blackout Period
and Additional Interest shall be payable in accordance with the above paragraph
from the day such Registration Default occurs until such Registration Default is
cured or until the Company is no longer required pursuant to this Agreement to
keep such Registration Statement effective or such Registration Statement or the
related Prospectus usable; provided, further, that in no event shall the total
of all Blackout Periods exceed 45 days in the aggregate of any 12-month period.

            All payment obligations of the Company and the Subsidiary Guarantors
set forth in this section that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such payment obligations with
respect to such security shall have been satisfied in full.

      SECTION 6. REGISTRATION PROCEDURES

            (a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Subsidiary Guarantors shall comply with all
of the provisions of Section 6(c) below, shall use their reasonable best efforts
to effect such exchange to permit the sale of Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:

                  (i) As a condition to its participation in the Exchange Offer
      pursuant to the terms of this Agreement, each Holder of Transfer
      Restricted Securities shall furnish, upon the request of the Company,
      prior to the

                                       9



      Consummation thereof, a written representation to the Company and the
      Subsidiary Guarantors (which may be contained in the letter of transmittal
      contemplated by the Exchange Offer Registration Statement) to the effect
      that (A) it is not an affiliate of the Company, (B) it is not engaged in,
      and does not intend to engage in, and has no arrangement or understanding
      with any Person to participate in, a distribution of the Exchange Notes to
      be issued in the Exchange Offer and (C) it is acquiring the Exchange Notes
      in its ordinary course of business. In addition, all such Holders of
      Transfer Restricted Securities shall otherwise cooperate in the Company's
      and the Subsidiary Guarantors' preparations for the Exchange Offer. Each
      Holder hereby acknowledges and agrees that any Broker-Dealer and any such
      Holder using the Exchange Offer to participate in a distribution of the
      securities to be acquired in the Exchange Offer (1) could not under
      Commission policy as in effect on the date of this Agreement rely on the
      position of the Commission enunciated in Exxon Capital Holdings
      Corporation (available May 13, 1988) and Morgan Stanley and Co., Inc.
      (available June 5, 1991), as interpreted in the Commission's letter to
      Shearman & Sterling dated July 2, 1993, and similar no-action letters, and
      (2) must comply with the registration and prospectus delivery requirements
      of the Securities Act in connection with a secondary resale transaction
      and that such a secondary resale transaction should be covered by an
      effective Registration Statement containing the selling security holder
      information required by Item 507 or 508, as applicable, of Regulation S-K
      if the resales are of Exchange Notes obtained by such Holder in exchange
      for Notes acquired by such Holder directly from the Company.

                  (ii) Prior to effectiveness of the Exchange Offer Registration
      Statement, the Company and the Subsidiary Guarantors shall state to the
      Commission that the Company and the Subsidiary Guarantors are registering
      the Exchange Offer in reliance on the position of the Commission
      enunciated in Exxon Capital Holdings Corporation (available May 13, 1988)
      and Morgan Stanley and Co., Inc. (available June 5, 1991) and shall
      represent to the Commission that neither the Company nor any Subsidiary
      Guarantor has entered into any arrangement or understanding with any
      Person to distribute the Exchange Notes to be received in the Exchange
      Offer and that, to the best of the Company's and each Subsidiary
      Guarantor's information and belief, each Holder participating in the
      Exchange Offer is acquiring the Exchange Notes in its ordinary course of
      business and has no arrangement or understanding with any Person to
      participate in the distribution of the Exchange Notes received in the
      Exchange Offer; and

                  (iii) The Company and the Subsidiary Guarantors shall issue,
      upon the request of any Holder of Notes covered by the Exchange Offer,
      Exchange Notes (including the related guarantees), having an aggregate
      principal amount equal to the aggregate principal amount of Notes
      surrendered to the Company by such Holder in exchange therefor; such
      Exchange Notes (including the related guarantees) to be registered in the
      name of such Holder or in the name of the purchaser(s) of such Exchange
      Notes (including the related guarantees), as

                                       10



      the case may be; in return, the Notes held by such Holder shall be
      surrendered to the Company for cancellation.

            (b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Subsidiary Guarantors shall comply
with all the provisions of Section 6(c) below and shall use their reasonable
best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto the Company and the
Subsidiary Guarantors will as expeditiously as possible prepare and file with
the Commission a Registration Statement relating to the registration on any
appropriate form under the Securities Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof.

            (c) General Provisions. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Notes and Exchange Notes by Broker-Dealers), the Company and the Subsidiary
Guarantors shall:

                  (i) use their reasonable best efforts to keep such
      Registration Statement continuously effective and provide all requisite
      financial statements (including, if required by the Securities Act or any
      regulation thereunder, financial statements of any Subsidiary Guarantors),
      unless such financial statements are publicly available, for the period
      specified in Sections 3 or 4 of this Agreement, as applicable; upon the
      occurrence of any event that would cause any such Registration Statement
      or the Prospectus contained therein (A) to contain a material misstatement
      or omission or (B) not to be effective and usable for resale of Transfer
      Restricted Securities during the period required by this Agreement, the
      Company and the Subsidiary Guarantors shall file promptly an appropriate
      amendment to such Registration Statement, in the case of clause (A),
      correcting any such misstatement or omission, and, in the case of either
      clause (A) or (B), use their reasonable best efforts to cause such
      amendment to be declared effective and such Registration Statement and the
      related Prospectus to become usable for their intended purpose(s) as soon
      as practicable thereafter. Notwithstanding the foregoing, the Company and
      the Subsidiary Guarantors may allow the Shelf Registration Statement to
      cease to become effective and usable if (x) the board of directors of the
      Company determines in good faith that it is in the best interests of the
      Company not to disclose the existence of or facts surrounding any proposed
      or pending material corporate transaction involving the Company or the
      Subsidiary Guarantors, and the Company notifies the Holders within two
      business days after such boards of directors make such determination or
      (y) the Prospectus contained in the Shelf Registration Statement contains
      an untrue statement of a material fact or omits to state a material fact
      necessary in order to make the statements made therein, in the light of
      the circumstances under which they were made, not misleading; provided
      that the two-year period referred to in Section 4(a) hereof

                                       11



      during which the Shelf Registration Statement is required to be effective
      and usable shall be extended by the number of days during which such
      Registration Statement was not effective or usable pursuant to the
      foregoing provisions; and provided further that Additional Interest shall
      accrue on the Notes as provided in Section 5 hereof;

                  (ii) prepare and file with the Commission such amendments and
      post-effective amendments to the Registration Statement as may be
      necessary to keep the Registration Statement effective for the applicable
      period set forth in Sections 3 or 4 hereof, as applicable; cause the
      Prospectus to be supplemented by any required Prospectus supplement, and
      as so supplemented to be filed pursuant to Rule 424 under the Securities
      Act, and to comply fully with the applicable provisions of Rules 424 and
      430A under the Securities Act in a timely manner; and comply with the
      provisions of the Securities Act with respect to the disposition of all
      securities covered by such Registration Statement during the applicable
      period in accordance with the intended method or methods of distribution
      by the sellers thereof set forth in such Registration Statement or
      supplement to the Prospectus;

                  (iii) cooperate with the selling Holders of Transfer
      Restricted Securities and the underwriter(s), if any, to facilitate the
      timely preparation and delivery of certificates representing Transfer
      Restricted Securities to be sold and not bearing any restrictive legends;
      and enable such Transfer Restricted Securities to be in such denominations
      and registered in such names as the Holders or the underwriter(s), if any,
      may request at least two business days prior to any sale of Transfer
      Restricted Securities made by such underwriter(s);

                  (iv) use their reasonable best efforts to cause the Transfer
      Restricted Securities covered by the Registration Statement to be
      registered with or approved by such other governmental agencies or
      authorities as may be necessary to enable the seller or sellers thereof or
      the underwriter(s), if any, to consummate the disposition of such Transfer
      Restricted Securities;

                  (v) if any fact or event contemplated by clause (d)(i)(D)
      below shall exist or have occurred, prepare a supplement or post-effective
      amendment to the Registration Statement or related Prospectus or any
      document incorporated therein by reference or file any other required
      document so that, as thereafter delivered to the purchasers of Transfer
      Restricted Securities, the Prospectus will not contain an untrue statement
      of a material fact or omit to state any material fact necessary to make
      the statements made therein, in the light of the circumstances under which
      they were made, not misleading;

                  (vi) provide a CUSIP, CINS or ISIN number, as applicable, for
      all Transfer Restricted Securities not later than the effective date of
      the Registration Statement and provide the Trustee under the Indenture
      with printed

                                       12



      certificates for the Transfer Restricted Securities which are in a form
      eligible for deposit with the depositary;

                  (vii) cooperate and assist in any filings required to be made
      with the NASD and in the performance of any due diligence investigation by
      any underwriter (including any "qualified independent underwriter") that
      is required to be retained in accordance with the rules and regulations of
      the NASD;

                  (viii) otherwise use their reasonable best efforts to comply
      with all applicable rules and regulations of the Commission, and make
      generally available to their security holders, as soon as practicable, a
      consolidated earnings statement meeting the requirements of Rule 158
      (which need not be audited) for the twelve-month period (A) commencing at
      the end of any fiscal quarter in which Transfer Restricted Securities are
      sold to underwriters in a firm or best efforts Underwritten Offering or
      (B) if not sold to underwriters in such an offering, beginning with the
      first month of the Company's first fiscal quarter commencing after the
      effective date of the Registration Statement;

                  (ix) cause the Indenture to be qualified under the TIA not
      later than the effective date of the first Registration Statement required
      by this Agreement, and, in connection therewith, cooperate with the
      Trustee and the Holders of Notes and Exchange Notes to effect such changes
      to the Indenture as may be required for such Indenture to be so qualified
      in accordance with the terms of the TIA; and execute, and use their
      reasonable best efforts to cause the Trustee to execute, all documents
      that may be required to effect such changes and all other forms and
      documents required to be filed with the Commission to enable such
      Indenture to be so qualified in a timely manner; and

                  (x) provide promptly to any Holder upon such Holder's written
      request each document filed with the Commission pursuant to the
      requirements of Section 13 and Section 15 of the Exchange Act to the
      extent such documents are not otherwise filed with the Commission and
      available to the public free of cost.

            (d) Additional Provisions Applicable to Shelf Registration
Statements. In connection with each Shelf Registration Statement, during the
Shelf Registration Period, the Company and the Subsidiary Guarantors shall:

                  (i) advise the underwriter(s), if any, and selling Holders of
      Transfer Restricted Securities promptly and, if requested by such Persons,
      to confirm such advice in writing, (A) when the Prospectus or any
      Prospectus supplement or post-effective amendment has been filed, and,
      with respect to the Shelf Registration Statement or any post-effective
      amendment thereto, when the same has become effective, (B) of any request
      by the Commission for amendments to the Shelf Registration Statement or
      amendments or supplements to the Prospectus or for additional information
      relating thereto, (C) of the issuance by the Commission of any stop order
      suspending the effectiveness of the

                                       13



      Registration Statement under the Securities Act, of the suspension by any
      state securities commission of the qualification of the Transfer
      Restricted Securities for offering or sale in any jurisdiction or of the
      initiation of any proceeding for any of the preceding purposes and (D) of
      the existence of any fact or the happening of any event that requires the
      making of any additions to or changes in the Shelf Registration Statement
      or the Prospectus in order that the Shelf Registration Statement and the
      Prospectus do not contain an untrue statement of a material fact or omit
      to state a material fact necessary to make the statements made therein, in
      the light of the circumstances under which they were made, not misleading.
      If at any time the Commission shall issue any stop order suspending the
      effectiveness of the Shelf Registration Statement, or any U.S. state
      securities commission or other regulatory authority shall issue an order
      suspending the qualification or exemption from qualification of the
      Transfer Restricted Securities under U.S. state securities or blue sky
      laws, the Company and the Subsidiary Guarantors shall use their reasonable
      best efforts to obtain the withdrawal or lifting of such order at the
      earliest possible time;

                  (ii) if requested in writing, furnish to each of the selling
      Holders of Transfer Restricted Securities and each of the underwriter(s),
      if any, before filing with the Commission, copies of any Shelf
      Registration Statement or any Prospectus included therein or any
      amendments or supplements to any such Shelf Registration Statement or
      Prospectus (including all documents incorporated by reference after the
      initial filing of such Shelf Registration Statement), which documents will
      be subject to the review of such Holders and underwriter(s), if any, for a
      period of at least five business days, and the Company and the Subsidiary
      Guarantors will not file any such Shelf Registration Statement or
      Prospectus or any amendment or supplement to any such Shelf Registration
      Statement or Prospectus (including all such documents incorporated by
      reference) if a selling Holder of Transfer Restricted Securities covered
      by such Shelf Registration Statement or the underwriter(s), if any, shall
      not have had an opportunity to review the Shelf Registration Statement as
      set forth above; such Holders and underwriter(s) shall be deemed to have
      reasonably objected to such filing if such Shelf Registration Statement,
      amendment, Prospectus or supplement, as applicable, as proposed to be
      filed, contains an untrue statement of a material fact or omits to state
      any material fact necessary to make the statements therein, in the light
      of the circumstances under which they were made, not misleading, or fails
      to comply with the applicable requirements of the Securities Act;

                  (iii) promptly prior to the filing of any document that is to
      be incorporated by reference into a Shelf Registration Statement or
      Prospectus, provide copies of such document to the selling Holders and to
      the underwriter(s), if any, make the Company's and the Subsidiary
      Guarantors' representatives available for discussion of such document and
      other customary due diligence matters, and include such information in
      such document prior to the filing thereof

                                       14



      as such selling Holders or underwriter(s), if any, reasonably may request
      in writing;

                  (iv) make available for inspection at reasonable times at each
      of the Company's principal places of business by the selling Holders of
      Transfer Restricted Securities, any underwriter participating in any
      disposition pursuant to such Shelf Registration Statement, and any
      attorney or accountant retained by such selling Holders or any of the
      underwriter(s) who shall certify to the Company and the Subsidiary
      Guarantors that they have a current intention to sell Transfer Restricted
      Securities pursuant to a Shelf Registration Statement, such relevant
      financial and other records, pertinent corporate documents and properties
      of the Company and the Subsidiary Guarantors as reasonably requested and
      cause the Company's and the Subsidiary Guarantors' officers, directors and
      employees to respond to such inquiries as shall be reasonably necessary,
      in the reasonable judgment of counsel to such Holders, to conduct a
      reasonable investigation; provided, however, that the foregoing inspection
      and information gathering shall be coordinated on behalf of the selling
      Holders by one counsel designated by and on behalf of such Holders and,
      provided, further, that each such party shall be required to maintain in
      confidence and not disclose to any other Person any information or records
      reasonably designated by the Company in writing as being confidential,
      until such time as (A) such information becomes a matter of public record
      (whether by virtue of its inclusion in such Shelf Registration Statement
      or otherwise), (B) such Person shall be required so to disclose such
      information pursuant to a subpoena or order of any court or other
      governmental agency or body having jurisdiction over the matter (subject
      to the requirements of such order, and only after such Person shall have
      given the Company prompt prior written notice of such requirement) or (C)
      such information is required to be set forth in such Shelf Registration
      Statement or the Prospectus included therein or in an amendment to such
      Shelf Registration Statement or an amendment or supplement to such
      Prospectus in order that such Shelf Registration Statement, Prospectus,
      amendment or supplement, as the case may be, does not contain an untrue
      statement of a material fact or omit to state therein a material fact
      required to be stated therein or necessary to make the statements made
      therein not misleading;

                  (v) if requested by any selling Holders of Transfer Restricted
      Securities or the underwriter(s), if any, promptly incorporate in any
      Shelf Registration Statement or Prospectus pursuant to a supplement or
      post-effective amendment if necessary, such information as such selling
      Holders and underwriter(s), if any, may reasonably request to have
      included therein, including, without limitation, information relating to
      the "Plan of Distribution" of the Transfer Restricted Securities,
      information with respect to the principal amount of Transfer Restricted
      Securities being sold to such underwriter(s), the purchase price being
      paid therefor and any other terms of the offering of the Transfer
      Restricted Securities to be sold in such offering; and make all required
      filings of

                                       15



      such Prospectus supplement or post-effective amendment as soon as
      practicable after the Company is notified of the matters to be
      incorporated in such Prospectus supplement or post-effective amendment;
      provided, however, that the Company shall not be required to take any
      action pursuant to this Section 6(d)(v) that would, in the opinion of
      counsel for the Company reasonably satisfactory to the Initial Purchasers,
      violate applicable law;

                  (vi) deliver to each selling Holder of Transfer Restricted
      Securities and each of the underwriter(s), if any, without charge, as many
      copies of the Prospectus (including each preliminary Prospectus) and any
      amendment or supplement thereto as such Persons reasonably may request;
      the Company and the Subsidiary Guarantors hereby consent to the use of the
      Prospectus and any amendment or supplement thereto by each of the selling
      Holders and each of the underwriter(s), if any, in connection with the
      offering and the sale of the Transfer Restricted Securities covered by the
      Prospectus or any amendment or supplement thereto;

                  (vii) furnish to each Holder whose Transfer Restricted
      Securities have been included in a Shelf Registration Statement in
      connection with such exchange or sale, without charge, at least one copy
      of the Registration Statement, as first filed with the Commission, and of
      each amendment thereto, including all documents incorporated by reference
      therein and all exhibits (including exhibits incorporated therein by
      reference) to the extent such documents are not otherwise filed with the
      Commission and available to the public free of cost;

                  (viii) enter into an underwriting agreement on not more than
      one occasion in the case of an offering pursuant to a Shelf Registration,
      and make such representations and warranties, and take all such other
      actions in connection therewith in order to expedite or facilitate the
      disposition of the Transfer Restricted Securities pursuant to any
      Registration Statement contemplated by this Agreement, all to such extent
      as may be reasonably requested by any Holder or Holders of Transfer
      Restricted Securities who hold at least 25% in aggregate principal amount
      of such class of Transfer Restricted Securities; provided that the Company
      and the Subsidiary Guarantors shall not be required to enter into any such
      agreement more than once with respect to all of the Transfer Restricted
      Securities and may delay entering into such agreement if the board of
      directors of each of the Company and the Subsidiary Guarantors determines
      in good faith that it is in the best interests of the Company and the
      Subsidiary Guarantors not to disclose the existence of or facts
      surrounding any proposed or pending material corporate transaction
      involving the Company and the Subsidiary Guarantors; and in connection
      with an Underwritten Registration, the Company and the Subsidiary
      Guarantors shall:

                        (A) furnish to the Initial Purchasers, the Holders of
      Transfer Restricted Securities who hold at least 25% in aggregate
      principal amount of such class of Transfer Restricted Securities and each
      underwriter, if

                                       16



      any, in such substance and scope as they may reasonably request and as are
      customarily made in connection with an offering of debt securities
      pursuant to a Shelf Registration Statement upon the effective date of the
      Shelf Registration Statement (and if such Shelf Registration Statement
      contemplates an Underwritten Offering of Transfer Restricted Securities
      upon the date of the closing under the underwriting agreement related
      thereto):

                        (1) a certificate, dated the date of effectiveness of
            the Shelf Registration Statement signed by (y) the respective chief
            executive officer, the respective President or any Vice President
            and (z) the respective chief financial officer of each of the
            Company and each of the Subsidiary Guarantors confirming, as of the
            date thereof, the matters set forth in Section 7(l) of the Purchase
            Agreement and such other matters as such parties may reasonably
            request;

                        (2) an opinion, dated the date of effectiveness of such
            Shelf Registration Statement, of securities counsel for the Company
            covering matters similar to those set forth in Section 7(c) of the
            Purchase Agreement and such other matters as such parties may
            reasonably request, and in any event including a statement to the
            effect that such counsel has participated in conferences with
            officers and other representatives of the Company, representatives
            of the independent public accountants for the Company, the Initial
            Purchasers' representatives and the Initial Purchasers' counsel in
            connection with the preparation of such Shelf Registration Statement
            and the related Prospectus although such counsel has not
            independently verified the accuracy, completeness or fairness of
            such statements in such Shelf Registration Statement; and that such
            counsel advises that, on the basis of the foregoing, such counsel's
            work in connection with this work did not disclose information that
            gave such counsel reason to believe that the Shelf Registration
            Statement, at the time such Shelf Registration Statement or any
            post-effective amendment thereto became effective contained an
            untrue statement of a material fact or omitted to state a material
            fact required to be stated therein or necessary to make the
            statements therein not misleading, or that the Prospectus contained
            in such Shelf Registration Statement as of its date contained an
            untrue statement of a material fact or omitted to state a material
            fact necessary in order to make the statements made therein, in the
            light of the circumstances under which they were made, not
            misleading. Such counsel may state further that such counsel
            expresses no view with respect to, and has not independently
            verified, the accuracy, completeness or fairness of the financial
            statements, notes and schedules, the financial projections and other
            financial, statistical and accounting data included or incorporated
            by reference in the Shelf Registration Statement contemplated by
            this Agreement or the related Prospectus; and

                                       17



                        (3) a customary comfort letter, dated as of the date of
            effectiveness of the Shelf Registration Statement from the Company's
            independent accountants, in the customary form and covering matters
            of the type customarily covered in comfort letters to underwriters
            in connection with primary underwritten offerings, and affirming the
            matters set forth in the comfort letters delivered pursuant to
            Sections 7(e) and 7(f) of the Purchase Agreement;

                        (B) set forth in full or incorporated by reference in
      the underwriting agreement, if any, the indemnification provisions and
      procedures of Section 8 hereof with respect to all parties to be
      indemnified pursuant to said Section; and

                        (C) deliver such other documents and certificates as may
      be reasonably requested by such parties to evidence compliance with clause
      (A) above and with any customary conditions contained in the underwriting
      agreement or other agreement entered into by the Company and the
      Subsidiary Guarantors pursuant to this clause (viii), if any.

If at any time during the Shelf Registration Period the representations and
warranties of the Company or the Subsidiary Guarantors contemplated in clause
(A)(1) above cease to be true and correct, the Company or the Subsidiary
Guarantors shall so advise the Initial Purchasers and the underwriters, if any,
and each selling Holder promptly and, if requested by such Persons, shall
confirm such advice in writing; and

                  (ix) prior to any public offering of Transfer Restricted
      Securities cooperate with the selling Holders of Transfer Restricted
      Securities the underwriter(s), if any, and their respective counsel in
      connection with the registration and qualification of the Transfer
      Restricted Securities under the securities or blue sky laws of such
      jurisdictions as the selling Holders of Transfer Restricted Securities or
      underwriter(s) may reasonably request and do any and all other acts or
      things necessary or advisable to enable the disposition in such
      jurisdictions of the Transfer Restricted Securities covered by the Shelf
      Registration Statement filed pursuant to Section 4 hereof; provided,
      however, that the Company and the Subsidiary Guarantors shall not be
      obligated to qualify as a foreign corporation in any jurisdiction in which
      they are not now so qualified or to take any action that would subject
      them to general consent to service of process, other than as to matters
      and transactions relating to the Shelf Registration Statement, in any
      jurisdiction where they are not now so subject.

            (e) Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 6(d)(i) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the Shelf Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(d)(vi) hereof,
or until it is advised in writing (the "Advice")

                                       18



by the Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in the Prospectus. If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice. In the event the Company shall give any such notice, the
time period regarding the effectiveness of such Shelf Registration Statement set
forth in Section 4 hereof, as applicable, shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 6(d)(i) hereof to and including the date when each selling
Holder covered by such Shelf Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by Section
6(d)(vi) hereof or shall have received the Advice.

            (f) The Company and the Subsidiary Guarantors may require each
Holder of Transfer Restricted Securities as to which any registration is being
effected to furnish to the Company such information regarding such Holder and
such Holder's intended method of distribution of the applicable Transfer
Restricted Securities as the Company may from time to time reasonably request in
writing, but only to the extent that such information is required in order to
comply with the Securities Act. Each such Holder agrees to notify the Company as
promptly as practicable of (i) any inaccuracy or change in information
previously furnished by such Holder to the Company or (ii) the occurrence of any
event, in either case, as a result of which any Prospectus relating to such
registration contains or would contain an untrue statement of a material fact
regarding such Holder or such Holder's intended method of distribution of the
applicable Transfer Restricted Securities or omits to state any material fact
regarding such Holder or such Holder's intended method of distribution of the
applicable Transfer Restricted Securities required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading and promptly to furnish to the
Company any additional information required to correct and update any previously
furnished information or required so that such Prospectus shall not contain,
with respect to such Holder or the distribution of the applicable Transfer
Restricted Securities an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.

      SECTION 7. REGISTRATION EXPENSES

            (a) All expenses incident to the Company's and the Subsidiary
Guarantors' performance of or compliance with this Agreement will be borne by
the Company regardless of whether a Registration Statement becomes effective,
including without limitation and as applicable: (i) all Commission, securities
exchange or NASD registration and filing fees and expenses (including filings
made by any Initial Purchasers or Holder with the NASD (and, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel
that may be required by the rules and regulations of the NASD)); (ii) all fees
and expenses of compliance with U.S. federal securities and state blue sky or
securities laws and compliance with the rules of the

                                       19



NASD (including reasonable fees and disbursements of one counsel for Holders in
connection with blue sky and/or NASD qualification of the Exchange Notes); (iii)
all expenses of printing (including printing certificates for the Exchange Notes
to be issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services; (iv) all fees and disbursements of counsel for the Company
and the Subsidiary Guarantors; (v) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance)
and (vi) the reasonable fees and disbursements of one counsel designated by the
Holders of a majority in principal amount of Transfer Restricted Securities
covered by the Shelf Registration Statement to act as counsel for the Holders of
those Transfer Restricted Securities in connection therewith.

            The Company will, in any event, bear its and the Subsidiary
Guarantors' internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company or the Subsidiary Guarantors.

            (b) Each Holder of Transfer Restricted Securities will pay all
underwriting discounts and commissions, if any, and agency fees, commissions and
transfer taxes, if any, relating to the disposition of such Holder's Transfer
Restricted Securities and the fees and disbursements of any counsel or other
advisors or experts retained by such Holder, other than the counsel and experts
specifically referred to in clause (a) above.

      SECTION 8. INDEMNIFICATION

            (a) The Company and each Subsidiary Guarantor shall, jointly and
severally, indemnify and hold harmless each Holder of Transfer Restricted
Securities, its officers and employees and each Person, if any, who controls any
such Holders, within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases, sales and registration of the Notes (including the
related Guarantees) and the Exchange Notes (including the related Guarantees)),
to which that Holder, officer, employee or controlling Person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Registration Statement or preliminary Prospectus or Prospectus or in any
amendment or supplement thereto, (B) in any Blue Sky Application (as defined
below) or other document prepared or executed by any Company or any Subsidiary
Guarantor (or based upon any written information furnished by any Company or any
Subsidiary Guarantor) specifically for the purpose of qualifying any or all of
the Notes under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application") or (C) in any materials or information provided to investors by,
or with the approval of, the Company in connection with the marketing of the
offering of the

                                       20



Exchange Notes ("Marketing Materials"), including any roadshow or investor
presentations made to investors by the Company (whether in person or
electronically); (ii) the omission or alleged omission to state in any
Registration Statement, preliminary Prospectus or Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application or Marketing
Materials any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or (iii) any act or failure to act or any alleged act or
failure to act by any Holder of Transfer Restricted Securities in connection
with, or relating in any manner to, the Notes, the Guarantees or the Exchange
Notes or the offering contemplated by any Registration Statement, and which is
included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company and the Subsidiary Guarantors shall not be liable
under this clause (iii) to the extent that it is determined in a final judgment
by a court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Holder through its gross negligence or willful
misconduct); and shall reimburse each Holder and each such officer, employee or
controlling Person promptly upon demand for any legal or other expenses
reasonably incurred by that Holder, officer, employee or controlling Person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company and the Subsidiary Guarantors shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any
Registration Statement, preliminary Prospectus or Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application or Marketing Materials,
in reliance upon and in conformity with written information concerning such
Holder furnished to the Company by or on behalf of any Holder specifically for
inclusion therein; provided, further, that with respect to any such untrue
statement or omission made in any preliminary Prospectus or Prospectus, the
indemnity agreement contained in this Section 8(a) shall not inure to the
benefit of the Holder from whom the Person asserting any such losses, claims,
damages or liabilities purchased the Notes, Guarantees or Exchange Notes
concerned if, to the extent that such sale was a sale by the Holder and any such
loss, claim, damage or liability of such Holder is a result of the fact that
both (A) a copy of the Prospectus (or the Prospectus as then amended or
supplemented) was not sent or given to such Person at or prior to written
confirmation of the sale of such Notes or Exchange Notes to such Person and (B)
the untrue statement or omission in the preliminary Prospectus or Prospectus was
corrected in the Prospectus (or the Prospectus as then amended or supplemented)
unless such failure to deliver the Prospectus was a result of noncompliance by
the Company with Section 6(d)(vi) hereof. The foregoing indemnity agreement is
in addition to any liability which the Company and the Subsidiary Guarantors may
otherwise have to any Holder or to any officer, employee or controlling Person
of that Holder.

            (b) Each Holder, severally and not jointly, shall indemnify and hold
harmless each of the Company, each of the Subsidiary Guarantors, their
respective

                                       21



directors, officers and employees, and each Person, if any, who controls either
of the Company or any of the Subsidiary Guarantors within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company, the Subsidiary
Guarantors or any such director, officer or controlling Person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Registration Statement, preliminary Prospectus or Prospectus, or in any
amendment or supplement thereto or (B) in any Blue Sky Application or (ii) the
omission or alleged omission to state in any Registration Statement, preliminary
Prospectus or Prospectus, or in any amendment or supplement thereto, or in any
Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such Holders furnished to the Company by or on behalf of
that Holder specifically for inclusion therein, and shall reimburse the Company,
each of the Subsidiary Guarantors and each such director, officer, employee and
controlling Person for any legal or other expenses reasonably incurred by the
Company, each such Subsidiary Guarantor or each such director, officer, employee
or controlling Person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Holder may otherwise have to the Company, any of the
Subsidiary Guarantors or any such director, officer, employee or controlling
Person.

            (c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and; provided, further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, any
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of the

                                       22



indemnified party unless (i) the employment of such counsel has been
specifically authorized by the indemnifying party in writing, or (ii) such
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the indemnifying party and in the reasonable judgment of such
counsel it is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such action and
employ counsel reasonably satisfactory to the indemnified party, in which case,
if such indemnified party notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to local counsel) at any
time for all such indemnified parties, which firm shall be designated in writing
by (x) Citigroup Global Markets Inc. if the indemnified parties under this
Section 8 consist of the Initial Purchasers or any of their respective officers,
employees or controlling Persons or (y) by the Company, if the indemnified
parties under this Section 8 consist of any of the Company, any of the
Subsidiary Guarantors or any of their respective directors, officers, employees
or controlling Persons. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.

            (d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Subsidiary Guarantors, on the one hand, and the
Holders on the other, from the sale of the Transfer Restricted Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Subsidiary Guarantors, on the one hand and the Holders on
the other with respect to the statements or omissions which

                                       23



resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or any of the Subsidiary Guarantors, on
the one hand, or the Holders, on the other hand, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Subsidiary Guarantors and
the Holders agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were to be determined by pro rata allocation (even
if the Holders were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8(d), no Holder
shall be required to contribute any amount in excess of the amount by which the
net proceeds received by it in connection with its sale of Notes exceeds the
amount of any damages which such Holder has otherwise paid or become liable to
pay by reason of the untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute as provided in this Section 8(d) are several and not
joint.

      SECTION 9. RULE 144A

            The Company and each Subsidiary Guarantor hereby agrees with each
Holder of Transfer Restricted Securities, during any period in which the Company
or such Subsidiary Guarantor is not subject to Section 13 or 15(d) of the
Exchange Act within the two-year period following the Closing Date, to make
available to any Holder or beneficial owner of Transfer Restricted Securities,
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.

      SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS

            No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.

      SECTION 11. SELECTION OF UNDERWRITERS

                                       24



            Subject to Section 6(d)(i), the Holders of Transfer Restricted
Securities covered by the Shelf Registration Statement who desire to do so may
sell such Transfer Restricted Securities in an Underwritten Offering at such
Holders' expense. In any such Underwritten Offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities included in such offering; provided that such
investment bankers and managers must be reasonably satisfactory to the Company.

      SECTION 12. MISCELLANEOUS

            (a) Remedies. The Company and the Subsidiary Guarantors agree that
monetary damages (including Additional Interest) would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.

            (b) No Inconsistent Agreements. Neither the Company nor any
Subsidiary Guarantor will, on or after the date of this Agreement, enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Except as disclosed in the Offering Memorandum (as such term
is defined in the Purchase Agreement), neither the Company nor any Subsidiary
Guarantor has previously entered into any agreement granting any registration
rights with respect to its securities to any Person. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's or any Subsidiary Guarantor's
securities under any agreement in effect on the date hereof.

            (c) Adjustments Affecting the Notes. The Company and the Subsidiary
Guarantors will not take any action, or permit any change to occur, with respect
to the Notes that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer.

            (d) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
the Transfer Restricted Securities affected by such amendment, modification,
supplement, waiver or consent. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.

                                       25



            (e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, facsimile or air
courier guaranteeing overnight delivery:

                  (i) if to a Holder, at the address set forth on the records of
      the Registrar under the Indenture, with a copy to the Registrar under the
      Indenture; and

                  if to the Company or the Subsidiary Guarantors to:

                        Psychiatric Solutions, Inc.
                        840 Crescent Centre Drive,
                        Suite 460
                        Franklin, Tennessee  37067
                        Attention: Joey A. Jacobs
                        Fax: (615) 312-5700

                        with a copy to:

                        Waller Lansden Dortch & Davis, PLLC
                        511 Union Street, Suite 2100
                        Nashville, Tennessee  37219
                        Attention: Christopher L. Howard, Esq.
                        Fax: (615) 244-6804

            Any such notices and communications shall take effect at the time of
receipt thereof. The Company shall be entitled to act and rely upon any notice
or communication given or made by the Initial Purchasers.

            Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

            (f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder.

            (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                                       26



            (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

            (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED, IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

            (j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.

            (k) Entire Agreement. This Agreement together with the other
Transaction Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company and the
Subsidiary Guarantors with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.

                            [Signature pages follow.]

                                       27



IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                             PSYCHIATRIC SOLUTIONS, INC.

                             By: /s/ Steven T. Davidson
                                 --------------------------------
                                 Name:  Steven T. Davidson
                                 Title: Chief Development Officer

                             GUARANTORS:

                             PSYCHIATRIC SOLUTIONS HOSPITALS, INC.
                             INFOSCRIBER CORPORATION
                             COLLABORATIVE CARE CORPORATION
                             PSYCHIATRIC SOLUTIONS OF ALABAMA, INC.
                             PSYCHIATRIC SOLUTIONS OF TENNESSEE, INC.
                             SOLUTIONS CENTER OF LITTLE ROCK, INC.
                             PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA, INC.
                             PSI COMMUNITY MENTAL HEALTH AGENCY MANAGEMENT, INC.
                             PSYCHIATRIC MANAGEMENT RESOURCES, INC.
                             PSI-EAP, INC.
                             SUNSTONE BEHAVIORAL HEALTH, INC.
                             THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC.
                             PSI CEDAR SPRINGS HOSPITAL, INC.
                             PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC.
                             AERIES HEALTHCARE CORPORATION
                             AERIES HEALTHCARE OF ILLINOIS, INC.
                             PSI HOSPITALS, INC.
                             PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS, INC.
                             BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
                             EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
                             GREAT PLAINS HOSPITAL, INC.
                             GULF COAST TREATMENT CENTER, INC.
                             HAVENWYCK HOSPITAL INC.
                             H.C. CORPORATION
                             HSA HILL CREST CORPORATION
                             HSA OF OKLAHOMA, INC.
                             MICHIGAN PSYCHIATRIC SERVICES, INC.
                             RAMSAY MANAGED CARE, INC.
                             RAMSAY TREATMENT SERVICES, INC.
                             PREMIER BEHAVIORAL SOLUTIONS, INC.
                             PREMIER BEHAVIORAL SOLUTIONS OF ALABAMA, INC.

                 SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT



                             PREMIER BEHAVIORAL SOLUTIONS OF FLORIDA, INC.
                             RAMSAY YOUTH SERVICES OF GEORGIA, INC.
                             RAMSAY YOUTH SERVICES PUERTO RICO, INC.
                             PSYCHIATRIC SOLUTIONS OF SOUTH CAROLINA, INC.
                             RHCI SAN ANTONIO, INC.
                             TRANSITIONAL CARE VENTURES, INC.
                             TRANSITIONAL CARE VENTURES (TEXAS), INC.
                             BRENTWOOD ACQUISITION, INC.
                             BRENTWOOD ACQUISITION-SHREVEPORT, INC.
                             CANYON RIDGE HOSPITAL, INC.
                             LAURELWOOD CENTER, INC.
                             PEAK BEHAVIORAL HEALTH SERVICES, INC.
                             PSI PRIDE INSTITUTE, INC.
                             PSI SUMMIT HOSPITAL, INC.
                             PSYCHIATRIC SOLUTIONS OF ARIZONA, INC.
                             PSYCHIATRIC SOLUTIONS OF LEESBURG, INC.
                             PSYCHIATRIC SOLUTIONS OF VIRGINIA, INC.
                             TUCSON HEALTH SYSTEMS, INC.
                             WHISPER RIDGE OF STAUNTON, INC.
                             FORT LAUDERDALE HOSPITAL, INC.
                             WELLSTONE HOLDINGS, INC.
                             ARDENT HEALTH SERVICES, INC.
                             BEHAVIORAL HEALTHCARE CORPORATION
                             BHC ALHAMBRA HOSPITAL, INC.
                             BHC BELMONT PINES HOSPITAL, INC.
                             BHC CEDAR CREST RTC, INC.
                             BHC CEDAR VISTA HOSPITAL, INC.
                             BHC CLINICAS DEL ESTE HOSPITAL, INC.
                             BHC COLUMBUS HOSPITAL, INC.
                             BHC FAIRFAX HOSPITAL, INC.
                             BHC FORT LAUDERDALE HOSPITAL, INC.
                             BHC FOX RUN HOSPITAL, INC.
                             BHC FREMONT HOSPITAL, INC.
                             BHC GULF COAST MANAGEMENT GROUP, INC.
                             BHC HEALTH SERVICES OF NEVADA, INC.
                             BHC HERITAGE OAKS HOSPITAL, INC.
                             BHC HOSPITAL HOLDINGS, INC.
                             BHC INTERMOUNTAIN HOSPITAL, INC.
                             BHC LEBANON HOSPITAL, INC.
                             BHC MANAGEMENT HOLDINGS, INC.
                             BHC MILLWOOD HOSPITAL, INC.
                             BHC MONTEVISTA HOSPITAL, INC.
                             BHC OF NORTHERN INDIANA, INC.
                             BHC PACIFIC GATEWAY HOSPITAL, INC.
                             BHC PACIFIC SHORES HOSPITAL, INC.
                             BHC PACIFIC VIEW RTC, INC.
                             BHC PINNACLE POINTE HOSPITAL, INC.

                 SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT



                             BHC PROPERTIES, INC.
                             BHC ROSS HOSPITAL, INC.
                             BHC SAN JUAN CAPESTRANO HOSPITAL, INC.
                             BHC SIERRA VISTA HOSPITAL, INC.
                             BHC SPIRIT OF ST. LOUIS HOSPITAL, INC.
                             BHC STREAMWOOD HOSPITAL, INC.
                             BHC VALLE VISTA HOSPITAL, INC.
                             BHC VISTA DEL MAR HOSPITAL, INC.
                             BHC WINDSOR HOSPITAL, INC.
                             COMMUNITY PSYCHIATRIC CENTERS OF TEXAS, INC.
                             INDIANA PSYCHIATRIC INSTITUTES, INC.
                             MESILLA VALLEY HOSPITAL, INC.
                             MESILLA VALLEY MENTAL HEALTH ASSOCIATES, INC.

                             By: /s/ Steven T. Davidson
                                 ----------------------------------
                                 Name:  Steven T. Davidson
                                 Title: Vice President

                             THERAPEUTIC SCHOOL SERVICES, LLC
                             PSI TEXAS HOSPITALS, LLC
                             WELLSTONE REGIONAL HOSPITAL ACQUISITION, LLC
                             PSI CROSSINGS, LLC
                             PALMETTO BEHAVIORAL HEALTH SYSTEM, L.L.C
                             PALMETTO LOWCOUNTRY BEHAVIORAL HEALTH, L.L.C.
                             PALMETTO PEE DEE BEHAVIORAL HEALTH, L.L.C.
                             AHS CUMBERLAND HOSPITAL, LLC
                             BHC CANYON RIDGE HOSPITAL, LLC
                             BHC MANAGEMENT SERVICES, LLC
                             BHC MANAGEMENT SERVICES OF INDIANA, LLC
                             BHC MANAGEMENT SERVICES OF KENTUCKY, LLC
                             BHC MANAGEMENT SERVICES OF LOUISIANA, LLC
                             BHC MANAGEMENT SERVICES OF NEW MEXICO, LLC
                             BHC MANAGEMENT SERVICES OF PENNSYLVANIA, LLC
                             BHC MANAGEMENT SERVICES OF STREAMWOOD, LLC

                 SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT



                             BHC MANAGEMENT SERVICES OF TULSA, LLC
                             BHC MESILLA VALLEY HOSPITAL, LLC (F/K/A
                               BHC NEWCO 1, LLC)
                             BHC NEWCO 2, LLC
                             BHC NEWCO 3, LLC
                             BHC NEWCO 4, LLC
                             BHC NEWCO 5, LLC
                             BHC NEWCO 6, LLC
                             BHC NEWCO 7, LLC
                             BHC NEWCO 8, LLC
                             BHC NEWCO 9, LLC
                             BHC NEWCO 10, LLC
                             BHC NORTHWEST PSYCHIATRIC HOSPITAL, LLC
                             BHC PHYSICIAN SERVICES OF KENTUCKY, LLC
                             COLUMBUS HOSPITAL , LLC
                             LEBANON HOSPITAL, LLC
                             NORTHERN INDIANA HOSPITAL, LLC
                             VALLE VISTA, LLC
                             WILLOW SPRINGS, LLC
                             RED ROCK SOLUTIONS, LLC

                             By: /s/ Steven T. Davidson
                                 ----------------------------------

                             Name:  Steven T. Davidson
                             Title: Vice President

                 SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT



                             H.C. PARTNERSHIP

                             BY: H.C. CORPORATION, AS GENERAL PARTNER

                             By: /s/ Steven T. Davidson
                                 --------------------------------

                             Name:  Steven T. Davidson
                             Title: Vice President

                             BY: HSA HILL CREST CORPORATION, AS GENERAL PARTNER

                             By: /s/ Steven T. Davidson
                                 ------------------------------

                             Name:  Steven T. Davidson
                             Title: Vice President

                             MILLWOOD HOSPITAL, L.P.
                             TEXAS CYPRESS CREEK HOSPITAL, L.P.
                             TEXAS WEST OAKS HOSPITAL, L.P.
                             NEURO INSTITUTE OF AUSTIN, L.P.
                             TEXAS LAUREL RIDGE HOSPITAL, L.P.
                             TEXAS OAKS PSYCHIATRIC HOSPITAL, L.P.
                             TEXAS SAN MARCOS TREATMENT CENTER, L.P.

                             BY: PSI TEXAS HOSPITALS, LLC, AS GENERAL PARTNER

                             BY: PSYCHIATRIC SOLUTIONS HOSPITAL, INC., AS SOLE
                                 MEMBER

                             By: /s/ Steven T. Davidson
                                 --------------------------------

                             Name:  Steven T. Davidson
                             Title: Vice President

                 SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT



                             BHC OF INDIANA GENERAL PARTNERSHIP

                             BY: BHC COLUMBUS HOSPITAL, INC.
                                 BHC LEBANON HOSPITAL, INC.
                                 BHC OF NORTHERN INDIANA, INC.
                                 BHC VALLE VISTA HOSPITAL, INC., ITS PARTNERS

                             By: /s/ Steven T. Davidson
                                 --------------------------------

                             Name:  Steven T. Davidson
                             Title: Vice President

                             BLOOMINGTON MEADOWS, G.P.

                             BY: BHC OF INDIANA GENERAL PARTNERSHIP, ITS PARTNER

                             BY: BHC COLUMBUS HOSPITAL, INC.
                                 BHC LEBANON HOSPITAL, INC.
                                 BHC OF NORTHERN INDIANA, INC.
                                 BHC VALLE VISTA HOSPITAL, INC., ITS PARTNERS

                             By: /s/ Steven T. Davidson
                                 -----------------------------------------

                             Name:  Steven T. Davidson
                             Title: Vice President

                             BY: INDIANA PSYCHIATRIC INSTITUTES, INC., ITS
                                 PARTNER

                             By: /s/ Steven T. Davidson
                                 -----------------------------------------

                             Name:  Steven T. Davidson
                             Title: Vice President

                 SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT



                             MESILLA VALLEY GENERAL PARTNERSHIP

                             BY: MESILLA VALLEY HOSPITAL, INC.
                                 MESILLA VALLEY MENTAL HEALTH ASSOCIATES,
                                 INC., ITS PARTNERS

                             By: /s/ Steven T. Davidson
                                 ------------------------------------

                             Name:  Steven T. Davidson
                             Title: Vice President

                 SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT



Accepted:

CITIGROUP GLOBAL MARKETS INC.

By: /s/ Ross A. Mac Intyre
    ---------------------------------
    Authorized Representative

For itself and the other Several Initial
Purchasers named in Schedule I to the
Purchase Agreement

EX-10.1

                                                                    Exhibit 10.1

================================================================================

                                  $475,000,000

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                            DATED AS OF JULY 1, 2005

                                      AMONG

                           PSYCHIATRIC SOLUTIONS, INC.
                                AS THE BORROWER,

               THE SUBSIDIARIES OF THE BORROWER IDENTIFIED HEREIN,
                                 AS GUARANTORS,

                  THE LENDERS AND THE L/C ISSUER PARTY HERETO,

                          CITICORP NORTH AMERICA, INC.,
                   AS TERM LOAN FACILITY ADMINISTRATIVE AGENT,

                             BANK OF AMERICA, N.A.,
               AS REVOLVING CREDIT FACILITY ADMINISTRATIVE AGENT,
                     COLLATERAL AGENT AND SWING LINE LENDER,

                          CITICORP NORTH AMERICA, INC.
                                       AND
                             BANK OF AMERICA, N.A.,
                            AS CO-SYNDICATION AGENTS

                          CITICORP NORTH AMERICA, INC.,
                             AS DOCUMENTATION AGENT

                          CITIGROUP GLOBAL MARKETS INC.
                                       AND
                         BANC OF AMERICA SECURITIES LLC,
                 AS JOINT LEAD ARRANGERS AND JOINT BOOK MANAGERS
                        FOR THE REVOLVING CREDIT FACILITY

                                       AND

                         CITIGROUP GLOBAL MARKETS INC.,
                   AS SOLE LEAD ARRANGER AND SOLE BOOK MANAGER
                           FOR THE TERM LOAN FACILITY

================================================================================



                                TABLE OF CONTENTS



                                                                                                   PAGE
                                                                                                
Article I       DEFINITIONS AND ACCOUNTING TERMS...............................................      1

         1.01   Defined Terms..................................................................      1

         1.02   Other Interpretive Provisions..................................................     38

         1.03   Accounting Terms...............................................................     39

         1.04   Rounding.......................................................................     40

         1.05   References to Agreements and Laws..............................................     40

         1.06   Times of Day...................................................................     40

         1.07   Letter of Credit Amounts.......................................................     40

Article II      THE COMMITMENTS AND CREDIT EXTENSIONS..........................................     41

         2.01   The Commitments................................................................     41

         2.02   Borrowings, Conversions and Continuations of Loans.............................     41

         2.03   Letters of Credit..............................................................     43

         2.04   Swing Line Loans...............................................................     49

         2.05   Reduction and Termination of the Commitments...................................     52

         2.06   Repayment of Loans.............................................................     52

         2.07   Optional Prepayments...........................................................     54

         2.08   Mandatory Prepayments..........................................................     54

         2.09   Interest.......................................................................     56

         2.10   Conversion/Continuation Option.................................................     57

         2.11   Evidence of Debt...............................................................     57

         2.12   Fees...........................................................................     59

         2.13   Payments and Computations......................................................     60

         2.14   Increases in Commitments.......................................................     62

Article III     TAXES, YIELD PROTECTION AND ILLEGALITY.........................................     64

         3.01   Taxes..........................................................................     64

         3.02   Illegality.....................................................................     65

         3.03   Determination of Rates; Inability to Determine Rates...........................     65

         3.04   Increased Cost and Reduced Return; Capital Adequacy............................     66

         3.05   Funding Losses.................................................................     66

         3.06   Matters Applicable to all Requests for Compensation............................     67

         3.07   Substitution of Lenders........................................................     67


                                       i



                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                                       PAGE
                                                                                                    
         3.08   Survival...........................................................................     68

Article IV      GUARANTY...........................................................................     68

         4.01   The Guaranty.......................................................................     68

         4.02   Obligations Unconditional..........................................................     69

         4.03   Reinstatement......................................................................     69

         4.04   Certain Additional Waivers.........................................................     70

         4.05   Remedies...........................................................................     70

         4.06   Rights of Contribution.............................................................     70

         4.07   Guarantee of Payment; Continuing Guarantee.........................................     70

Article V       CONDITIONS PRECEDENT...............................................................     71

         5.01   Conditions Precedent to Initial Credit Extensions..................................     71

         5.02   Conditions Precedent to Each Credit Extension......................................     75

         5.03   Determinations of Initial Borrowing Conditions.....................................     76

Article VI      REPRESENTATIONS AND WARRANTIES.....................................................     76

         6.01   Existence, Qualification and Power.................................................     76

         6.02   Authorization; No Contravention....................................................     77

         6.03   Governmental Authorization; Other Consents.........................................     77

         6.04   Binding Effect.....................................................................     77

         6.05   Financial Statements; No Material Adverse Effect; Solvency.........................     77

         6.06   Litigation.........................................................................     78

         6.07   No Default; No Burdensome Restrictions.............................................     78

         6.08   Ownership of Property; Liens.......................................................     79

         6.09   Environmental Compliance...........................................................     79

         6.10   Insurance..........................................................................     80

         6.11   Taxes..............................................................................     80

         6.12   ERISA Compliance...................................................................     80

         6.13   Subsidiaries.......................................................................     81

         6.14   Margin Regulations; Investment Company Act; Public Utility Holding Company Act.....     81

         6.15   Disclosure.........................................................................     81

         6.16   Compliance with Laws...............................................................     81

         6.17   Intellectual Property; Licenses; Etc...............................................     82


                                       ii


                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                                       PAGE
                                                                                                    
         6.18   Broker's Fees......................................................................     83

         6.19   Use of Proceeds....................................................................     83

         6.20   Labor Matters......................................................................     83

         6.21   Business Locations.................................................................     83

         6.22   Perfection of Security Interests in the Collateral.................................     84

         6.23   Subordination......................................................................     84

         6.24   Related Documents..................................................................     84

         6.25   Fraud and Abuse....................................................................     85

         6.26   Licensing and Accreditation........................................................     85

         6.27   Reimbursement from Medical Reimbursement Programs..................................     85

         6.28   Medicare and Medicaid Notices and Filings Related to Health Care Business..........     86

Article VII     AFFIRMATIVE COVENANTS..............................................................     86

         7.01   Financial Statements...............................................................     86

         7.02   Certificates; Other Information....................................................     87

         7.03   Notices............................................................................     88

         7.04   Payment of Obligations.............................................................     89

         7.05   Preservation of Existence, Etc.....................................................     90

         7.06   Maintenance of Properties..........................................................     90

         7.07   Maintenance of Insurance...........................................................     90

         7.08   Compliance with Laws...............................................................     91

         7.09   Books and Records..................................................................     91

         7.10   Access; Inspection Rights..........................................................     91

         7.11   Use of Proceeds....................................................................     92

         7.12   Additional Subsidiaries and Guarantees.............................................     92

         7.13   ERISA Compliance...................................................................     93

         7.14   Environmental Compliance...........................................................     93

         7.15   Additional Collateral..............................................................     93

         7.16   Control Accounts; Approved Deposit Accounts........................................     94

         7.17   Interest Rate Contracts............................................................     95

         7.18   Collateral Access Agreements and Bailee's Letters..................................     95

         7.19   Certain Post-Closing Date Requirements.............................................     95


                                       iii


                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                                              PAGE
                                                                                                           
Article VIII    NEGATIVE COVENANTS........................................................................      96

         8.01   Liens.....................................................................................      96

         8.02   Investments...............................................................................      98

         8.03   Indebtedness..............................................................................      99

         8.04   Fundamental Changes.......................................................................     100

         8.05   Dispositions..............................................................................     100

         8.06   Restricted Payments.......................................................................     101

         8.07   Change in Nature of Business..............................................................     101

         8.08   Transactions with Affiliates and Insiders.................................................     101

         8.09   Burdensome Agreements.....................................................................     102

         8.10   Use of Proceeds...........................................................................     102

         8.11   Financial Covenants.......................................................................     102

         8.12   Capital Expenditures......................................................................     103

         8.13   Prepayment of Other Indebtedness; Modification of Debt Agreements.........................     103

         8.14   Organization Documents; Fiscal Year; Legal Name, State of Formation and Form of Entity....     104

         8.15   Ownership of Subsidiaries.................................................................     105

         8.16   Sale and Leaseback Transactions; Operating Leases.........................................     105

         8.17   Modification of Related Documents.........................................................     105

         8.18   No Speculative Transactions...............................................................     105

         8.19   Compliance with ERISA.....................................................................     106

         8.20   Environmental.............................................................................     106

         8.21   Additional Senior Debt....................................................................     106

Article IX      EVENTS OF DEFAULT AND REMEDIES............................................................     106

         9.01   Events of Default.........................................................................     106

         9.02   Remedies Upon Event of Default............................................................     108

         9.03   Actions In Respect of Letters of Credit...................................................     109

Article X       AGENTS....................................................................................     109

         10.01  Authorization and Action..................................................................     109

         10.02  Administrative Agent's Reliance, Etc......................................................     111

         10.03  Posting of Approved Electronic Communications.............................................     111

         10.04  The Agents Individually...................................................................     112


                                       iv


                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                                                   PAGE
                                                                                                
         10.05  Lender Credit Decision.........................................................     113

         10.06  Indemnification................................................................     113

         10.07  Successor Agents...............................................................     113

         10.08  Paying Agents; Collateral and Guaranty Matters.................................     115

         10.09  Collateral Matters Relating to Related Obligations.............................     117

         10.10  Arrangers; Other Agents........................................................     118

Article XI      MISCELLANEOUS..................................................................     118

         11.01  Amendments, Etc................................................................     118

         11.02  Notices, Etc...................................................................     120

         11.03  No Waiver; Cumulative Remedies.................................................     122

         11.04  Attorney Costs, Expenses and Taxes.............................................     122

         11.05  Indemnification by the Borrower; Limitation of Liability.......................     123

         11.06  Marshalling; Payments Set Aside................................................     125

         11.07  Assignments and Participations.................................................     126

         11.08  Confidentiality................................................................     129

         11.09  Set-off........................................................................     130

         11.10  Interest Rate Limitation.......................................................     130

         11.11  Counterparts...................................................................     130

         11.12  Integration....................................................................     130

         11.13  Survival of Representations and Warranties.....................................     131

         11.14  Severability...................................................................     131

         11.15  Tax Forms......................................................................     131

         11.16  Sharing of Payments, Etc.......................................................     133

         11.17  Governing Law..................................................................     133

         11.18  Waiver of Right to Trial by Jury...............................................     133

         11.19  Submission to Jurisdiction; Service of Process.................................     134

         11.20  Designated Senior Indebtedness.................................................     134

         11.21  USA Patriot Act Notice.........................................................     134

         11.22  Section Titles.................................................................     134

         11.23  Entire Agreement...............................................................     135


                                       v



SCHEDULES

     I          Commitments
     6.13       Ownership of Borrower; Subsidiaries
     6.17       IP Rights
     6.21(a)    Locations of Real Property
     6.21(b)    Locations of Tangible Personal Property
     6.21(c)    Locations of Chief Executive Office
     6.21(e)    Changes in Legal Name, State of Formation and Structure
     7.18       Collateral Access Agreements and Bailee's Letter
     8.01       Existing Liens
     8.02       Existing Investments
     8.03       Existing Indebtedness
     11.02      Lending Offices and Addresses for Notices

EXHIBITS

     A          Form of Notice of Borrowing
     B          Form of Swing Line Loan Request
     C          Form of Letter of Credit Application
     D          Form of Notice of Conversion or Continuation
     E-1        Form of Revolving Note
     E-2        Form of Term Loan Note
     E-3        Form of Swing Line Note
     F          Form of Compliance Certificate
     G          Form of Assignment and Assumption
     H          Form of Joinder Agreement
     I          Form of Opinion of Counsel to the Loan Parties

                                       vi



                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

      This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
July 1, 2005, among PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation (the
"Borrower"), the Guarantors (as defined below), the Lenders (as defined below),
the L/C Issuer (as defined below) and CITICORP NORTH AMERICA, INC. ("CNAI"), as
administrative agent for the Term Loan Facility (as defined below) (in such
capacity, the "Term Loan Facility Administrative Agent"), BANK OF AMERICA, N.A.
("Bank of America"), as administrative agent for the Revolving Credit Facility
(in such capacity, the "Revolving Credit Facility Administrative Agent") and as
collateral agent for the Lenders and the L/C Issuer (in such capacity, the
"Collateral Agent"), CNAI and Bank of America, as co-syndication agents for the
Revolving Credit Facility and the Term Loan Facility, CNAI, as documentation
agent for the Revolving Credit Facility and the Term Loan Facility.

      WHEREAS, the Borrower has requested that the Lenders and the L/C Issuer
make available for the purposes specified in this Agreement, a term loan
facility and a revolving credit and letter of credit facility; and

      WHEREAS, the Lenders and the L/C Issuer are willing to make available to
the Borrower such term loan facility, revolving credit and letter of credit
facility upon the terms and subject to the conditions set forth herein;

      WHEREAS, the Borrower has requested, and the other parties hereto have
agreed, that the Existing Credit Agreement (as defined below) be amended and
restated on the terms set forth herein;

      WHEREAS, it is the intention of the parties hereto that this Agreement (as
defined below) does not constitute a novation of the rights, obligations and
liabilities of the respective parties (including the Obligations) existing under
the Existing Credit Agreement (as defined below) or evidence payment of all or
any such obligations and liabilities;

      NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

1.01  DEFINED TERMS.

      As used in this Agreement, the following terms shall have the meanings set
forth below:

      "Account" has the meaning given such term in the UCC.

      "Acquisition," by any Person, means the acquisition by such Person, in a
single transaction or in a series of related transactions, of all or any
substantial portion of the Property of another Person or at least a majority of
the Voting Stock of another Person, in each case whether or not involving a
merger or consolidation with such other Person and whether for cash, property,
services, assumption of Indebtedness, securities or otherwise.

      "Administrative Agents" means collectively, the Revolving Credit Facility
Administrative Agent and the Term Loan Facility Administrative Agent.



      "Administrative Agent's Office" means (a) in the case of the Revolving
Credit Facility Administrative Agent, the Revolving Credit Facility
Administrative Agent's address set forth in Schedule 11.02 (Lending Offices and
Addresses for Notices) or such other address as the Revolving Credit Facility
Administrative Agent may from time to time notify the Borrower, the Term Loan
Facility Administrative Agent, the Collateral Agent, the Swing Line Lender, the
Revolving Credit Lenders and the L/C Issuer and (b) in the case of the Term Loan
Facility Administrative Agent, the Term Loan Facility Administrative Agent's
address set forth in Schedule 11.02 (Lending Offices and Addresses for Notices)
or such other address as the Term Loan Facility Administrative Agent may from
time to time notify the Borrower, the Revolving Credit Facility Administrative
Agent, the Collateral Agent and the Term Loan Lenders.

      "Affected Lender" has the meaning specified in Section 3.07(a)
(Substitution of Lenders).

      "Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "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 power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 5% or more of
the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.

      "Agent-Related Persons" means the Revolving Credit Facility Administrative
Agent, the Term Loan Facility Administrative Agent and the Collateral Agent,
together with their respective Affiliates (including, in the case of Bank of
America, Banc of America Securities and in the case of CNAI, CGMI and Citibank),
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.

      "Agents" means, collectively, each Administrative Agent and the Collateral
Agent.

      "Aggregate Revolving Credit Commitments" means the Revolving Credit
Commitments of all the Lenders. The amount of the Aggregate Revolving Credit
Commitments in effect on the Closing Date is $150,000,000.

      "Agreement" means this Second Amended and Restated Credit Agreement, as it
may be further amended, restated, extended, supplemented or otherwise modified
from time to time.

      "AHS" means Ardent Health Services, Inc., a Delaware corporation which,
following the Reverse Spin-Off, will own only the Capital Stock of BHC and,
indirectly, BHC's Subsidiaries which, together with BHC, constitute, immediately
prior to the consummation of the Ardent Acquisition, the behavioral healthcare
business of Ardent LLC.

      "AHS Indenture" means the Indenture dated as of August 19, 2003, as
amended through the Closing Date (including the amendments contemplated by the
AHS Tender Offer), among AHS, certain of its Subsidiaries, as guarantors, and
AHS Trustee, governing the AHS Notes.

      "AHS Notes" means AHS's 10% senior subordinated notes due 2013.

      "AHS Tender Offer" means the (i) cash tender offer to purchase all of the
AHS Notes on or prior to the Closing Date and (ii) the solicitation of the
consent of the holders of the AHS Notes regarding amendments to the AHS
Indenture, each in form and substance satisfactory to the Administrative Agents.

                                        2


      "AHS Trustee" means U.S. Bank Trust National Association, in its capacity
as trustee for the holders of the AHS Notes.

      "AHS Untendered Notes" means any AHS Notes outstanding on the Closing Date
after the consummation of the AHS Tender Offer.

      "Applicable Margin" means:

      (a) with respect to Term Loans, (x) prior to the Trigger Date, (A) for
Base Rate Loans, a rate equal to 1.00% per annum and (B) for Eurodollar Rate
Loans, a rate equal to 2.00% per annum and (y) from and after the Trigger Date,
a per annum rate equal to the rate for the applicable type of Loan adjacent to
the then applicable Consolidated Total Leverage Ratio as set forth below:



                                                        BASE RATE   EURODOLLAR
CONSOLIDATED TOTAL LEVERAGE RATIO                         LOANS     RATE LOANS
- ----------------------------------                      ---------   ----------
                                                              
Greater than or equal to 4.75 to 1                        1.00%        2.00%
Less than 4.75 to 1                                       0.75%        1.75%


      and

      (b) with respect to Revolving Loans and Swing Line Loans, (x) prior to the
Trigger Date, (A) for Base Rate Loans, a rate equal to 1.50% per annum and (B)
for Eurodollar Rate Loans, a rate equal to 2.50% per annum and (y) from and
after the Trigger Date, a per annum rate equal to the rate for the applicable
type of Loan adjacent to the then applicable Consolidated Total Leverage Ratio
as set forth below:



                                                            BASE RATE   EURODOLLAR
           CONSOLIDATED TOTAL LEVERAGE RATIO                  LOANS     RATE LOANS
- --------------------------------------------------------    ---------   ----------
                                                                  
Greater than or equal to 5.5 to 1                             1.50%        2.50%
Less than 5.5 to 1 and equal to or greater than 5.0 to 1      1.25%        2.25%
Less than 5.0 to 1 and equal to or greater than 4.5 to 1      1.00%        2.00%
Less than 4.5 to 1 and equal to or greater than 4.0 to 1      0.75%        1.75%
Less than 4.0 to 1                                            0.50%        1.50%


      Changes in the Applicable Margin resulting from a change in the
Consolidated Total Leverage Ratio on the last day of any subsequent fiscal
quarter shall become effective as to all Loans on the Business Day following
delivery by the Borrower to the Administrative Agents of new financial
statements for such fiscal period pursuant to Section 7.01 (a) or (b) (Financial
Statements), as applicable. Notwithstanding anything to the contrary set forth
in this Agreement (including the then effective Consolidated Total Leverage
Ratio), if the Borrower shall fail to deliver such financial statements within
any of the time periods specified in Section 7.01 (a) or (b) (Financial
Statements), as applicable, the Applicable Margin from and including the 46th
day after the end of such fiscal quarter or the 91st day after the end of such
fiscal year, as the case may be, to and including the date the Borrower delivers
to the Administrative Agents such financial statements shall equal the highest
possible Applicable Margin provided for by this definition.

      "Approved Deposit Account" means a Deposit Account that is the subject of
an effective Deposit Account Control Agreement and that is maintained by any
Loan Party with a Deposit Account Bank. The term "Approved Deposit Account"
includes all monies on deposit in a Deposit Account and all certificates and
instruments, if any, representing or evidencing such Deposit Account.

                                        3


      "Approved Electronic Communications" means each notice, demand,
communication, information, document and other material that any Loan Party is
obligated to, or otherwise chooses to, provide to the Agents pursuant to any
Loan Document or the transactions contemplated therein, including (a) any
Joinder Agreement, any joinder to the Pledge Agreement or Security Agreement and
any other written Contractual Obligation delivered or required to be delivered
in respect of any Loan Document or the transactions contemplated therein and (b)
any financial statement, financial and other report, notice, request,
certificate and other information material; provided, however, that, "Approved
Electronic Communication" shall exclude (x) any Notice of Borrowing, Letter of
Credit Application, Swing Line Loan Request, Notice of Conversion or
Continuation, and any other notice, demand, communication, information, document
and other material relating to a request for a new, or a conversion of an
existing, Borrowing or other Credit Extension, (ii) any notice pursuant to
Section 2.07 (Optional Prepayments) and Section 2.08 (Mandatory Prepayments) and
any other notice relating to the payment of any principal or other amount due
under any Loan Document prior to the scheduled date therefor, (iii) all notices
of any Default or Event of Default and (iv) any notice, demand, communication,
information, document and other material required to be delivered to satisfy any
of the conditions set forth in Article V (Conditions Precedent) or Section
2.03(b) (Procedures for issuance and Amendment of Letters of Credit;
Auto-Renewal of Letters of Credit) or any other condition to any Borrowing or
other extension of credit hereunder or any condition precedent to the
effectiveness of this Agreement.

      "Approved Electronic Platform" has the meaning specified in Section 10.03
(Posting of Approved Electronic Communications).

      "Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

      "Approved Securities Intermediary" means a "securities intermediary" or
"commodity intermediary" (as such terms are defined in the UCC) selected or
approved by the Administrative Agents.

      "Ardent Acquired Business" means AHS, BHC and BHC's Subsidiaries which,
together with BHC, constitute, immediately prior to the consummation of the
Ardent Acquisition, the behavioral healthcare business of Ardent LLC.

      "Ardent Acquisition" means the purchase by the Borrower of all of the
outstanding Capital Stock of AHS pursuant to the terms of the Ardent Acquisition
Agreement.

      "Ardent Acquisition Agreement" means that certain Stock Purchase
Agreement, dated as of March 10, 2005, by and among Ardent LLC, as seller, AHS
and the Borrower, as purchaser, as the same may be amended, supplemented or
otherwise modified in accordance with the terms of this Agreement.

      "Ardent LLC" means Ardent Health Services LLC, a Delaware limited
liability company.

      "Arrangers" means each of (i) CGMI, in its capacity as joint lead arranger
and joint book-running manager with respect to the Revolving Credit Facility and
as sole lead arranger and sole book-running manager the Term Loan Facility and
(ii) Banc of America Securities, in its capacity as joint lead arranger and
joint book-running manager with respect to the Revolving Credit Facility.

      "Assignment and Assumption" means an Assignment and Assumption
substantially in the form of Exhibit G (Form of Assignment and Assumption).

      "Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.

                                        4


      "Attributable Indebtedness" means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
(b) in respect of any Synthetic Lease, the capitalized amount of the remaining
lease payments under the relevant lease that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a capital lease, (c) in respect of any Securitization
Transaction of any Person, the outstanding principal amount of such financing,
after taking into account reserve accounts and making appropriate adjustments,
determined by the Administrative Agents in their reasonable judgment, and (d) in
the case of any Sale and Leaseback Transaction, the present value (discounted in
accordance with GAAP at the debt rate implied in the applicable lease) of the
obligations of the lessee for rental payments during the term of such lease).

      "Audited Financial Statements" means (a) in the case of the Borrower and
its Subsidiaries (immediately prior to giving effect to the Ardent Acquisition),
the audited consolidated balance sheet of the Borrower and such Subsidiaries for
the fiscal year ended December 31, 2004 and (b) in the case of AHS and its
Subsidiaries (immediately prior to giving effect to the Ardent Acquisition, the
audited consolidated balance sheet of AHS and such Subsidiaries (other than any
of its Subsidiaries that were transferred to Ardent LLC in connection with the
Reverse Spin-Off), for the fiscal year ended December 31, 2004, in each case,
together with the related consolidated statements of income or operations,
shareholders' equity and cash flows of the Borrower and its Subsidiaries for
such fiscal year, including the notes thereto.

      "Available Credit" means, at any time, (a) the then effective Revolving
Credit Commitments minus (b) the aggregate Revolving Credit Outstandings at such
time.

      "Availability Period" means, with respect to the Revolving Credit
Commitments, the period from and including the Closing Date to the earliest of
(a) the Revolving Credit Termination Date, (b) the date of termination of the
Aggregate Revolving Credit Commitments pursuant to Section 2.05 (Reduction and
Termination of the Commitments), and (c) the date of termination of the
commitment of each Lender to make Loans and of the obligation of the L/C Issuer
to make L/C Credit Extensions pursuant to Section 9.02 (Remedies Upon Event of
Default).

      "Bailee's Letter" means a letter in form and substance reasonably
acceptable to the Agents and executed by any Person (other than a Loan Party)
that is in possession of inventory on behalf of such Loan Party pursuant to
which such Person acknowledges, among other things, the Collateral Agent's Lien
with respect thereto.

      "Bank of America" has the meaning specified in the introductory paragraph
to this Agreement.

      "Banc of America Securities" means Banc of America Securities LLC.

      "Base Rate" means, for any period, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate per annum shall be equal at
all times to the highest of the following:

            (a) the rate of interest announced publicly by Citibank in New York,
      New York, from time to time, as Citibank's base rate;

            (b) the sum (adjusted to the nearest 0.25% or, if there is no
      nearest 0.25%, to the next higher 0.25%) of (i) 0.50% per annum, (ii) the
      rate per annum obtained by dividing (A) the latest three-week moving
      average of secondary market morning offering rates in the United States
      for three-month certificates of deposit of major United States money
      market banks, such three-week moving average being determined weekly on
      each Monday (or, if any such day is not a Business

                                        5


      Day, on the next succeeding Business Day) for the three-week period ending
      on the previous Friday by Citibank on the basis of such rates reported by
      certificate of deposit dealers to and published by the Federal Reserve
      Bank of New York or, if such publication shall be suspended or terminated,
      on the basis of quotations for such rates received by Citibank from three
      New York certificate of deposit dealers of recognized standing selected by
      Citibank, by (B) a percentage equal to 100% minus the average of the daily
      percentages specified during such three-week period by the Federal Reserve
      Board for determining the maximum reserve requirement (including any
      emergency, supplemental or other marginal reserve requirement) for
      Citibank in respect of liabilities consisting of or including (among other
      liabilities) three-month U.S. dollar nonpersonal time deposits in the
      United States and (iii) the average during such three-week period of the
      maximum annual assessment rates estimated by Citibank for determining the
      then current annual assessment payable by Citibank to the Federal Deposit
      Insurance Corporation (or any successor) for insuring Dollar deposits in
      the United States; and

            (c) 0.50% per annum plus the Federal Funds Rate.

      "Base Rate Loan" means a Loan that bears interest based on the Base Rate.

      "BHC" means Behavioral Healthcare Corporation, a Delaware corporation.

      "Blockage Notice" means a notice delivered pursuant to any Deposit Account
Control Agreement by the Collateral Agent pursuant to which the Collateral Agent
shall notify the applicable Deposit Account Bank that it may no longer accept
instructions from the applicable Loan Party.

      "Borrower" has the meaning specified in the introductory paragraph hereto.

      "Borrowing" means a Revolving Credit Borrowing or a Term Loan Borrowing.

      "Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, the State of New York and, if such day relates to any Eurodollar Rate
Loan, means any such day on which dealings in Dollar deposits are conducted by
and between banks in the London interbank eurodollar market.

      "Businesses" means, at any time, a collective reference to the businesses
operated by the Borrower and its Subsidiaries at such time.

      "Capital Expenditures" means, with respect to any Person for any period,
the aggregate of amounts that would be reflected as additions to property, plant
or equipment on a consolidated balance sheet of such Person and its
Subsidiaries, but excluding (a) interest capitalized during construction, (b)
expenditures of proceeds of insurance settlements, condemnation awards and other
settlements in respect of lost, destroyed, damaged or condemned assets,
equipment or other property to the extent such expenditures are made to replace
or repair such lost, destroyed, damaged or condemned assets, equipment or other
property or otherwise to acquire similar assets or properties useful in the
business of Borrower or its Subsidiaries with such proceeds, (c) expenditures to
acquire equipment or other property purchased substantially concurrently with
the trade-in of existing equipment or other property to the extent of the
trade-in credit thereof, and (d) expenditures made with respect to the purchase
consideration for Permitted Acquisitions.

      "Capital Lease" means, with respect to any Person, any lease of, or other
arrangement conveying the right to use, property by such Person as lessee that
would be accounted for as a capital lease on a balance sheet of such Person
prepared in conformity with GAAP.

                                        6


      "Capital Stock" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.

      "Cash Collateralize" has the meaning specified in Section 2.03(g)(Cash
Collateral).

      "Cash Equivalents" means, as at any date,

            (a) securities issued or directly and fully guaranteed or insured by
      the United States or any agency or instrumentality thereof (provided that
      the full faith and credit of the United States is pledged in support
      thereof) having maturities of not more than twelve months from the date of
      acquisition;

            (b) Dollar denominated time deposits and certificates of deposit of
      (i) any Lender, (ii) any domestic commercial bank of recognized standing
      having capital and surplus in excess of $500,000,000 or (iii) any bank
      whose short-term commercial paper rating from S&P is at least A-1 or the
      equivalent thereof or from Moody's is at least P-1 or the equivalent
      thereof (any such bank being an "Approved Institution"), in each case with
      maturities of not more than 270 days from the date of acquisition;

            (c) commercial paper and variable or fixed rate notes issued by any
      Approved Institution (or by the parent company thereof) or any variable
      rate notes issued by, or guaranteed by, any domestic corporation rated A-1
      (or the equivalent thereof) or better by S&P or P-1 (or the equivalent
      thereof) or better by Moody's and maturing within six months of the date
      of acquisition;

            (d) repurchase agreements entered into by any Person with a bank or
      trust company (including any of the Lenders) or recognized securities
      dealer having capital and surplus in excess of $500,000,000 for direct
      obligations issued by or fully guaranteed by the United States in which
      such Person shall have a perfected first priority security interest
      (subject to no other Liens) and having, on the date of purchase thereof, a
      fair market value of at least 100% of the amount of the repurchase
      obligations;

            (e) debt obligations issued by any domestic corporation or any
      domestic government instrumentality, in each case rated A-1 (or the
      equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
      better by Moody's and maturing within six months of the date of
      acquisition; and

            (f) Investments, classified in accordance with GAAP as current
      assets, in money market investment programs registered under the
      Investment Company Act of 1940 which are administered by reputable
      financial institutions having capital of at least $500,000,000 and the
      portfolios of which are limited to Investments of the character described
      in the foregoing clauses (a) through (e).

      "Cash Interest Charges" means, for any period for the Borrower and its
Subsidiaries on a consolidated basis, the Consolidated Interest Charges for such
period less the Non-Cash Interest Charges for such period.

                                        7


      "Cash Management Document" means any certificate, agreement or other
document executed by any Loan Party in respect of the Cash Management
Obligations of any Loan Party.

      "Cash Management Obligation" means, as applied to any Person, any direct
or indirect liability, contingent or otherwise, of such Person in respect of
cash management services (including treasury, depository, overdraft, credit or
debit card, electronic funds transfer and other cash management arrangements)
provided by any Administrative Agent, any Lender or any Affiliate of any of them
(regardless of whether these or similar services were provided prior to the date
hereof by any Administrative Agent, any Lender or any Affiliate or any of them),
including obligations for the payment of fees, interest, charges, expenses,
attorneys' fees and disbursements in connection therewith.

      "CGMI" means Citigroup Global Markets Inc.

      "Change of Control" means an event or series of events by which:

            (a) any "person" or "group" (as such terms are used in Sections
      13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any
      employee benefit plan of such person or its subsidiaries, and any person
      or entity acting in its capacity as trustee, agent or other fiduciary or
      administrator of any such plan) becomes the "beneficial owner" (as defined
      in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except
      that a person or group shall be deemed to have "beneficial ownership" of
      all Capital Stock that such person or group has the right to acquire (such
      right, an "option right"), whether such right is exercisable immediately
      or only after the passage of time), directly or indirectly, of twenty-five
      percent (25%) of the Capital Stock of the Borrower entitled to vote for
      members of the board of directors or equivalent governing body of the
      Borrower on a fully diluted basis (and taking into account all such
      securities that such person or group has the right to acquire pursuant to
      any option right); or

            (b) during any period of 12 consecutive months, a majority of the
      members of the board of directors or other equivalent governing body of
      the Borrower cease to be composed of individuals (i) who were members of
      that board or equivalent governing body on the first day of such period,
      (ii) whose election or nomination to that board or equivalent governing
      body was approved by individuals referred to in clause (i) above
      constituting at the time of such election or nomination at least a
      majority of that board or equivalent governing body or (iii) whose
      election or nomination to that board or other equivalent governing body
      was approved by individuals referred to in clauses (i) and (ii) above
      constituting at the time of such election or nomination at least a
      majority of that board or equivalent governing body (excluding, in the
      case of both clause (ii) and clause (iii), any individual whose initial
      nomination for, or assumption of office as, a member of that board or
      equivalent governing body occurs as a result of an actual or threatened
      solicitation of proxies or consents for the election or removal of one or
      more directors by any person or group other than a solicitation for the
      election of one or more directors by or on behalf of the board of
      directors); or

            (c) a "Change of Control" (or any comparable term) occurs under, and
      as defined in, any of the Senior Subordinated Notes Documents or the
      Senior Bridge Credit Agreement.

      "Citibank" means Citibank, N.A.

      "Citigroup" means CNAI and/or any of its affiliates as CNAI shall
determine to be appropriate to provide the services contemplated herein,
including CGMI and Citibank.

      "Closing Date" means the date on which each of the conditions precedent
set forth in Section

                                        8


5.01 (Conditions Precedent to Initial Credit Extensions) have been satisfied or
duly waived in accordance with the terms of this Agreement.

      "Closing Date Equity Issuance" means the issuance by the Borrower to
Ardent LLC a number of shares of the Borrower's common stock in an amount
sufficient to equal an aggregate sale price of $60,000,000, such sale price to
be determined based upon the average of the volume-weighted average sales price
of the Company's common stock over a 20 day trading day period ending two
trading days prior to the Closing Date (the "Company Stock Price"); provided,
that (i) in no event shall the maximum Company Stock Price exceed $45.86 per
share and (ii) in no event shall the minimum Company Stock Price be less than
$33.90 per share.

      "CMS" means the Centers for Medicare and Medicaid Services of HHS and any
successor thereof and any predecessor thereof, including the United States
Health Care Financing Administration.

      "CNAI" has the meaning specified in the introductory paragraph to this
Agreement.

      "Collateral" means a collective reference to all real and personal
Property with respect to which Liens in favor of the Collateral Agent or any
other Agent are purported to be granted pursuant to and in accordance with the
terms of the Collateral Documents.

      "Collateral Access Agreement" means a letter in form and substance
reasonably acceptable to the Agents and executed by a landlord or lessor in
respect of the Collateral of any Loan Party located at any leased premises of
such Loan Party pursuant to which such landlord or lessor, among other things,
acknowledges the security interest in the Collateral granted by the applicable
Loan Party to the Collateral Agent, grants the Collateral Agent a right to
access the leased premises for purposes of taking actions with respect to the
Collateral (including removal thereof) and agrees that any Lien on the
Collateral which it may have is subordinate to the Lien of the Collateral Agent.

      "Collateral Agent" has the meaning specified in the introductory paragraph
to this Agreement.

      "Collateral Documents" means a collective reference to the Security
Agreement, Pledge Agreement, the Mortgages and such other security documents as
may be executed and delivered by the Loan Parties pursuant to the terms of
Section 7.15 (Additional Collateral).

      "Commitments" means, collectively, the Revolving Credit Commitments and
the Term Loan Commitments.

      "Compliance Certificate" means a certificate substantially in the form of
Exhibit F (Form of Compliance Certificate).

      "Confidential Borrower Information" means all information received from
the Loan Parties and their agents, relating to the Loan Parties or their
business, other than any such information that is, or subsequently becomes,
available to any Lender or Agent on a nonconfidential basis prior to disclosure
by the Loan Parties.

      "Confidential Information Memorandum" means the confidential information
memorandum dated June 2005 used by the Arrangers and the Agents in connection
with the syndication of the Revolving Credit Facility and the Term Loan
Facility.

      "Consolidated Current Assets" means, with respect to any Person at any
date, the total consolidated current assets (other than cash and Cash
Equivalents) of such Person and its Subsidiaries at

                                        9


such date.

      "Consolidated Current Liabilities" means, with respect to any Person at
any date, all liabilities of such Person and its Subsidiaries at such date that
should be classified as current liabilities on a consolidated balance sheet of
such Person and its Subsidiaries, but excluding, in the case of the Borrower the
sum of (a) the principal amount of any current portion of long-term Funded
Indebtedness and (b) (without duplication of clause (a) above) the then
outstanding principal amount of the Loans.

      "Consolidated EBITDA" means, for any period for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to (a) Consolidated Net
Income for such period plus (b) the sum of, in each case to the extent deducted
in calculating such Consolidated Net Income but without duplication, (i)
Consolidated Interest Charges for such period, (ii) the provision for federal,
state, local and foreign income taxes paid by the Borrower and its Subsidiaries
for such period, (iii) the amount of depreciation, depletion and amortization
expense for such period, (iv) the amount of any loss on refinancing of long term
debt incurred during the twelve month period ending on (and including) the
Closing Date and (v) all other non-cash charges and non-cash losses for such
period, including the amount of any compensation deduction as the result of any
grant of Capital Stock to employees, officers, directors or consultants minus
(c) the sum of, in each case to the extent included in calculating such
Consolidated Net Income, but without duplication, (i) any credit for federal,
state, local and foreign income taxes paid by the Borrower and its Subsidiaries
for such period, (ii) interest income, (iii) gains from extraordinary items for
such period, (iv) any aggregate gain (but not any aggregate net loss) from the
sale, exchange or other disposition of capital assets by such person and (v) any
other non-cash gains or other items which have been added in determining
Consolidated Net Income, including any reversal of a charge referred to in
clause (b)(v) above by reason of a decrease in the value of any Capital Stock,
all as determined in accordance with GAAP.

      "Consolidated Funded Indebtedness" means Funded Indebtedness of the
Borrower and its Subsidiaries on a consolidated basis determined in accordance
with GAAP.

      "Consolidated Interest Charges" means, for any period for the Borrower and
its Subsidiaries on a consolidated basis, all interest expense of the Borrower
and its Subsidiaries for such period determined in accordance with GAAP
(including the portion of rent expense of the Borrower and its Subsidiaries with
respect to such period under Capital Leases that is treated as interest in
accordance with GAAP).

      "Consolidated Interest Coverage Ratio" means, with respect to the Borrower
and its Subsidiaries as of any date of determination, the ratio of (i)
Consolidated EBITDA for the period of four fiscal quarters most recently ended
to (ii) Consolidated Interest Charges of such Person for such period.

      "Consolidated Net Income" means, for any period for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries for such period as determined in accordance with GAAP, but
excluding for all purposes extraordinary gains and related tax effects thereon.

      "Consolidated Scheduled Funded Debt Payments" means, for any period for
the Borrower and its Subsidiaries on a consolidated basis, the sum of all
scheduled payments of principal on Consolidated Funded Indebtedness, as
determined in accordance with GAAP. For purposes of this definition, "scheduled
payments of principal" (a) shall be determined without giving effect to any
reduction of such scheduled payments resulting from the application of any
voluntary or mandatory prepayments made during the applicable period, (b) shall
be deemed to include the Attributable Indebtedness in respect of capital leases,
Synthetic Leases and Sale and Leaseback Transactions and (c) shall not include
any voluntary prepayments or mandatory prepayments required pursuant to Section
2.05 (Reduction and Termination of the Commitments).

                                       10


      "Consolidated Total Leverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated Funded Indebtedness as of such date
to (b) Consolidated EBITDA for the period of the four fiscal quarters most
recently ended.

      "Contract Provider" means any Person or any employee, agent or
subcontractor of such Person who provides professional health care services
under or pursuant to any contract with the Borrower or any Subsidiary.

      "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.

      "Control" has the meaning specified in the definition of "Affiliate."

      "Corporate Chart" means a corporate organizational chart, list or other
similar document in each case in form reasonably acceptable to the
Administrative Agent and setting forth, for each Person that is a Loan Party,
that is subject to Section 7.12 (Additional Subsidiaries and Guarantees) or that
is a Subsidiary of any of them, (a) the full legal name of such Person (and any
trade name, fictitious name or other name such Person may have had or operated
under), (b) the jurisdiction of organization, the organizational number (if any)
and the tax identification number (if any) of such Person, (c) the location of
such Person's chief executive office (or sole place of business) and (d) the
number of shares of each class of such Person's Capital Stock authorized (if
applicable), the number outstanding as of the date of delivery and the number
and percentage of such outstanding shares for each such class owned (directly or
indirectly) by any Loan Party or any Subsidiary of any of them.

      "Credit Extension" means each of the following: (a) a Borrowing and (b) a
L/C Credit Extension.

      "Customary Permitted Liens" means Permitted Liens of the type described in
clauses (c), (d), (e), (f), (g) and (k) of Section 8.01 (Liens).

      "Debt Issuance" means the incurrence of Indebtedness of the type specified
in clause (a) of the definition of "Funded Indebtedness" by the Borrower or any
of its Subsidiaries, other than the Senior Bridge Facility, the New Senior
Subordinated Notes and other Indebtedness permitted under Section 8.03
(Indebtedness); provided, that notwithstanding anything to the contrary in the
foregoing, Permitted Subordinated Indebtedness incurred pursuant to Section
8.03(k)(ii) (Indebtedness) shall be considered a "Debt Issuance" for purposes of
this Agreement.

      "Debtor Relief Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

      "Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.

      "Default Rate" means an interest rate equal to:

      (a) in the case of Base Rate Loans, the Base Rate plus the Applicable
Margin for such Loans plus 2% per annum;

      (b) in the case of Eurodollar Rate Loans, (x) prior to the expiration of
the then applicable

                                       11


Interest Period for such Loans, the Eurodollar Rate plus the Applicable Margin
for such Loans plus 2% per annum and (y) thereafter, the Base Rate plus the
Applicable Margin for Revolving Loans that are maintained as Base Rate Loans
plus 2% per annum; and

      (c) for all other Obligations, the Base Rate plus the Applicable Margin
for Revolving Loans that are maintained as Base Rate Loans plus 2% per annum.

      "Defaulting Lender" has the meaning specified in Section 2.02 (Borrowings,
Conversions and Continuations of Loans).

      "Deposit Account" has the meaning given to such term in the UCC.

      "Deposit Account Bank" means a financial institution selected or approved
by the Administrative Agents.

      "Deposit Account Control Agreement" means a letter agreement, in form and
substance satisfactory to the Agents, executed by the relevant Loan Party, the
Collateral Agent and the relevant Deposit Account Bank.

      "Disposition" or "Dispose" means the sale, transfer, license, lease or
other disposition (including any Sale and Leaseback Transaction) of any Property
by the Borrower or any Subsidiary (including the Capital Stock of any
Subsidiary), including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith, but excluding (a) the sale, lease, license, transfer or
other disposition of inventory in the ordinary course of business of the
Borrower and its Subsidiaries, (b) the sale, lease, license, transfer or other
disposition of machinery and equipment no longer used or useful in the conduct
of business of the Borrower and its Subsidiaries, (c) any sale, lease, license,
transfer or other disposition of Property by the Borrower or any Subsidiary to
any Loan Party, (d) any Involuntary Disposition by the Borrower or any
Subsidiary and (e) any sale, lease, license, transfer or other disposition of
Property by any Foreign Subsidiary to another Foreign Subsidiary.

      "Disposition/Involuntary Disposition Deferred Amount" means, with respect
to any Reinvestment Event arising from a Disposition or Involuntary Disposition,
the aggregate Net Cash Proceeds received by any Loan Party in connection
therewith that are not initially applied to prepay the Loans pursuant to Section
2.08 (Mandatory Prepayments) as a result of the delivery of a Reinvestment
Notice.

      "Dollar" and "$" mean lawful money of the United States.

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

      "Earn-Out Obligations" means, with respect to any Acquisition, all
deferred purchase price obligations (including earn-out payment obligations and
other contingent payment obligations) incurred by the Borrower or any of its
Subsidiaries pursuant to the documentation for such Acquisition (other than any
portion of such obligations payable in Capital Stock of the Borrower). For
purposes of Section 8.03 (Indebtedness), the amount of any "Earn-Out Obligation"
shall be the liability in respect thereof as recorded on the balance sheet of
the Borrower and its Subsidiaries in accordance with GAAP.

      "Eligible Assignee" means (a) a Lender or any Affiliate or Approved Fund
of such Lender, (b) a bank, savings and loan association, savings bank, finance
company, insurance company or any other financial institution or fund, in each
case reasonably acceptable to the applicable Administrative Agent

                                       12


and regularly engaged in making, purchasing or investing in loans and having a
net worth, determined in accordance with GAAP, in excess of $250,000,000 or, to
the extent net worth is less than such amount, a bank, savings and loan
association, savings bank, finance company, insurance company, other financial
institution or fund, reasonably acceptable to the applicable Administrative
Agent and, unless an Event of Default has occurred and is continuing, the
Borrower (such approval not to be unreasonably withheld or delayed) or (c) any
other Person (other than a natural person) approved by (i) the applicable
Administrative Agent, the L/C Issuer (in the case of any Eligible Assignee of
Revolving Loans and Revolving Credit Commitments) and the Swing Line Lender (in
the case of any Eligible Assignee of Revolving Loans and Revolving Credit
Commitments) and (ii) unless an Event of Default has occurred and is continuing,
the Borrower (such approval not to be unreasonably withheld or delayed);
provided that notwithstanding the foregoing, "Eligible Assignee" shall not
include the Borrower or any of the Borrower's Affiliates or Subsidiaries.

      "Entitlement Holder" has the meaning given to such term in the UCC.

      "Entitlement Order" has the meaning given to such term in the UCC.

      "Environmental Laws" means any and all federal, state, local, foreign and
other applicable statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or governmental restrictions or other legal requirements (a) related to Releases
or threatened Releases of any Hazardous Materials into the environment
(including soil, surface water, groundwater or air), (b) governing the use,
treatment, storage, disposal, transport or handling of Hazardous Materials or
(c) related to the protection of the environment, natural resources or human
health or safety (as it relates to environmental protection). Such
"Environmental Laws" include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C. Section
1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C. Section 136 et seq.); the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Section 6901 et seq.); the Toxic Substance Control
Act, as amended (15 U.S.C. Section 2601 et seq.); the Clean Air Act, as amended
(42 U.S.C. Section 7401 et seq.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. Section 1251 et seq.); the Occupational Safety and Health
Act, as amended (29 U.S.C. Section 651 et seq.); the Safe Drinking Water Act, as
amended (42 U.S.C. Section 300f et seq.); and each of their state and local
counterparts or equivalents and any transfer of ownership notification or
approval statute, including the Industrial Site Recovery Act (N.J. Stat. Ann.
Section 13:1K-6 et seq.).

      "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the Release or threatened Release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

      "Equity Issuance" means any issuance by the Borrower or any Subsidiary to
any Person of shares of its Capital Stock, other than (a) any issuance of shares
of its Capital Stock pursuant to the exercise of options or warrants, (b) any
issuance of shares of its Capital Stock pursuant to the conversion of any debt
securities to equity or the conversion of any class equity securities to any
other class of equity securities and (c) the Closing Date Equity Issuance.

      "Equity Issuance Deferred Amount" means, with respect to any Reinvestment
Event arising from an Equity Issuance to finance a proposed Permitted
Acquisition, an amount equal to 50% of the aggregate

                                       13


Net Cash Proceeds received by any Loan Party in connection therewith that are
not initially applied to prepay the Loans pursuant to Section 2.08(a) (Mandatory
Prepayments) as a result of the delivery of a Reinvestment Notice.

      "ERISA" means the Employee Retirement Income Security Act of 1974.

      "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o)
of the Internal Revenue Code for purposes of provisions relating to Section 412
of the Internal Revenue Code).

      "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.

      "Eurodollar Base Rate" means, with respect to any Interest Period for any
Eurodollar Rate Loan, the rate determined by the applicable Administrative Agent
to be the offered rate for deposits in Dollars for the applicable Interest
Period appearing on the Dow Jones Markets Telerate Page 3750 as of 11:00 a.m.,
London time, on the second full Business Day next preceding the first day of
each Interest Period. In the event that such rate does not appear on the Dow
Jones Markets Telerate Page 3750 (or otherwise on the Dow Jones Markets screen),
the Eurodollar Base Rate for the purposes of this definition shall be determined
by reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the applicable Administrative Agent or,
in the absence of such availability, the Eurodollar Base Rate shall be the rate
of interest determined by the applicable Administrative Agent to be the rate per
annum at which deposits in Dollars are offered by the principal office of such
Administrative Agent in London to major banks in the London interbank market at
11:00 a.m. (London time) two Business Days before the first day of such Interest
Period in an amount substantially equal to the Eurodollar Rate Loan of such
Administrative Agent for a period equal to such Interest Period.

      "Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined by the applicable
Administrative Agent to be equal to the quotient obtained by dividing (a) the
Eurodollar Base Rate for such Eurodollar Rate Loan for such Interest Period by
(b) one minus the Eurodollar Reserve Percentage for such Eurodollar Rate Loan
for such Interest Period.

      "Eurodollar Rate Loan" means a Loan that bears interest at a rate based on
the Eurodollar Rate.

      "Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to five
decimal places) in effect on such day, whether or not applicable to any Lender,
under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the

                                       14


effective date of any change in the Eurodollar Reserve Percentage.

      "Event of Default" has the meaning specified in Section 9.01 (Events of
Default).

      "Excess Cash Flow" means, for the Borrower for any period, (a)
Consolidated EBITDA of the Borrower for such period plus (b) the excess, if any,
of the Working Capital of the Borrower at the beginning of such period over the
Working Capital of the Borrower at the end of such period minus (c) the sum of
(without duplication) (i) scheduled and mandatory cash principal payments on the
Loans during such period and optional cash principal payments on the Loans
during such period (but only, in the case of payment in respect of Revolving
Loans, to the extent that the Revolving Credit Commitments are permanently
reduced by the amount of such payments), (ii) Consolidated Scheduled Funded Debt
Payments made by the Borrower or any of its Subsidiaries during such period on
other Indebtedness to the extent such other Indebtedness and payments are
permitted by this Agreement, (iii) the aggregate principal amount of the New
Senior Subordinated Notes voluntarily prepaid, redeemed or repurchased but only
to the extent any such prepayment, redemption or repurchase is expressly
permitted under this Agreement; (iv) scheduled payments made by the Borrower or
any of its Subsidiaries on Capital Leases to the extent such Capital Leases and
payments are permitted by this Agreement, (v) Capital Expenditures made by the
Borrower or any of its Subsidiaries during such period to the extent not
prohibited by this Agreement, (vi) the amount of Cash Interest Charges paid by
the Borrower or any of its Subsidiaries during such period, (vii) the amount of
federal, state, local and foreign income taxes paid in cash by the Borrower and
its Subsidiaries for such period, (viii) expenditures made with respect to the
purchase consideration for Permitted Acquisitions (to the extent not financed
from the proceeds of any Disposition or any Equity Issuance or from the issuance
or assumption of Indebtedness) and (ix) the excess, if any, of the Working
Capital of the Borrower at the end of such period over the Working Capital of
the Borrower at the beginning of such period.

      "Exchange Indenture" has the meaning specified in the Senior Bridge Credit
Agreement

      "Exchange Securities" has the meaning specified in the Senior Bridge
Credit Agreement.

      "Excluded Property" means, with respect to any Loan Party:

      (a) any owned Real Property that has a fair market value of less than
$2,500,000 individually and $15,000,000 in the aggregate for all such Real
Property, unless requested by any Administrative Agent or the Required Lenders;

      (b) any Specified Leased Property;

      (c) any owned or leased real or personal Property which is located outside
of the United States unless requested by any Administrative Agent or the
Required Lenders;

      (d) any leased personal Property unless requested by any Administrative
Agent or the Required Lenders;

      (e) any personal Property (including motor vehicles) in respect of which
perfection of a Lien is not either (i) governed by the UCC or (ii) effected by
appropriate evidence of the Lien being filed in either the United States
Copyright Office or the United States Patent and Trademark Office, unless
requested by any Administrative Agent or the Required Lenders;

      (f) any Property owned by any Loan Party that is subject to a purchase
money Lien or a Capital Lease permitted hereunder if the contract or other
agreement in which such Lien is granted (or in

                                       15


the documentation providing for such Capital Lease) prohibits or requires the
consent of any Person other than the Borrower and/or its Affiliates as a
condition to the creation of any other Lien on such Property;

      (g) any permit, lease, license, contract, instrument or other agreement if
the grant of a security interest in such permit, lease, license, contract,
instrument or other agreement is prohibited by the terms thereof or by Law and
would result in the termination of such permit, lease, license, contract,
instrument or other agreement, but only to the extent that (i) after reasonable
efforts, consent from the relevant party or parties has not been obtained and
(ii) any such prohibition could not be rendered unenforceable or otherwise
deemed ineffective pursuant to the UCC or any other applicable Law (including
Debtor Relief Laws) or principles of equity; and

      (h) any Property (other than Accounts) of Aeries Healthcare Illinois, Inc.
that is subject to a Lien securing any HUD Financing permitted hereunder;

      provided, however, the term "Excluded Property" shall not include any
Proceeds, substitutions or replacements of Excluded Property (unless such
Proceeds, substitutions or replacements would constitute Excluded Property).

      "Excluded Subsidiaries" means, collectively, (i) PSI Surety, (ii) each HUD
Financing Subsidiary and (iii) each Immaterial Subsidiary.

      "Exclusion Event" means any event or events resulting in the exclusion of
the Borrower or any Subsidiary or any of the Facilities from participation in
any Medical Reimbursement Program.

      "Existing Administrative Agent" means Bank of America, in its capacity as
Administrative Agent under the Existing Credit Agreement.

      "Existing Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of December 21, 2004, among the Borrower, the Subsidiaries
of the Borrower party thereto as guarantors, the lenders party thereto and the
Existing Administrative Agent.

      "Existing Senior Subordinated Notes" means the Borrower's existing 10 5/8%
Senior Subordinated Notes due 2013.

      "Existing Senior Subordinated Notes Documents" means (a) the Existing
Senior Subordinated Notes Indenture, (b) the Existing Senior Subordinated Notes,
(c) any guaranty agreement given by any Subsidiary in respect of the Existing
Senior Subordinated Notes and (d) all other documents, agreements and
instruments relating to the Existing Senior Subordinated Notes.

      "Existing Senior Subordinated Notes Indenture" means the Indenture dated
as of June 30, 2003 between the Borrower, the Subsidiaries party thereto as
guarantors and Wachovia Bank, National Association, as trustee, governing the
terms of the Existing Senior Subordinated Notes.

      "Extraordinary Receipts" means any cash or Cash Equivalents received after
the Closing Date by the Borrower or any of its Subsidiaries not in the ordinary
course of business arising from (i) indemnity payments and (ii) any purchase
price adjustment received in connection with the Ardent Acquisition or any other
Acquisition.

      "Facilities" means, at any time, a collective reference to the facilities
and Real Properties owned, leased, managed or operated by the Borrower or any
Subsidiary.

                                       16


      "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the applicable Administrative Agent from three Federal
funds brokers of recognized standing selected by it.

      "Fee Letter" means the letter agreement, dated as of June 30, 2005, among
the Borrower and the Administrative Agents.

      "Fixed Assets" means, as of any date of determination, plant, property and
equipment of the Borrower and its Subsidiaries on a consolidated basis on such
day as determined in accordance with GAAP.

      "Foreign Lender" has the meaning specified in Section 11.15(a)(i) (Tax
Forms).

      "Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.

      "FRB" means the Board of Governors of the Federal Reserve System of the
United States.

      "Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course.

      "Funded Indebtedness" means, as to any Person at a particular time,
without duplication, all of the following, whether or not included as
indebtedness or liabilities in accordance with GAAP:

            (a) all obligations for borrowed money, whether current or long-term
      (including the Obligations) and all obligations of such Person evidenced
      by bonds, debentures, notes, loan agreements or other similar instruments;

            (b) all purchase money Indebtedness;

            (c) the principal portion of all obligations under conditional sale
      or other title retention agreements relating to Property purchased by such
      Person (other than customary reservations or retentions of title under
      agreements with suppliers entered into in the ordinary course of
      business);

            (d) the maximum amount available to be drawn under letters of credit
      (including standby and commercial), bankers' acceptances, bank guaranties,
      surety bonds and similar instruments;

            (e) all obligations in respect of the deferred purchase price of
      Property or services (other than trade accounts payable in the ordinary
      course of business);

            (f) Attributable Indebtedness in respect of Capital Leases,
      Synthetic Leases, Sale and Leaseback Transactions and Securitization
      Transactions;

            (g) all preferred stock or other equity interests providing for
      mandatory redemptions, sinking fund or like payments prior to the Term
      Loan Maturity Date ("Redeemable Stock");

                                       17


      provided that Redeemable Stock shall not include any preferred or other
      equity interest subject to mandatory redemption if (i) such mandatory
      redemption may be satisfied by delivering common stock or some other
      equity interest not subject to mandatory redemption or (ii) such mandatory
      redemption is triggered solely by reason of a "change of control" and is
      not required to be paid until after the Obligations are paid in full;

            (h) all Funded Indebtedness of others to the extent secured by (or
      for which the holder of such Funded Indebtedness has an existing right,
      contingent or otherwise, to be secured by) any Lien on, or payable out of
      the proceeds of production from, Property owned or acquired by such
      Person, whether or not the obligations secured thereby have been assumed;

            (i) all Guarantees with respect to Funded Indebtedness of the types
      specified in clauses (a) through (h) above of another Person; and

            (j) all Funded Indebtedness of the types referred to in clauses (a)
      through (i) above of any partnership or joint venture (other than a joint
      venture that is itself a corporation or limited liability company) in
      which such Person is a general partner or joint venturer, unless such
      Funded Indebtedness is expressly made non-recourse to such Person.

      "GAAP" means generally accepted accounting principles in the United States
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, consistently applied
and as in effect from time to time.

      "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

      "Governmental Reimbursement Program Cost" means, with respect to any
Person, the sum of:

            (a) all amounts (including punitive and other similar amounts)
      agreed to be paid or payable (i) in settlement of claims or (ii) as a
      result of a final, non-appealable judgment, award or similar order, in
      each case, relating to participation in Medical Reimbursement Programs;

            (b) all final, non-appealable fines, penalties, forfeitures or other
      amounts rendered pursuant to criminal indictments or other criminal
      proceedings relating to participation in Medical Reimbursement Programs;
      and

            (c) the amount of final, non-appealable recovery, damages, awards,
      penalties, forfeitures or similar amounts rendered in any litigation,
      suit, arbitration, investigation, review or other legal or administrative
      proceeding of any kind relating to participation in Medical Reimbursement
      Programs.

      "Guarantee" means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation,

                                       18


(iii) to maintain working capital, equity capital or any other financial
statement condition or liquidity or level of income or cash flow of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation, or (iv) entered into for the purpose of assuring in any other manner
the obligee in respect of such Indebtedness or other obligation of the payment
or performance thereof or to protect such obligee against loss in respect
thereof (in whole or in part), or (b) any Lien on any assets of such Person
securing any Indebtedness or other obligation of any other Person, whether or
not such Indebtedness or other obligation is assumed by such Person. The amount
of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term "Guarantee" as a verb has a
corresponding meaning.

      "Guaranty" means the Guaranty made by the Guarantors in favor of the
Administrative Agent and the Lenders pursuant to Article IV (Guaranty).

      "Guarantors" means (a) the Borrower (solely in respect of the Obligations
of the other Loan Parties) and (b) each Person identified as a "Guarantor" on
the signature pages hereto and each other Person that delivers a Joinder
Agreement or otherwise becomes a party to this Agreement as a Guarantor pursuant
to Section 7.12 (Additional Subsidiaries and Guarantees), together with their
successors and permitted assigns.

      "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic materials, substances or wastes, all
contaminants or pollutants and all other substances or wastes of any nature
regulated pursuant to any Environmental Law, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes.

      "HHS" means the United States Department of Health and Human Services and
any successor thereof.

      "Honor Date" has the meaning set forth in Section 2.03(c)(i) (Drawings and
Reimbursements; Funding of Participations).

      "HIPAA" means the Health Insurance Portability and Accountability Act of
1996, Pub. L. 104-191, Aug. 21, 1996, 110 Stat. 1936.

      "HUD Financing" means Indebtedness of HUD Financing Subsidiaries that is
insured by the Federal Housing Administration, an organizational unit of the
United States Department of Housing and Urban Development.

      "HUD Financing Subsidiaries" means, collectively, (i) each of Holly Hill
Real Estate, LLC, a North Carolina limited liability company, PSI Cedar Springs
Hospital Real Estate, Inc., a Colorado corporation, Psychiatric Solutions of
Oklahoma Real Estate, Inc., an Oklahoma corporation, Riveredge Real Estate,
Inc., an Illinois corporation, Cypress Creek Real Estate, L.P., a Texas limited
partnership, Neuro Rehab Real Estate, L.P., a Texas limited partnership, Texas
Laurel Ridge Hospital Real Estate, L.P., a Texas limited partnership, Texas Oaks
Psychiatric Hospital Real Estate, L.P., a Texas limited partnership, Texas San
Marcos Treatment Center Real Estate, L.P., a Texas limited partnership, and West
Oaks Real Estate, L.P., a Texas limited partnership and (ii) each other
Subsidiary of the Borrower that enters into a HUD Financing that is expressly
permitted to be incurred pursuant to Section 8.03 (Indebtedness); provided,
however, that in each case, each such Subsidiary shall be deemed to be a HUD
Subsidiary only for so long as the documents governing the applicable HUD
Financing prohibit such

                                       19


Subsidiary from guaranteeing Indebtedness of the Borrower:

      "Immaterial Subsidiary" means any Subsidiary that, as of any date of
determination, is without material operations and has total assets with an
aggregate fair market value of less than $10,000.

      "Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

            (a) all Funded Indebtedness;

            (b) the Swap Termination Value of any Swap Contract;

            (c) all Guarantees with respect to outstanding Indebtedness of the
      types specified in clauses (a) and (b) above of any other Person; and

            (d) all Indebtedness of the types referred to in clauses (a) through
      (c) above of any partnership or joint venture (other than a joint venture
      that is itself a corporation or limited liability company) in which such
      Person is a general partner or joint venturer unless such Indebtedness is
      expressly made non-recourse to such Person.

      "Indemnified Matters" has the meaning set forth in Section 11.05
(Indemnification by the Borrower; Limitation of Liability).

      "Indemnitee" has the meaning set forth in Section 11.05 (Indemnification
by the Borrower; Limitation of Liability).

      "Interest Period" means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six months (or, if available to all Lenders, nine or twelve months) thereafter,
as selected by the Borrower in its Notice of Borrowing or Notice of Conversion
or Continuation, as applicable; provided that:

            (i) any Interest Period that would otherwise end on a day that is
      not a Business Day shall be extended to the next succeeding Business Day
      unless such Business Day falls in another calendar month, in which case
      such Interest Period shall end on the next preceding Business Day;

            (ii) any Interest Period that begins on the last Business Day of a
      calendar month (or on a day for which there is no numerically
      corresponding day in the calendar month at the end of such Interest
      Period) shall end on the last Business Day of the calendar month at the
      end of such Interest Period; and

            (iii) no Interest Period shall extend beyond the applicable Maturity
      Date.

      "Internal Revenue Code" means the Internal Revenue Code of 1986.

      "Investment" means, as to any Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or other
acquisition of Capital Stock of another Person, (b) a loan, advance or capital
contribution to, Guarantee or assumption of debt of, or purchase or other
acquisition of any other debt or equity participation or interest in, another
Person, including any partnership or joint venture interest in such other Person
or (c) an Acquisition. For purposes of determining covenant compliance, the
amount of any Investment shall be the amount actually invested,

                                       20


without adjustment for subsequent increases or decreases in the value of such
Investment.

      "Involuntary Disposition" means any loss of, damage to or destruction of,
or any condemnation or other taking for public use of, any Property of the
Borrower or any Subsidiary.

      "IP Rights" has the meaning set forth in Section 6.17 (Intellectual
Property; Licenses; Etc.).

      "IRS" means the United States Internal Revenue Service or any Governmental
Authority succeeding to any of its principal functions.

      "ISP98" has the meaning set forth in Section 2.03(h) (Applicability of
ISP98).

      "Joinder Agreement" means a joinder agreement substantially in the form of
Exhibit H (Form of Joinder Agreement) executed and delivered by a Domestic
Subsidiary in accordance with the provisions of Section 7.12 (Additional
Subsidiaries and Guarantees).

      "Land" of any Person means all of those plots, pieces or parcels of land
now owned, leased or hereafter acquired or leased or purported to be owned,
leased or hereafter acquired or leased (including, in respect of the Loan
Parties, as reflected in the most recent financial statements required to be
delivered pursuant to Section 7.01(a) or (b) (Financial Statements)) by such
Person.

      "Laws" means, collectively, all common law and all international, foreign,
federal, state and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.

      "L/C Advance" means, with respect to each Lender, such Lender's funding of
its participation in any L/C Borrowing in accordance with its Pro Rata Share.

      "L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which has not been reimbursed on the date when made
or refinanced as a Borrowing of Revolving Loans.

      "L/C Credit Extension" means, with respect to any Letter of Credit, the
issuance thereof or extension of the expiry date thereof, or the renewal or
increase of the amount thereof.

      "L/C Issuer" means Bank of America, in its capacity as issuer of Letters
of Credit hereunder, or any successor issuer of Letters of Credit hereunder that
is approved by the Revolving Credit Facility Administrative Agent and the
Borrower and agrees to become bound by the terms of this Agreement applicable to
the L/C Issuer pursuant to an agreement in form and substance satisfactory to
the Revolving Credit Facility Administrative Agent and the Borrower.

      "L/C Obligations" means, as at any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings. For all purposes of this
Agreement, if on any date of determination a Letter of Credit has expired by its
terms but any amount may still be drawn thereunder by reason of the operation of
Rule 3.14 of the ISP98, such Letter of Credit shall be deemed to be
"outstanding" in the amount so remaining available to be drawn.

                                       21


      "Lender" means the Swing Line Lender and each other financial institution
or other entity (a) identified as a "Lender" on the signature pages hereto and
its successors and assigns or (b) from time to time becomes a party hereto by
execution of an Assignment and Assumption; and, as the context requires,
includes the L/C Issuer.

      "Lending Office" means, as to any Lender, the office of such Lender
specified as its "Lending Office" opposite its name on Schedule 11.02 (Lending
Offices and Addresses for Notices) or on the Assignment and Assumption by which
it became a Lender or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the applicable Administrative Agent.

      "Letter of Credit" means any standby letter of credit issued hereunder.

      "Letter of Credit Application" means an application and agreement for the
issuance or amendment of a letter of credit in the form from time to time in use
by the L/C Issuer.

      "Letter of Credit Expiration Date" means the day that is thirty days prior
to the Revolving Credit Termination Date then in effect (or, if such day is not
a Business Day, the next preceding Business Day).

      "Letter of Credit Sublimit" means an amount equal to the lesser of the
Aggregate Revolving Credit Commitments and $15,000,0000. The Letter of Credit
Sublimit is part of, and not in addition to, the Aggregate Revolving Credit
Commitments.

      "Lien" means any mortgage, pledge, hypothecation, collateral assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing).

      "Loan" means any Term Loan, Revolving Loan or Swing Line Loan made by any
Lender pursuant to this Agreement.

      "Loan Documents" means this Agreement, each Note, each Letter of Credit,
each Letter of Credit Application, each Joinder Agreement, the Collateral
Documents, each Request for Credit Extension, each Compliance Certificate, the
Fee Letter, each Swap Contract between any Loan Party and any Person that was an
Agent, a Lender or an Affiliate of an Agent or a Lender at the time it entered
into such Swap Contract, each Cash Management Document and each other document,
instrument or agreement from time to time executed by the Borrower or any
Subsidiary or any Responsible Officer of any thereof and delivered in connection
with this Agreement.

      "Loan Parties" means, collectively, the Borrower and each Guarantor.

      "Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, (a) the business, assets, operations, properties,
condition (financial or otherwise) or liabilities (contingent or otherwise) of
the Borrower and its Subsidiaries taken as a whole; (b) the ability of the
Borrower or the Guarantors, taken as a whole, to perform their respective
obligations under the Loan Documents; (c) the legality, validity, binding effect
or enforceability against any Loan Party of any Loan Document to which it is a
party; (d) the perfection or priority of the Liens Granted pursuant to the
Collateral Documents; or (e) the material rights and remedies of the Agents, the
Lenders or the L/C Issuer under the Loan Documents.

      "Maturity Date" means the Revolving Credit Termination Date and/or the
Term Loan Maturity

                                       22


Date, as the context requires.

      "Medicaid" means that certain means-tested entitlement program under Title
XIX of the Social Security Act, which provides federal grants to states for
medical assistance based on specific eligibility criteria, as set forth at
Section 1396, et seq. of Title 42 of the United Sates Code and any statute
succeeding thereto.

      "Medicaid Provider Agreement" means an agreement entered into between a
state agency or other such entity administering the Medicaid program and a
health care provider or supplier under which the health care provider or
supplier agrees to provide items and services for Medicaid patients in
accordance with the terms of the agreement and Medicaid Regulations.

      "Medicaid Regulations" means, collectively, (a) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting the medical assistance program established by Title XIX of the Social
Security Act and any statutes succeeding thereto; (b) all applicable provisions
of all federal rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (a) above and all federal administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (a) above;
(c) all state statutes and plans for medical assistance enacted in connection
with the statutes and provisions described in clauses (a) and (b) above; and (d)
all applicable provisions of all rules, regulations, manuals and orders of all
Governmental Authorities promulgated pursuant to or in connection with the
statutes described in clause (c) above and all state administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of Law promulgated pursuant to or in connection with the statutes
described in clause (b) above, in each case as may be amended, supplemented or
otherwise modified from time to time.

      "Medical Reimbursement Programs" means a collective reference to the
Medicare, Medicaid and TRICARE programs and any other health care program
operated by or financed in whole or in part by any foreign or domestic federal,
state or local government and any other non-government funded third party payor
programs.

      "Medicare" means that government-sponsored entitlement program under Title
XVIII of the Social Security Act, which provides for a health insurance system
for eligible elderly and disabled individuals, as set forth at Section 1395, et
seq. of Title 42 of the United States Code and any statute succeeding thereto.

      "Medicare Provider Agreement" means an agreement entered into between CMS
or other such entity administering the Medicare program on behalf of CMS, and a
health care provider or supplier under which the health care provider or
supplier agrees to provide items and services for Medicare patients in
accordance with the terms of the agreement and Medicare Regulations.

      "Medicare Regulations" means, collectively, all federal statutes (whether
set forth in Title XVIII of the Social Security Act or elsewhere) affecting the
health insurance program for the aged and disabled established by Title XVIII of
the Social Security Act and any statutes succeeding thereto; together with all
applicable provisions of all rules, regulations, manuals and orders and
administrative, reimbursement and other guidelines having the force of law of
all Governmental Authorities (including CMS, the OIG, HHS, or any Person
succeeding to the functions of any of the foregoing) promulgated pursuant to or
in connection with any of the foregoing having the force of Law, as each may be
amended, supplemented or otherwise modified from time to time.

                                       23


      "Moody's" means Moody's Investors Service, Inc. and any successor thereto.

      "Mortgage Instrument" means each mortgage, deed of trust, deed to secure
debt or like Real Property security instrument given by any Loan Party to the
Administrative Agent to secure the Obligations of such Loan Party, in each case
as amended, modified and supplemented from time to time.

      "Mortgage Supporting Documents" means, with respect to a Mortgage for a
parcel of Real Property, each the following:

            (a) (i) evidence in form and substance reasonably satisfactory to
      the Agents that the recording of counterparts of such Mortgage in the
      recording offices specified in such Mortgage will create a valid and
      enforceable first priority Lien on the Property described therein in favor
      of the Collateral Agent for the benefit of the Secured Parties (or in
      favor of such other trustee as may be required or desired under local Law)
      subject only to (A) Liens permitted under Section 8.01 (Liens) and (B)
      such other Liens as the Administrative Agents may reasonably approve and
      (ii) an opinion of counsel in each state in which any such Mortgage is to
      be recorded in form and substance and from counsel reasonably satisfactory
      to the Administrative Agents;

            (b) (i) a mortgagee's title policy (or policies) or marked-up
      unconditional binder (or binders) for such insurance (or other evidence
      reasonably acceptable to the Administrative Agents proving ownership
      thereof) ("Mortgagee's Title Insurance Policy"), dated a date reasonably
      satisfactory to the Administrative Agents, and shall (A) be in an amount
      not less than the then recently appraised fair market value (determined by
      reference to an appraisal, as required in the discretion of the
      Administrative Agents) of such parcel of Real Property in form and
      substance satisfactory to the Administrative Agents, provided, that the
      amount of such title insurance required pursuant to such Mortgagee's Title
      Insurance Policy shall not materially exceed such appraised fair market
      value, (B) be issued at ordinary rates, (C) insure that the Lien granted
      pursuant to the Mortgage insured thereby creates a valid first Lien on
      such parcel of Real Property free and clear of all defects and
      encumbrances, except for Customary Permitted Liens and for such defects
      and encumbrances as may be approved by the Administrative Agents, (D) name
      the Collateral Agent for the benefit of the Secured Parties as the insured
      thereunder, (E) be in the form of ALTA Loan Policy - 1992 (or such local
      equivalent thereof as is reasonably satisfactory to the Administrative
      Agents), (F) contain a comprehensive lender's endorsement (including, but
      not limited to, a revolving credit endorsement and a floating rate
      endorsement), (G) be issued by Chicago Title Insurance Company, First
      American Title Insurance Company, Lawyers Title Insurance Corporation or
      any other title company reasonably satisfactory to the Administrative
      Agents (including any such title companies acting as co-insurers or
      reinsurers) and (H) be otherwise in form and substance reasonably
      satisfactory to the Administrative Agents and (ii) a copy of all documents
      referred to, or listed as exceptions to title, in such title policy (or
      policies) in each case in form and substance reasonably satisfactory to
      the Administrative Agents;

            (c) maps or plats of a current as-built survey of such parcel of
      Real Property certified to and received by (in a manner reasonably
      satisfactory to each of them) the Collateral Agent and the title insurance
      company issuing the Mortgagee's Title Insurance Policy for such Mortgage,
      dated a date reasonably satisfactory to the Administrative Agents and such
      title insurance company, by an independent professional licensed land
      surveyor reasonably satisfactory to the Administrative Agents and such
      title insurance company, which maps or plats and the surveys on which they
      are based shall be made in form and substance reasonably satisfactory to
      the Administrative Agents; provided, that the Agents agree that it will
      review any existing surveys describing such Real Property and will accept
      any such existing survey so long as the form and substance thereof is
      reasonably satisfactory to the Administrative Agents, together with any

                                       24


      reasonably advisable updates to such existing survey and any bringdown
      certifications with respect to such existing survey; and provided,
      further, that the Administrative Agents agree that no update of any
      existing survey will be required unless it is reasonable to do so in the
      circumstances.

            (d) evidence in form and substance reasonably satisfactory to the
      Administrative Agents that all premiums in respect of each Mortgagee's
      Title Insurance Policy, all recording fees and stamp, documentary,
      intangible or mortgage taxes, if any, in connection with the Mortgage have
      been paid;

            (e) a Phase I environmental report with respect to such parcel of
      Real Property, dated (i) in the case of any Real Property owned by the
      Borrower and its Subsidiaries (other than AHS and its Subsidiaries), a
      date not earlier than January 1, 2002 and (ii) in the case of any owned
      Real Property and any Specified Leased Property by AHS and its
      Subsidiaries, a date not earlier than January 1, 2002, together with any
      other Phase I environmental report prepared by on or behalf of the
      Borrower or its Subsidiaries or Affiliates in connection with the Ardent
      Acquisition, in each case, showing no material condition of environmental
      concern and otherwise in form and substance reasonably satisfactory to the
      Administrative Agents; and

            (f) such other agreements, documents and instruments in form and
      substance reasonably satisfactory to the Administrative Agents as the
      Administrative Agents reasonably deem necessary or appropriate to create,
      register or otherwise perfect, maintain, evidence the existence,
      substance, form or validity of, or enforce a valid and enforceable first
      priority Lien on such parcel of Real Property in favor of the Collateral
      Agent for the benefit of the Secured Parties (or in favor of such other
      trustee as may be required or desired under local Law) subject only to (A)
      Liens permitted under Section 8.01 (Liens) and (B) such other Liens as the
      Administrative Agents may reasonably approve.

      "Mortgagee's Title Insurance Policy" has the meaning specified in the
definition of Mortgage Supporting Documents.

      "Mortgages" means each mortgage, deed of trust, deed to secure debt or
like Real Property security instrument given by any Loan Party to the Collateral
Agent to secure the Obligations of such Loan Party, in each case as amended,
modified and supplemented from time to time.

      "Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

      "Net Cash Proceeds" means the aggregate proceeds consisting of cash or
Cash Equivalents received by the Borrower or any of its Subsidiaries after the
Closing Date from any:

      (a) Disposition or Involuntary Disposition, in each case, net of (i) the
reasonable cash costs (including legal, accounting and investment banking fees,
and sales commissions) of such Disposition or Involuntary Disposition, as the
case may be, (ii) taxes paid or reasonably estimated to be payable as a result
thereof and (iii) any amount required to be paid or prepaid on Indebtedness
(other than the Obligations) secured by the Property subject to such Disposition
or Involuntary Disposition, as the case may be; provided, however, that evidence
of each of clauses (i), (ii) and (iii) above is provided to the Administrative
Agents in form and substance satisfactory to the Administrative Agents; and
provided, further, that "Net Cash Proceeds" shall include any cash or Cash
Equivalents received upon the

                                       25


Disposition of any non-cash consideration received by the Borrower or any
Subsidiary in any Disposition or Involuntary Disposition; or

      (b) (i) Equity Issuance or (ii) any Debt Issuance, in each case, net of
brokers' and advisors' fees and other costs (including legal, accounting and
investment banking fees, and sales commissions) incurred in connection with such
transaction; provided, however, that in the case of this clause (b), evidence of
such costs is provided to the Administrative Agents in form and substance
satisfactory to the Administrative Agents.

      "New Senior Subordinated Notes" means the Borrower's senior subordinated
notes which are intended to be issued following the Closing Date (i) to
refinance in full the Senior Bridge Facility and (ii) to the extent that there
are available proceeds, to redeem or purchase Existing Senior Subordinated
Notes.

      "New Senior Subordinated Notes Documents" means (a) the New Senior
Subordinated Notes Indenture, (b) the New Senior Subordinated Notes, (c) each
supplemental indenture or other agreement pursuant to which any Subsidiary of
the Borrower Guarantees the Indebtedness in respect of the New Senior
Subordinated Notes and (d) all other documents, agreements and instruments
relating to the New Senior Subordinated Notes, in each case, in form and
substance satisfactory to the Administrative Agents.

      "New Senior Subordinated Notes Indenture" means the Indenture, in form and
substance acceptable to CGMI, to be entered into between the Borrower, the
Subsidiaries party thereto as guarantors and a financial institution acceptable
to CGMI, as trustee, governing the terms of the New Senior Subordinated Notes.

      "Non-Cash Interest Charges" means, for any period of the Borrower and its
Subsidiaries on a consolidated basis, the sum of the following amounts to the
extent included in the definition of Consolidated Interest Charges: (a) the
amount of debt discount and debt issuance costs amortized, (b) charges relating
to write-ups or write-downs in the book or carrying value of existing
Consolidated Funded Indebtedness, (c) interest payable in evidences of
Indebtedness or by addition to the principal of the related Indebtedness and (d)
other non-cash interest.

      "Non-Consenting Lender" has the meaning specified in Section 11.01(c)
(Amendments, Etc.).

      "Nonrenewal Notice Date" has the meaning specified in Section
2.03(b)(Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal
Letters of Credit).

      "Note" means any Revolving Note or Term Loan Note.

      "Notice of Borrowing" has the meaning specified in Section 2.02(a)
(Borrowings, Conversions and Continuations of Loans).

      "Notice of Conversion or Continuation" has the meaning specified in
Section 2.10 (Conversion/Continuation Option).

      "Obligations" means all advances to, and debts, liabilities, obligations,
covenants and duties of, the Borrower and/or any Loan Party arising under this
Agreement or any other Loan Document (including each Cash Management Document or
Swap Contract that is a Loan Document) or otherwise with respect to any Loan or
Letter of Credit, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against the Borrower and/or any other Loan Party or any
Affiliate thereof of any proceeding under any Debtor Relief Laws naming such
Person as the debtor in

                                       26


such proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding.

      "OIG" means the Office of Inspector General of HHS and any successor
thereof.

      "Organization Documents" means, (a) (i) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(ii) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (iii) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity and (b) with respect to any Person, (i) to the
extent not covered by the preceding clause (a), any document setting forth the
manner of election and duties of the directors or managing members of such
Person (if any) and (ii) any document setting forth the manner of designation,
amount or relative rights, limitations and preferences of any class or series of
such Person's Capital Stock.

      "Outstanding Amount" means (i) with respect to any Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of any Loans occurring on such date and
(ii) with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements of
outstanding unpaid drawings under any Letters of Credit or any reductions in the
maximum amount available for drawing under Letters of Credit taking effect on
such date.

      "PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.

      "Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

      "Permitted Acquisition" means (a) the Ardent Acquisition and (b) any other
Investment consisting of an Acquisition by the Borrower or any Subsidiary,
subject in the case of this clause (b) to the satisfaction of the following
conditions:

      (i) the Property acquired (or the Property of the Person acquired) in such
Acquisition shall be located in the United States and shall be used or useful in
the same or a similar line of business as the Borrower and its Subsidiaries were
engaged in on the Closing Date (or any reasonable extensions or expansions
thereof);

      (ii) the applicable Agents shall have received all items in respect of the
Capital Stock or Property acquired in such Acquisition required to be delivered
by (and within the time periods specified by) the terms of Section 7.12
(Additional Subsidiaries and Guarantees), Section 7.15 (Additional Collateral)
and Section 7.18 (Collateral Access Agreements and Bailee's Letters);

      (iii) in the case of an Acquisition of the Capital Stock of another
Person, the board of directors (or other comparable governing body) of such
other Person shall have duly approved such

                                       27


Acquisition;

      (iv) no additional Indebtedness shall be incurred, assumed or otherwise be
reflected on a consolidated balance sheet of the Borrower and the acquired
Person after giving effect to the proposed Acquisition, except for (A) Loans
made hereunder and (B) Indebtedness that is permitted under Section 8.03
(Indebtedness);

      (v) except as may otherwise be agreed by the Administrative Agents, on or
prior to the date of any proposed Acquisition following the Closing Date for
which Total Consideration to be paid by the Borrower or any Subsidiary exceeds
$50,000,000 in any Fiscal Year (either individually or when aggregated with the
Total Consideration paid during such Fiscal Year for all such Acquisitions
following the Closing Date), the Borrower shall have delivered to the
Administrative Agents, in form and substance satisfactory to the Administrative
Agents, (A) an updated business plan and updated financial projections of the
Borrower and its Subsidiaries, prepared by the Borrower in good faith, after
giving effect to the proposed Acquisition on a Pro Forma Basis for the next four
fiscal quarters ending after the consummation of such Acquisition and (B) such
other financial information, financial analysis, documentation or other
information relating to such proposed Acquisition as any Administrative Agent or
any Lender shall reasonably request;

      (vi) the Borrower shall have delivered to the Administrative Agents a Pro
Forma Compliance Certificate, calculated based upon the financial information
delivered to the Administrative Agents pursuant to the immediately preceding
clause (v), demonstrating that, upon giving effect to such Acquisition on a Pro
Forma Basis, the Loan Parties would be in compliance with the financial
covenants set forth in Section 8.11 (Financial Covenants) as of the most recent
fiscal quarter for which the Borrower has delivered financial statements
pursuant to Section 7.01(a) or (b) (Financial Statements);

      (vii) on or prior to the date of such proposed Acquisition, the
Administrative Agents shall have received, in form and substance reasonably
satisfactory to the Administrative Agents, copies of the acquisition agreement,
related Contractual Obligations and instruments and all opinions, certificates,
lien search results and other documents reasonably requested by the
Administrative Agents;

      (viii) (A) no Default or Event of Default shall have occurred and be
continuing and (B) the representations and warranties made by the Loan Parties
in this Agreement and each other Loan Document shall be true and correct in all
material respects at and as if made as of the date of such Acquisition (after
giving effect thereto) except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date;

      (ix) if such Acquisition involves the purchase of an interest in a
partnership between the Borrower (or a Subsidiary of the Borrower) as a general
partner and entities unaffiliated with the Borrower or such Subsidiary as the
other partners, such transaction shall be effected by having such equity
interest acquired by a corporate holding company directly or indirectly
wholly-owned by the Borrower that shall be newly formed for the sole purpose of
effecting such Acquisition; and

      (x) the Total Consideration paid by the Borrower or any Subsidiary for any
such Acquisition shall not exceed (i) $50,000,000 individually for any such
Acquisition (whether such Acquisition occurs in a single transaction or in a
series of related transactions) or (ii) $150,000,000 in the aggregate for all
such Acquisitions during any fiscal year of the Borrower and its Subsidiaries.

      "Permitted Investments" means, at any time, Investments by the Borrower
and its Subsidiaries permitted to exist at such time pursuant to the terms of
Section 8.02 (Investments).

                                       28


      "Permitted Liens" means, at any time, Liens in respect of Property of the
Borrower and its Subsidiaries permitted to exist at such time pursuant to the
terms of Section 8.01 (Liens).

      "Permitted Subordinated Indebtedness" means any unsecured Indebtedness of
Borrower that (a) is expressly subordinated to the prior payment in full in cash
of the Obligations on terms and conditions reasonably satisfactory to the
Administrative Agents and in any event no less favorable to the Lenders than the
terms and conditions set forth in the Existing Senior Subordinated Notes
Indenture or the New Senior Subordinated Notes Indenture, (b) is not scheduled
to mature prior to the date that is ninety-one (91) days after the scheduled
Term Loan Maturity Date, (c) has no scheduled amortization or payments of
principal prior to the Term Loan Maturity Date and (d) has covenant, default and
remedy provisions no more restrictive, or mandatory prepayment, repurchase or
redemption provisions no more onerous or expansive in scope, taken as a whole,
than those set forth in the Existing Senior Subordinated Notes Indenture or the
New Senior Subordinated Notes Indenture and in any event, such provisions to be
reasonably acceptable to the Administrative Agents.

      "Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

      "Physician Support Obligation" means a loan to or on behalf of, or a
guarantee of indebtedness of a Qualified Physician made or given by the Borrower
or any of its Subsidiaries, (a) in the ordinary course of its business and (b)
pursuant to a written agreement having a term not to exceed five years.

      "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Internal Revenue Code or Title IV of
ERISA, any ERISA Affiliate.

      "Pledge Agreement" means the Second Amended and Restated Pledge Agreement,
dated as of the Closing Date, executed in favor of the Collateral Agent by each
of the Loan Parties, as amended, restated, supplemented or otherwise modified
from time to time.

      "Pledged Collateral" has the meaning given such term in the Pledge
Agreement.

      "Pro Forma Basis" means, for purposes of calculating the financial
covenants in Section 8.11 (Financial Covenants) (including for purposes of
determining the Applicable Margin), that any Disposition, Involuntary
Disposition or Acquisition shall be deemed to have occurred as of the first day
of the most recent four fiscal quarter period preceding the date of such
transaction for which the Borrower has delivered financial statements pursuant
to Section 7.01(a) or (b) (Financial Statements); provided that (a) with respect
to any Disposition or Involuntary Disposition, (i) income statement and cash
flow statement items (whether positive or negative) attributable to the Property
disposed of shall be excluded to the extent relating to any period occurring
prior to the date of such transaction and (ii) Indebtedness which is retired
shall be excluded and deemed to have been retired as of the first day of the
applicable period and (b) with respect to any Acquisition, (i) income statement
items attributable to the Person or Property acquired shall be included to the
extent relating to any period applicable in such calculations to the extent (A)
such items are not otherwise included in such income statement items for the
Borrower and its Subsidiaries in accordance with GAAP or in accordance with any
defined terms set forth in Section 1.01 (Defined Terms) and (B) such items are
supported by financial statements or other information reasonably satisfactory
to the Administrative Agents and (ii) any Indebtedness incurred or assumed by
the Borrower or any Subsidiary (including the Person or Property acquired) in
connection with such transaction and any Indebtedness of the Person or Property
acquired which is not retired in connection with such transaction (A) shall be
deemed to have been incurred as of the first day of the applicable period and
(B) if such Indebtedness has a floating or formula rate, shall have an implied
rate of interest

                                       29


for the applicable period for purposes of this definition determined by
utilizing the rate which is or would be in effect with respect to such
Indebtedness as at the relevant date of determination.

      "Pro Forma Compliance Certificate" means a certificate of a Responsible
Officer of the Borrower containing reasonably detailed calculations of the
financial covenants set forth in Section 8.11 (Financial Covenants) (i) as of
the most recent fiscal quarter end for which the Borrower has delivered
financial statements pursuant to Section 7.01(a) or (b) (Financial Statements)
after giving effect to the applicable transaction on a Pro Forma Basis and (ii)
for each of the four fiscal quarters tested following the applicable
Acquisition, commencing with the fiscal quarter during which such Acquisition
was consummated, determined in the case of this clause (ii) based on the
financial information furnished by the Borrower to the Administrative Agents
pursuant to clause (v) of the definition of Permitted Acquisition.

      "Pro Rata Share" means or (other than in the expression "equally and
ratably") "ratably" means, with respect to any Lender, (a) with respect to the
Revolving Credit Facility, the percentage obtained by dividing (i) the Revolving
Credit Commitment of such Lender by (ii) the Aggregate Revolving Credit
Commitments of all Lenders (or, at any time after the Revolving Credit
Termination Date, the percentage obtained by dividing the aggregate outstanding
principal balance of the Revolving Credit Outstandings owing to such Lender by
the aggregate outstanding principal balance of the Revolving Credit Outstandings
owing to all Lenders) and (b) with respect to the Term Loan Facility, the
percentage obtained by dividing (i) the Term Loan Commitment of such Lender by
(ii) the aggregate Term Loan Commitments of all Lenders (or, at any time after
the Closing Date, the percentage obtained by dividing the principal amount of
such Lender's Term Loans by the aggregate Term Loans of all Lenders).

      "Proceeds" has the meaning given to such term in the UCC.

      "Projections" means those financial projections dated as of the Closing
Date, covering the fiscal years ending in 2005 through 2012 inclusive (and
prepared on a quarterly basis through the end of fiscal year 2006), to be
delivered to the Administrative Agents and the Lenders by the Borrower.

      "Property" means any interest of any kind in any property or asset,
whether real, personal or mixed, or tangible or intangible.

      "Proposed Change" has the meaning specified in Section 11.01(c)
(Amendments, Etc.).

      "PSI Surety" means PSI Surety, Inc., a Montana corporation.

      "Purchasing Lender" has the meaning specified in Section 11.16 (Sharing of
Payments, Etc.).

      "Qualified Physicians" means one or more physicians or health care
professionals providing service to patients in a health care facility owned,
leased, operated or managed by the Borrower or any of its Subsidiaries.

      "Real Property" of any Person means the Land of such Person, together with
the right, title and interest of such Person, if any, in and to the streets, the
Land lying in the bed of any streets, roads or avenues, opened or proposed, in
front of, the air space and development rights pertaining to the Land and the
right to use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including all alley, vault, drainage, mineral, water, oil
and gas rights, together with all of the buildings and other improvements now or
hereafter erected on the Land and any fixtures appurtenant

                                       30


thereto.

      "Redeemable Stock" has the meaning specified in the definition of clause
(g) of the definition of "Funded Indebtedness".

      "Register" has the meaning set forth in Section 2.11 (Evidence of Debt).

      "Reimbursement Obligations" means, as and when matured, the obligation of
the Borrower or any other Loan Party to pay, on the date payment is made or
scheduled to be made to the beneficiary under each such Letter of Credit (or at
such other date as may be specified in the reimbursement agreement applicable to
such Letter of Credit) and in the currency drawn (or in such other currency as
may be specified in such reimbursement agreement, if any), all amounts of each
draft and other requests for payments drawn under Letters of Credit, and all
other matured reimbursement or repayment obligations of the Borrower or any
other Loan Party to the L/C Issuer with respect to amounts drawn under Letters
of Credit.

      "Reinvestment Deferred Amount" means, as the context requires, the
Disposition/Involuntary Disposition Deferred Amount or the Equity Issuance
Deferred Amount.

      "Reinvestment Event" means any Equity Issuance in connection with a
proposed Permitted Acquisition, Disposition or Involuntary Disposition in
respect of which the Borrower has delivered a Reinvestment Notice.

      "Reinvestment Notice" means a written notice executed by a Responsible
Officer of the Borrower stating that no Default or Event of Default has occurred
and is continuing and (i) in the case of any Disposition or Involuntary
Disposition, that the Borrower (directly or indirectly through one of its
Subsidiaries) intends and expects to use all or a specified portion of the Net
Cash Proceeds of such Disposition or Involuntary Disposition to acquire
replacement assets useful in its or one of its Subsidiaries' businesses or, in
the case of an Involuntary Disposition, to effect repairs or (ii) in the case of
any such Equity Issuance, that the Borrower (directly or indirectly through one
of its Subsidiaries) intends and expects to use all or a specified portion of
the Net Cash Proceeds of such Equity Issuance to finance all or a portion of a
Permitted Acquisition.

      "Reinvestment Prepayment Amount" means, with respect to any Net Cash
Proceeds of any Reinvestment Event, the Reinvestment Deferred Amount relating
thereto less any amount expended or required to be expended pursuant to a
Contractual Obligation entered into prior to the relevant Reinvestment
Prepayment Date (i) in the case of any Disposition or Involuntary Disposition,
to acquire replacement assets useful in the business of the Borrower or any of
its Subsidiaries, or in the case of an Involuntary Disposition, to effect
repairs or replacements or (ii) in the case of any Equity Issuance, to
consummate the applicable Permitted Acquisition.

      "Reinvestment Prepayment Date" means, with respect to any Net Cash
Proceeds of any Reinvestment Event, (i) in the case of any Disposition or
Involuntary Disposition constituting a Reinvestment Event, the earlier of (a)
the date occurring 365 days after such Reinvestment Event and (b) the date that
is five Business Days after the date on which the Borrower shall have notified
the Administrative Agents of the Borrower's determination not to acquire
replacement assets useful in the Borrower's or a Subsidiary's business (or, in
the case of an Involuntary Disposition, not to effect repairs) with all or any
portion of the relevant Reinvestment Deferred Amount and (ii) in the case of any
Equity Issuance constituting a Reinvestment Event, the earlier of (a) the date
occurring 180 days after such Reinvestment Event and (b) the date that is five
Business Days after the date on which the Borrower shall have notified the
Administrative Agents of the Borrower's determination not to consummate the

                                       31


applicable Permitted Acquisition.

      "Related Documents" means the Ardent Acquisition Agreement, the Senior
Bridge Credit Agreement, (following issuance of the New Senior Subordinated
Notes) the New Senior Subordinated Notes Indenture, the Existing Senior
Subordinated Notes Indenture and each other document and instrument executed
with respect to either thereof.

      "Related Obligations" has the meaning specified in Section 10.09
(Collateral Matters Relating to Related Obligations).

      "Release" means, with respect to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration, in each case, of any Hazardous Material into the indoor or outdoor
environment or into or out of any property owned, leased or operated by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.

      "Remedial Action" means all actions required to (a) clean up, remove,
treat or in any other way address any Hazardous Material in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release so that Hazardous Material does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.

      "Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the thirty-day notice period has been waived.

      "Request for Credit Extension" means (a) with respect to a Borrowing, a
Notice of Borrowing, (b) with respect to a conversion or continuation of Loans,
a Notice of Conversion or Continuation, (c) with respect to an L/C Credit
Extension, a Letter of Credit Application and (d) with respect to a Swing Line
Loan, a Swing Line Loan Request.

      "Required Lenders" means, collectively, (a) on and after the Closing Date
and on and prior to the Revolving Credit Termination Date, more than fifty
percent (50%) of the sum of the aggregate outstanding amount of the Revolving
Credit Commitments and the principal amount of all Term Loans then outstanding
and (b) after the Revolving Credit Termination Date, more than fifty percent
(50%) of the sum of the aggregate Revolving Credit Outstandings and the
principal amount of all Term Loans then outstanding. A Defaulting Lender shall
not be included for purposes of making a determination of Required Lenders.

      "Required Revolving Credit Lenders" means, collectively, Revolving Credit
Lenders having more than fifty percent (50%) of the aggregate outstanding amount
of the Revolving Credit Commitments or, after the Revolving Credit Termination
Date, more than fifty percent (50%) of the aggregate Revolving Credit
Outstandings. A Defaulting Lender shall not be included in the calculation of
"Required Revolving Credit Lenders."

      "Required Term Loan Lenders" means, collectively, Term Loan Lenders having
more than 50% of the aggregate outstanding amount of the Term Loan Commitments
or, after the Closing Date, more than fifty percent (50%) of the principal
amount of all Term Loans then outstanding.

      "Responsible Officer" means the chief executive officer, president, chief
financial officer, or treasurer of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,

                                       32


partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

      "Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Capital Stock of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Capital Stock or of any option, warrant or other right to acquire any
such Capital Stock.

      "Reverse Spin-Off" means the reverse spin-off transaction between AHS and
Ardent LLC contemplated by the Ardent Acquisition Agreement to occur prior to
the Closing Date pursuant to which AHS shall have transferred to Ardent LLC the
Capital Stock of its subsidiaries and certain other assets and liabilities that
do not constitute part of the Ardent Acquired Business.

      "Revolving Credit Borrowing" means a borrowing consisting of Revolving
Loans made on the same day by the Revolving Credit Lenders ratably according to
their respective Revolving Credit Commitments.

      "Revolving Credit Commitment" means, with respect to each Revolving Credit
Lender, the commitment of such Revolving Credit Lender to make Revolving Loans
and acquire interests in other Revolving Credit Outstandings in the aggregate
principal amount outstanding not to exceed the amount set forth opposite such
Revolving Credit Lender's name on Schedule I (Commitments) under the caption
"Revolving Credit Commitment," as amended to reflect each Assignment and
Assumption executed by such Revolving Credit Lender and as such amount may be
reduced pursuant to this Agreement.

      "Revolving Credit Facility" means the Revolving Credit Commitments and the
provisions herein related to the Revolving Loans, Swing Line Loans and Letters
of Credit.

      "Revolving Credit Facility Administrative Agent" has the meaning specified
in the introductory paragraph to this Agreement.

      "Revolving Credit Lender" means each Lender that (a) has a Revolving
Credit Commitment, (b) holds a Revolving Loan or (c) participates in any Letter
of Credit.

      "Revolving Credit Termination Date" means the earliest of (a) the
Scheduled Maturity Date, (b) the date of termination of all of the Aggregate
Revolving Credit Commitments pursuant to Section 2.05 (Reduction and Termination
of the Commitments) and (c) the date on which the Obligations become due and
payable pursuant to Section 9.02 (Remedies Upon an Event of Default).

      "Revolving Credit Outstandings" means, at any particular time, the sum of
(a) the principal amount of the Revolving Loans outstanding at such time, (b)
the L/C Obligations outstanding at such time and (c) the principal amount of the
Swing Line Loans outstanding at such time.

      "Revolving Loan" has the meaning specified in Section 2.01(a) (Revolving
Credit Commitments).

      "Revolving Note" means a promissory note of the Borrower payable to the
order of any Revolving Credit Lender in a principal amount equal to the amount
of such Revolving Credit Lender's Revolving Credit Commitment evidencing the
aggregate Indebtedness of the Borrower to such Revolving Credit Lender resulting
from the Revolving Loans owing to such Revolving Credit Lender.

      "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies,

                                       33


Inc. and any successor thereto.

      "Sarbanes-Oxley Act" means the United States Sarbanes-Oxley Act of 2002.

      "Sale and Leaseback Transaction" means, with respect to the Borrower or
any Subsidiary, any arrangement, directly or indirectly, with any Person whereby
the Borrower or such Subsidiary shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.

      "Scheduled Maturity Date" means December 21, 2009.

      "SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

      "Secured Parties" means the Lenders, the L/C Issuer, each Administrative
Agent, the Collateral Agent and any other holder of any Obligation.

      "Securities Account" has the meaning given to such term in the UCC.

      "Securities Account Control Agreement" means a letter agreement, in form
and substance satisfactory to the Agents, executed by the relevant Loan Party,
the Collateral Agent and the relevant Approved Securities Intermediary.

      "Securitization Transaction" means any financing transaction or series of
financing transactions (including factoring arrangements) pursuant to which the
Borrower or any Subsidiary may sell, convey or otherwise transfer, or grant a
security interest in, accounts, payments, receivables, rights to future lease
payments or residuals or similar rights to payment to a special purpose
subsidiary or affiliate of any Person.

      "Security Agreement" means the Second Amended and Restated Security
Agreement, dated as of the Closing Date, executed in favor of the Collateral
Agent for the benefit of the Secured Parties by each of the Loan Parties, as
amended, restated, supplemented or otherwise modified from time to time.

      "Selling Lender" has the meaning specified in Section 11.16 (Sharing of
Payments, Etc.).

      "Senior Bridge Credit Agreement" means the Credit Agreement for the Senior
Bridge Facility, dated as of the date of this Agreement, among the Borrower, the
Subsidiaries party thereto as guarantors, the lenders party thereto and CNAI, as
administrative agent.

      "Senior Bridge Facility" means a senior term loan facility to the Borrower
in an aggregate principal amount of $150,000,000.

      "Senior Bridge Loans" means (x) the senior loans to be made pursuant to
the Senior Bridge Credit Agreement on the Closing Date in an aggregate principal
amount of $150,000,000 with a maturity date of 1 year following the Closing Date
and (y) any such loans which are extended until the tenth anniversary of the
Closing Date pursuant to the Senior Bridge Credit Agreement.

      "Senior Subordinated Notes" means, collectively, the Existing Senior
Subordinated Notes and the New Senior Subordinated Notes.

                                       34


      "Senior Subordinated Notes Documents" means, collectively, the Existing
Senior Subordinated Notes Documents and the New Senior Subordinated Notes
Documents.

      "Senior Subordinated Notes Indentures" means, collectively, the Existing
Senior Subordinated Notes Indenture and the New Senior Subordinated Notes
Indenture.

      "Social Security Act" means the Social Security Act of 1965 as set forth
in Title 42 of the United States Code, as amended, and any successor statute
thereto, as interpreted by the rules and regulations issued thereunder, in each
case as in effect from time to time.

      "Solvent" means, with respect to any Person as of any date of
determination, that, as of such date, (a) the value of the assets of such Person
(both at fair value and present fair saleable value) is greater than the total
amount of liabilities (including contingent and unliquidated liabilities) of
such Person, (b) such Person is able to pay all liabilities of such Person as
such liabilities mature and (c) such Person does not have unreasonably small
capital. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities shall be computed at the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.

      "Special Purpose Vehicle" means any special purpose funding vehicle
identified as such in writing by any Lender to the applicable Administrative
Agent.

      "Specified Leased Property" means (i) the Facility leased by Columbus
Hospital, LLC located at Columbus Hospital, Columbus, Indiana and (ii) any other
Real Estate leased by any Loan Party for which the monthly rental obligations do
not exceed $20,000.

      "Subordinated Indebtedness" means (a) the New Senior Subordinated Notes,
(b) the Existing Senior Subordinated Notes and (c) any other Indebtedness of the
Borrower or any Subsidiary which by its terms is subordinated to the Obligations
in a manner and to an extent acceptable to the Administrative Agents.

      "Subordinated Indebtedness Documents" means (a) the New Senior
Subordinated Notes Documents, when issued, (b) the Existing Senior Subordinated
Notes Documents and (c) all other documents, agreements and instruments
governing any Subordinated Indebtedness.

      "Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of Capital Stock having ordinary voting power for the election of
directors or other governing body (other than Capital Stock having such power
only by reason of the happening of a contingency) are at the time beneficially
owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise specified, all references herein to a "Subsidiary" or to
"Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower.

      "Substitute Institution" has the meaning specified in Section 3.07(a)
(Substitution of Lenders).

      "Substitution Notice" has the meaning specified in Section 3.07(a)
(Substitution of Lenders).

      "Swap Contract" means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward

                                       35


foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a "Master Agreement"), including any such
obligations or liabilities under any Master Agreement.

      "Swap Termination Value" means, in respect of any Swap Contract, after
taking into account the effect of any legally enforceable netting agreement
relating to such Swap Contract, (a) for any date on or after the date such Swap
Contract has been closed out and a termination value is determined in accordance
therewith, such termination value, and (b) for any date prior to the date
referenced in clause (a), the amount determined as the market-to-market value
for such Swap Contract, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such Swap
Contract (which may include a Lender or any Affiliate of a Lender).

      "Swing Line Lender" means Bank of America, in its capacity as provider of
Swing Line Loans or any successor swing line lender hereunder that is approved
by the Revolving Credit Facility Administrative Agent and the Borrower and
agrees to become bound by the terms of this Agreement applicable to the Swing
Line Lender pursuant to an agreement in form and substance satisfactory to the
Revolving Credit Facility Administrative Agent and the Borrower.

      "Swing Line Loan" has the meaning specified in Section 2.04(a) (The Swing
Line).

      "Swing Line Loan Request" means a notice of a Borrowing of Swing Line
Loans pursuant to Section 2.04(b) (Borrowing Procedures), which, if in writing,
shall be substantially in the form of Exhibit B (Form of Swing Line Loan
Request).

      "Swing Line Note" means a promissory note of the Borrower payable to the
order of the Sing Line Lender in a principal amount equal to the amount of the
Swing Line Loan owing to such Lender.

      "Swing Line Sublimit" means an amount equal to the lesser of (a)
$5,000,000 or (b) the Aggregate Revolving Credit Commitments. The Swing Line
Sublimit is part of, and not in addition to, the Aggregate Revolving Credit
Commitments.

      "Syndication Completion Date" means the earlier of (i) the date on which
the Arrangers shall have determined that the primary syndication of the
Revolving Credit Facility and the Term Loan Facility has been completed and (ii)
July 31, 2005.

      "Synthetic Lease" means any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing arrangement
whereby the arrangement is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease or does not otherwise appear on
a balance sheet under GAAP.

      "Term Loan" has the meaning specified in Section 2.01(b) (Term Loan
Commitments).

      "Term Loan Borrowing" means a borrowing consisting of Term Loans made on
the same day by the Term Loan Lenders ratably according to their respective Term
Loan Commitments.

                                       36


      "Term Loan Commitment" means, with respect to each Term Loan Lender, the
commitment of such Lender to make Term Loans to the Borrower in the aggregate
principal amount outstanding not to exceed the amount set forth opposite such
Lender's name on Schedule I (Commitments) under the caption "Term Loan
Commitment" as amended to reflect each Assignment and Assumption executed by
such Lender and as such amount may be reduced pursuant to this Agreement.

      "Term Loan Facility" means the Term Loan Commitments and the provisions
herein related to the Term Loans.

      "Term Loan Facility Administrative Agent" has the meaning specified in the
introductory paragraph to this Agreement.

      "Term Loan Lender" means each Lender that has a Term Loan Commitment or
that holds a Term Loan.

      "Term Loan Maturity Date" means the seventh anniversary of the Closing
Date.

      "Term Loan Note" means a promissory note of the Borrower payable to the
order of any Term Loan Lender in a principal amount equal to the amount of the
Term Loan owing to such Lender.

      "Threshold Amount" means $5,000,000.

      "Total Consideration" means, with respect to any Acquisition, all cash and
non-cash consideration, including the amount of Indebtedness assumed, the amount
reasonably anticipated to be payable in connection with any deferred purchase
price obligation (including any earn-out obligation) as determined by the
Borrower in good faith at the time of the consummation of such Acquisition, and
the value of any Capital Stock of the Borrower issued to the seller.

      "Total Revolving Outstandings" means the aggregate Outstanding Amount of
all Revolving Loans, all Swing Line Loans and all L/C Obligations.

      "Transactions" means, collectively, the transactions contemplated in
connection with the Reverse Spin-Off, the amendment and restatement of the
Existing Credit Agreement pursuant to this Agreement, the borrowing of the
Senior Bridge Loans and the execution, delivery and performance by the Loan
Parties of the Senior Bridge Credit Agreement, (following the Closing Date) the
refinancing in full of the Senior Bridge Facility from the issuance and sale of
the New Senior Subordinated Notes (or other Subordinated Indebtedness permitted
by Section 8.13(c) (Prepayment of Other Indebtedness; Modification of Debt
Agreements), the AHS Tender Offer, the Closing Date Equity Issuance, the initial
Borrowing of the Loans and other Credit Extensions under this Agreement, the
Ardent Acquisition and the payment of related fees and expenses.

      "TRICARE" means the United States Department of Defense health care
program for service families (including TRICARE Prime, TRICARE Extra and TRICARE
Standard), and any successor or predecessor thereof.

      "Trigger Date" means the later of (x) receipt by the Administrative Agents
of the quarterly financial statements for the fiscal quarter ending on June 30,
2005 pursuant to Section 7.01 (b) (Financial Statements) and (y) the date on
which all Indebtedness under the Senior Bridge Facility (including any Exchange
Notes) has been repaid in full.

      "Type" means, with respect to any Loan, its character as a Base Rate Loan
or a Eurodollar Rate

                                       37



Loan.

      "UCC" means the Uniform Commercial Code as from time to time in effect in
the State of New York; provided, however, that, in the event that, by reason of
mandatory provisions of law, any of the attachment, perfection or priority of
the Collateral Agent's and the Secured Parties' security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.

      "Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Internal Revenue Code
for the applicable plan year.

      "United States" and "U.S." mean the United States of America.

      "Unreimbursed Amount" has the meaning set forth in Section 2.03(c)(i)
(Drawings and Reimbursements; Funding of Participations).

      "Unused Commitment Fee" has the meaning specified in Section 2.12(a)
(Unused Commitment Fee).

      "Unused Commitment Fee Rate" means 0.50% per annum.

      "Voting Stock" means, with respect to any Person, Capital Stock issued by
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency; provided, that for
purposes of Section 7.15 (Additional Collateral), the term "Voting Stock" means,
as to any issuer of Capital Stock, the issued and outstanding shares of each
class of Capital Stock or other ownership interests of such issuer entitled to
vote (within the meaning of Treasury Regulations Section 1.956-2(c)(2)).

      "Wholly Owned Subsidiary" means any Person 100% of whose Capital Stock is
at the time owned by the Borrower directly or indirectly through other Persons
100% of whose Capital Stock is at the time owned, directly or indirectly, by the
Borrower.

      "Working Capital" means, for any Person at any date, the amount, if any,
by which the Consolidated Current Assets of such Person at such date exceeds the
Consolidated Current Liabilities of such Person at such date.

1.02 OTHER INTERPRETIVE PROVISIONS.

      With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:

            (a) The meanings of defined terms are equally applicable to the
      singular and plural forms of the defined terms.

            (b)   (i) The words "herein," "hereto," "hereof" and "hereunder" and
      words of similar import when used in any Loan Document shall refer to such
      Loan Document as a whole

                                       38


      and not to any particular provision thereof.

                  (i) Article, Section, Exhibit and Schedule references are to
            the Loan Document in which such reference appears.

                  (ii) The term "including" is by way of example and not
            limitation.

                  (iii) The term "documents" includes any and all instruments,
            documents, agreements, certificates, notices, reports, financial
            statements and other writings, however evidenced, whether in
            physical or electronic form.

            (c) In the computation of periods of time from a specified date to a
      later specified date, the word "from" means "from and including;" the
      words "to" and "until" each mean "to but excluding;" and the word
      "through" means "to and including."

            (d) Section headings herein and in the other Loan Documents are
      included for convenience of reference only and shall not affect the
      interpretation of this Agreement or any other Loan Document.

            (e) Upon the appointment of any successor Revolving Credit Facility
      Administrative Agent pursuant to Section 10.07 (Successor Agents),
      references to Bank of America with respect to the role of Revolving Credit
      Facility Administrative Agent in Section 10.04 (The Agents Individually)
      shall be deemed to refer to the financial institution then acting as the
      Term Loan Facility Administrative Agent or one of its Affiliates if it so
      designates.

            (f) Upon the appointment of any successor Term Loan Facility
      Administrative Agent pursuant to Section 10.07 (Successor Agents),
      references to CNAI in Section 10.4 (The Agents Individually) and to
      Citigroup in the definition of Base Rate and to Citibank in the definition
      of Eurodollar Rate shall be deemed to refer to the financial institution
      then acting as the Term Loan Facility Administrative Agent or one of its
      Affiliates if it so designates.

            (g) Upon the appointment of any successor Collateral Agent pursuant
      to Section 10.07 (Successor Agents), references to Bank of America with
      respect to the role of Collateral Agent in Section 10.4 (The Agents
      Individually) shall be deemed to refer to the financial institution then
      acting as the Collateral Agent or one of its Affiliates if it so
      designates.

1.03  ACCOUNTING TERMS.

      (a) Except as otherwise specifically prescribed herein, all accounting
terms not specifically or completely defined herein shall be construed in
conformity with, and all financial data (including financial ratios and other
financial calculations) required to be submitted pursuant to this Agreement
shall be prepared in conformity with, GAAP applied on a consistent basis, as in
effect from time to time, applied in a manner consistent with that used in
preparing the most recent audited financial statements of the Borrower and its
Subsidiaries delivered pursuant to Section 7.01(a) (Financial Statements);
provided, however, that calculations of Attributable Indebtedness under any
Synthetic Lease or the implied interest component of any Synthetic Lease shall
be made by the Borrower in accordance with accepted financial practice and
consistent with the terms of such Synthetic Lease.

      (b) Together with each Compliance Certificate, the Borrower will provide a
written summary of any changes in GAAP that materially impact the calculation of
the financial covenants in Section 8.11 (Financial Covenants) contained in such
Compliance Certificate. If at any time any change in GAAP

                                       39


would affect the computation of any financial ratio or requirement set forth in
any Loan Document, and either the Borrower or the Required Lenders shall so
request, the Administrative Agents, the Lenders and the Borrower shall negotiate
in good faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the Required
Lenders); provided, however, that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Borrower shall provide to the Administrative Agents
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP.

      (c) Notwithstanding the above, the parties hereto acknowledge and agree
that all calculations of the financial covenants in Section 8.11 (Financial
Covenants) (including for purposes of determining compliance with such financial
covenants and determining the Applicable Margin) shall be made on a Pro Forma
Basis.

1.04  ROUNDING.

      Any financial ratios required to be maintained by the Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of places
by which such ratio is expressed herein and rounding the result up or down to
the nearest number (with a rounding-up if there is no nearest number).

1.05  REFERENCES TO AGREEMENTS AND LAWS.

      Unless otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by this Agreement or any other Loan Document;
(b) references to any Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such Law; and
(c) references to any statute shall be to such statute as amended or modified
from time to time and to any successor legislation thereto, in each case as in
effect at the time any such reference is operative.

1.06  TIMES OF DAY.

      Unless otherwise specified, all references herein to times of day shall be
references to Eastern time (daylight or standard, as applicable).

1.07  LETTER OF CREDIT AMOUNTS.

      Unless otherwise specified, all references herein to the amount of a
Letter of Credit at any time shall be deemed to mean the maximum face amount of
such Letter of Credit after giving effect to all increases thereof contemplated
by such Letter of Credit or the Letter of Credit Application therefor, whether
or not such maximum face amount is in effect at such time.

                                       40


                                   ARTICLE II

                      THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 THE COMMITMENTS.

      (a) Revolving Credit Commitments. On the terms and subject to the
conditions contained in this Agreement, each Revolving Credit Lender severally
agrees to make loans in Dollars (each a "Revolving Loan") to the Borrower from
time to time on any Business Day during the period from the date hereof until
the Revolving Credit Termination Date in an aggregate principal amount at any
time outstanding for all such loans by such Revolving Credit Lender not to
exceed such Revolving Credit Lender's Revolving Credit Commitment; provided,
however, that at no time shall any Revolving Credit Lender be obligated to make
a Revolving Loan in excess of such Revolving Credit Lender's Pro Rata Share of
the Available Credit. Within the limits of the Revolving Credit Commitment of
each Revolving Credit Lender, amounts of Revolving Loans repaid may be
reborrowed under this Section 2.01. From and including the Closing Date, the
"Revolving Commitments" (under and as defined in the Existing Credit Agreement)
of each Revolving Credit Lender pursuant to the Existing Credit Agreement shall
be deemed Revolving Credit Commitments under this Agreement in the respective
amounts provided herein.

      (b) Term Loan Commitments. On the terms and subject to the conditions
contained in this Agreement, each Term Loan Lender severally agrees to make a
loan (each a "Term Loan") in Dollars to the Borrower on the Closing Date, in an
amount not to exceed such Lender's Term Loan Commitment. Amounts of Term Loans
repaid or prepaid may not be reborrowed.

2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

      (a) Each Borrowing shall be made on notice given by the Borrower to the
applicable Administrative Agent not later than 11:00 a.m. (i) on the date of the
Proposed Borrowing, in the case of a Borrowing of Base Rate Loans and (ii) on
the date which is three Business Days prior to the date of the proposed
Borrowing, in the case of a Borrowing of Eurodollar Rate Loans. Each such notice
shall be in substantially the form of Exhibit A (Form of Notice of Borrowing) (a
"Notice of Borrowing"), specifying, (A) the date of such proposed Borrowing
(which, in the case of the Term Loan Borrowing, shall be the Closing Date), (B)
the aggregate amount of such proposed Borrowing, (C) whether any portion of the
proposed Borrowing will be of Base Rate Loans or Eurodollar Rate Loans and (D)
for each Eurodollar Rate Loan, the initial Interest Period or Periods thereof.
Loans shall be made as Base Rate Loans unless, subject to Sections 3.02
(Illegality), 3.03 (Determination of Rates; Inability to Determine Rates), 3.04
(Increased Cost and Reduced Return; Capital Adequacy) or 3.05 (Funding Losses),
the Notice of Borrowing specifies that all or a portion thereof shall be
Eurodollar Rate Loans. Notwithstanding anything to the contrary contained in
Section 2.04 (Swing Line Loans), if any Notice of Borrowing requests a Borrowing
of Base Rate Loans, the Swing Line Lender may make a Swing Line Loan available
to the Borrower in an aggregate amount not to exceed such proposed Borrowing,
and the aggregate amount of the corresponding proposed Borrowing shall be
reduced accordingly by the principal amount of such Swing Line Loan; provided,
that no such reduction shall cause the corresponding proposed Borrowing to fail
to meet the requirements of the next sentence. Each Revolving Credit Borrowing
shall be in an aggregate amount of not less than $1,000,000 or an integral
multiple of $100,000 in excess thereof. Each Term Loan Borrowing shall be in an
aggregate amount of not less than $1,000,000 or an integral multiple of
$1,000,000 in excess thereof.

            (i) In the case of any Revolving Credit Borrowings, the Revolving
Credit Facility Administrative Agent shall give to each Revolving Credit Lender
prompt notice of the Revolving Credit Facility Administrative Agent's receipt of
a Notice of Borrowing and, if Eurodollar Rate Loans are

                                       41



properly requested in such Notice of Borrowing, the applicable interest rate
determined pursuant to Section 3.03(a) (Determination of Rates; Inability to
Determine Rates). Each Revolving Credit Lender shall, before 12:00 p.m. on the
date of the proposed Borrowing, make available to the Revolving Credit Facility
Administrative Agent at its Administrative Agent's Office, in immediately
available funds, such Revolving Credit Lender's Pro Rata Share of such proposed
Borrowing. Upon fulfillment (or due waiver in accordance with Section 11.01
(Amendments, Etc.)) (i) on the Closing Date, of the applicable conditions set
forth in Section 5.01 (Conditions Precedent to Initial Credit Extensions) and
(ii) at any time (including the Closing Date), of the applicable conditions set
forth in Section 5.02 (Conditions Precedent to Each Credit Extension), and after
the Revolving Credit Facility Administrative Agent's receipt of such funds, the
Revolving Credit Facility Administrative Agent shall make such funds available
to the Borrower.

            (ii) In the case of any Term Loan Borrowings, the Term Loan Facility
Administrative Agent shall give to each Term Loan Lender prompt notice of the
Term Loan Facility Administrative Agent's receipt of a Notice of Borrowing and,
if Eurodollar Rate Loans are properly requested in such Notice of Borrowing, the
applicable interest rate determined pursuant to Section 3.03 (Determination of
Interest Rates; Inability to Determine Rates); provided, however, that no
Eurodollar Rate Loan shall be permitted to have an Interest Period that is
longer than one week at any time prior to the Syndication Completion Date. Each
Term Loan Lender shall, before 11:00 a.m. on the date of the proposed Borrowing,
make available to the Term Loan Facility Administrative Agent at its
Administrative Agent's Office, in immediately available funds, such Term Loan
Lender's Pro Rata Share of such proposed Borrowing. Upon fulfillment (or due
waiver in accordance with Section 11.01 (Amendments, Etc.)) on the Closing Date
of the applicable conditions set forth in Section 5.01 (Conditions Precedent to
Initial Credit Extensions) and Section 5.02 (Conditions Precedent to Each Credit
Extension), and after the Term Loan Facility Administrative Agent's receipt of
such funds, the Term Loan Facility Administrative Agent shall make such funds
available to the Borrower.

      (b) Unless the applicable Administrative Agent shall have received notice
from any applicable Lender prior to the date of any proposed Borrowing that such
Lender will not make available to such Administrative Agent such Lender's Pro
Rata Share of such Borrowing (or any portion thereof), such Administrative Agent
may assume that such Lender has made such Pro Rata Share available to such
Administrative Agent on the date of such Borrowing in accordance with this
Section 2.02 and such Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made such Pro Rata Share
available to the applicable Administrative Agent, such Lender and the Borrower
severally agree to repay to the applicable Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the applicable Administrative Agent, at (i) in the case of
the Borrower, the interest rate applicable at the time to the Loans comprising
such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate for
the first Business Day and thereafter at the interest rate applicable at the
time to the Loans comprising such Borrowing. If such Lender shall repay to the
applicable Administrative Agent such corresponding amount, such corresponding
amount so repaid shall constitute such Lender's Loan as part of such Borrowing
for purposes of this Agreement. If the Borrower shall repay to the applicable
Administrative Agent such corresponding amount, such payment shall not relieve
such Lender of any obligation it may have hereunder to the Borrower.

      (d) The failure of any Lender to make on the date specified any Loan or
any payment required by it (such Lender being a "Defaulting Lender"), including
any payment in respect of its participation in Swing Line Loans and L/C
Obligations, shall not relieve any other Lender of its obligations to make such
Loan or payment on such date but no such other Lender shall be responsible for
the failure of any Defaulting Lender to make a Loan or payment required under
this Agreement.

                                       42



2.03 LETTERS OF CREDIT.

      (a)   The Letter of Credit Commitment.

            (i) On the terms and subject to the conditions contained in this
Agreement,

                  (A) the L/C Issuer agrees, in reliance upon the agreements of
            the Revolving Credit Lenders set forth in this Section 2.03, (1)
            from time to time on any Business Day during the period from the
            Closing Date until the Letter of Credit Expiration Date, to issue
            Letters of Credit in Dollars for the account of the Borrower or any
            Loan Party, and to amend or renew Letters of Credit previously
            issued by it, in accordance with Section 2.03(b) (Procedures for
            Issuance and Amendment of Letters of Credit; Auto-Renewal Letters of
            Credit) below, and (2) to honor drafts under the Letters of Credit;
            and

                  (B) the Revolving Credit Lenders severally agree to
            participate in Letters of Credit issued for the account of the
            Borrower or any of its Subsidiaries; provided that the L/C Issuer
            shall not be obligated to make any L/C Credit Extension with respect
            to any Letter of Credit, and no Revolving Credit Lender shall be
            obligated to participate in any Letter of Credit if, after giving
            effect to such L/C Credit Extension, (x) the Total Revolving
            Outstandings would exceed the Aggregate Revolving Credit
            Commitments, (y) the aggregate Outstanding Amount of the Revolving
            Loans of any Revolving Credit Lender, plus such Revolving Credit
            Lender's Pro Rata Share of the Outstanding Amount of all L/C
            Obligations, plus such Revolving Credit Lender's Pro Rata Share of
            the Outstanding Amount of all Swing Line Loans would exceed such
            Revolving Credit Lender's Revolving Credit Commitment, or (z) the
            Outstanding Amount of the L/C Obligations would exceed the Letter of
            Credit Sublimit. Within the foregoing limits, and subject to the
            terms and conditions hereof, the Borrower's ability to obtain
            Letters of Credit shall be fully revolving, and accordingly the
            Borrower may, during the foregoing period, obtain Letters of Credit
            to replace Letters of Credit that have expired or that have been
            drawn upon and reimbursed.

            (ii) The L/C Issuer shall not be under any obligation to issue any
Letter of Credit if:

                  (A) any order, judgment or decree of any Governmental
            Authority or arbitrator shall by its terms purport to enjoin or
            restrain such L/C Issuer from issuing such Letter of Credit, or any
            Law applicable to such L/C Issuer or any request or directive
            (whether or not having the force of law) from any Governmental
            Authority with jurisdiction over such L/C Issuer shall prohibit, or
            request that such L/C Issuer refrain from, the issuance of letters
            of credit generally or such Letter of Credit in particular or shall
            impose upon such L/C Issuer with respect to such Letter of Credit
            any restriction, reserve or capital requirement (for which such L/C
            Issuer is not otherwise compensated hereunder) not in effect on the
            Closing Date, or shall impose upon such L/C Issuer any unreimbursed
            loss, cost or expense which was not applicable on the Closing Date
            and which such L/C Issuer in good faith deems material to it;

                  (B) subject to Section 2.03(b)(iii) below, the expiry date of
            such requested Letter of Credit would occur more than twelve months
            after the date of issuance or last renewal, unless the Required
            Lenders have approved such expiry date;

                  (C) the expiry date of such requested Letter of Credit would
            occur after the Letter of Credit Expiration Date, unless all the
            Lenders have approved such expiry date;

                                       43



                  (D) the issuance of such Letter of Credit would violate one or
            more policies of such L/C Issuer; or

                  (E) such Letter of Credit is in an initial amount less than
            $100,000 or is to be denominated in a currency other than Dollars.

                  (F) a default of any Revolving Lender's obligations to fund
            pursuant to Section 2.03(c) (Drawings and Reimbursements; Funding of
            Participations) exists or any Revolving Lender is at such time a
            Defaulting Lender hereunder, unless the L/C Issuer has entered into
            satisfactory arrangements with the Borrower or such Revolving Lender
            to eliminate the L/C Issuer's risk with respect to such Revolving
            Lender.

            (iii) The L/C Issuer shall not be under any obligation to amend any
Letter of Credit if (A) such L/C Issuer would have no obligation at such time to
issue such Letter of Credit in its amended form under the terms hereof, or (B)
the beneficiary of such Letter of Credit does not accept the proposed amendment
to such Letter of Credit.

            (iv) The L/C Issuer shall not be under any obligation to issue or
amend any Letter of Credit if such L/C Issuer has received written notice from
any Lender, any Administrative Agent or any Loan Party, on or prior to the
Business Day prior to the requested date of issuance or amendment of such Letter
of Credit, that one or more applicable conditions contained in Article V
(Conditions Precedent) shall not then be satisfied.

      (b) Procedures for Issuance and Amendment of Letters of Credit;
Auto-Renewal Letters of Credit.

            (i) Each Letter of Credit shall be issued or amended, as the case
      may be, upon the request of the Borrower delivered to the applicable L/C
      Issuer (with a copy to the Revolving Credit Facility Administrative Agent)
      in the form of a Letter of Credit Application, appropriately completed and
      signed by a Responsible Officer of the Borrower. Such Letter of Credit
      Application must be received by such L/C Issuer and the Revolving Credit
      Facility Administrative Agent not later than 11:00 a.m. at least three
      Business Days (or such later date and time as such L/C Issuer may agree in
      a particular instance in its sole discretion) prior to the proposed
      issuance date or date of amendment, as the case may be. In the case of a
      request for an initial issuance of a Letter of Credit, such Letter of
      Credit Application shall specify in form and detail satisfactory to the
      applicable L/C Issuer: (A) the proposed issuance date of the requested
      Letter of Credit (which shall be a Business Day); (B) the amount thereof;
      (C) the expiry date thereof; (D) the name and address of the beneficiary
      thereof; (E) the documents to be presented by such beneficiary in case of
      any drawing thereunder; (F) the full text of any certificate to be
      presented by such beneficiary in case of any drawing thereunder; and (G)
      such other matters as the applicable L/C Issuer may reasonably require. In
      the case of a request for an amendment of any outstanding Letter of
      Credit, such Letter of Credit Application shall specify in form and detail
      satisfactory to the applicable L/C Issuer (A) the Letter of Credit to be
      amended; (B) the proposed date of amendment thereof (which shall be a
      Business Day); (C) the nature of the proposed amendment; and (D) such
      other matters as the applicable L/C Issuer may reasonably require.

            (ii) Promptly after receipt of any Letter of Credit Application, the
      applicable L/C Issuer will confirm with the Revolving Credit Facility
      Administrative Agent (by telephone or in writing) that such Administrative
      Agent has received a copy of such Letter of Credit Application from the
      Borrower and, if not, such L/C Issuer will provide such Administrative
      Agent with a copy thereof. Upon receipt by such L/C Issuer of confirmation
      from the Revolving Credit

                                       44



      Facility Administrative Agent that the requested issuance or amendment is
      permitted in accordance with the terms hereof, then, subject to the terms
      and conditions hereof, such L/C Issuer shall, on the requested date, issue
      a Letter of Credit for the account of the Borrower or enter into the
      applicable amendment, as the case may be, in each case in accordance with
      such L/C Issuer's usual and customary business practices. Immediately upon
      the issuance of each Letter of Credit, each Revolving Credit Lender shall
      be deemed to, and hereby irrevocably and unconditionally agrees to,
      purchase from the L/C Issuer a risk participation in each Letter of Credit
      issued by such L/C Issuer in an amount equal to the product of such
      Revolving Credit Lender's Pro Rata Share times the amount of such Letter
      of Credit.

            (iii) If the Borrower so requests in any applicable Letter of Credit
      Application, the applicable L/C Issuer shall issue a Letter of Credit that
      has automatic renewal provisions (each, an "Auto-Renewal Letter of
      Credit"); provided that any such Auto-Renewal Letter of Credit must permit
      such L/C Issuer to prevent any such renewal at least once in each
      twelve-month period (commencing with the date of issuance of such Letter
      of Credit) by giving prior notice to the beneficiary thereof not later
      than a day (the "Nonrenewal Notice Date") in each such twelve-month period
      to be agreed upon at the time such Letter of Credit is issued. Unless
      otherwise directed by the applicable L/C Issuer, the Borrower shall not be
      required to make a specific request to such L/C Issuer for any such
      renewal. Once an Auto-Renewal Letter of Credit has been issued, the
      Revolving Credit Lenders shall be deemed to have authorized (but may not
      require) such L/C Issuer to permit the renewal of such Letter of Credit at
      any time to an expiry date not later than the Letter of Credit Expiration
      Date; provided, however, that the L/C Issuer shall not permit any such
      renewal if (A) such L/C Issuer has determined that it would have no
      obligation at such time to issue such Letter of Credit in its renewed form
      under the terms hereof (by reason of the provisions of Section
      2.03(a)(ii)(The Letter of Credit Commitment) or otherwise), or (B) it has
      received notice (which may be by telephone or in writing) on or before the
      day that is five (5) Business Days before the Nonrenewal Notice Date (I)
      from the Revolving Credit Facility Administrative Agent that the Required
      Lenders have elected not to permit such renewal or (II) from the Revolving
      Credit Facility Administrative Agent, any Lender or the Borrower that one
      or more of the applicable conditions specified in Section 5.02 (Conditions
      Precedent to Each Credit Extension) is not then satisfied.

            (iv) Promptly after its delivery of any Letter of Credit or any
      amendment to a Letter of Credit to an advising bank with respect thereto
      or to the beneficiary thereof, the applicable L/C Issuer will also deliver
      to the Borrower and the Revolving Credit Facility Administrative Agent a
      true and complete copy of such Letter of Credit or amendment.

      (c) Drawings and Reimbursements; Funding of Participations.

            (i) Upon receipt from the beneficiary of any Letter of Credit of any
      notice of drawing under such Letter of Credit, the applicable L/C Issuer
      shall notify the Borrower and the Revolving Credit Facility Administrative
      Agent thereof. Not later than 11:00 a.m. on the date of any payment by the
      L/C Issuer under a Letter of Credit (each such date, an "Honor Date"), the
      Borrower shall reimburse such L/C Issuer through the Revolving Credit
      Facility Administrative Agent in an amount equal to the amount of such
      drawing. If the Borrower fails to so reimburse such L/C Issuer by such
      time, the Revolving Credit Facility Administrative Agent shall promptly
      notify each Revolving Credit Lender of the Honor Date, the amount of the
      unreimbursed drawing (the "Unreimbursed Amount"), and the amount of such
      Revolving Credit Lender's Pro Rata Share thereof. In such event, the
      Borrower shall be deemed to have requested a Borrowing of Base Rate Loans
      to be disbursed on the Honor Date in an amount equal to the Unreimbursed
      Amount, without regard to the minimum and multiples specified in Section
      2.02 (Borrowings, Conversions

                                       45



      and Continuations of Loans) for the principal amount of Base Rate Loans,
      but subject to the amount of the unutilized portion of the Aggregate
      Revolving Credit Commitments and the conditions set forth in Section 5.02
      (Conditions Precedent to Each Credit Extension) (other than the delivery
      of a Notice of Borrowing). Any notice given by the L/C Issuer or the
      Revolving Credit Facility Administrative Agent pursuant to this Section
      2.03(c)(i) may be given by telephone if immediately confirmed in writing;
      provided that the lack of such an immediate confirmation shall not affect
      the conclusiveness or binding effect of such notice.

            (ii) Each Revolving Credit Lender (including the Revolving Credit
      Lender acting as the applicable L/C Issuer) shall, upon any notice
      pursuant to Section 2.03(c)(i) above, make funds available to the
      Revolving Credit Facility Administrative Agent for the account of the
      applicable L/C Issuer at the Administrative Agent's Office of the
      Revolving Credit Facility Administrative Agent in an amount equal to its
      Pro Rata Share of the Unreimbursed Amount not later than 1:00 p.m. on the
      Business Day specified in such notice by the Revolving Credit Facility
      Administrative Agent, whereupon, subject to the provisions of Section
      2.03(c)(iii) below, each Revolving Credit Lender that so makes funds
      available shall be deemed to have made a Base Rate Loan to the Borrower in
      such amount. The Revolving Credit Facility Administrative Agent shall
      remit the funds so received to the L/C Issuer.

            (iii) With respect to any Unreimbursed Amount that is not fully
      refinanced by a Borrowing of Base Rate Loans because the conditions set
      forth in Section 5.02 (Conditions Precedent to Each Credit Extension)
      cannot be satisfied or for any other reason, the Borrower shall be deemed
      to have incurred from the applicable L/C Issuer an L/C Borrowing in the
      amount of the Unreimbursed Amount that is not so refinanced, which L/C
      Borrowing shall be due and payable on demand (together with interest) and
      shall bear interest at the Default Rate. In such event, each Revolving
      Credit Lender's payment to the Revolving Credit Facility Administrative
      Agent for the account of such L/C Issuer pursuant to Section 2.03(c)(ii)
      above shall be deemed payment in respect of its participation in such L/C
      Borrowing and shall constitute an L/C Advance from such Revolving Credit
      Lender in satisfaction of its participation obligation under this Section
      2.03.

            (iv) Until each Revolving Credit Lender funds its Revolving Loan or
      L/C Advance pursuant to this Section 2.03(c) to reimburse the applicable
      L/C Issuer for any amount drawn under any Letter of Credit, interest in
      respect of such Revolving Credit Lender's Pro Rata Share of such amount
      shall be solely for the account of the applicable L/C Issuer.

            (v) Each Revolving Credit Lender's obligation to make Revolving
      Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under
      Letters of Credit, as contemplated by this Section 2.03(c), shall be
      absolute and unconditional and shall not be affected by any circumstance,
      including (A) any set-off, counterclaim, recoupment, defense or other
      right which such Revolving Credit Lender may have against such L/C Issuer,
      the Borrower or any other Person for any reason whatsoever; (B) the
      occurrence or continuance of a Default, or (C) any other occurrence, event
      or condition, whether or not similar to any of the foregoing; provided,
      however, that each Revolving Credit Lender's obligation to make Revolving
      Loans pursuant to this Section 2.03(c) is subject to the conditions set
      forth in Section 5.02 (Conditions Precedent to Each Credit Extension)
      (other than delivery by the Borrower of a Notice of Borrowing). No such
      making of an L/C Advance shall relieve or otherwise impair the obligation
      of the Borrower to reimburse the L/C Issuer for the amount of any payment
      made by the L/C Issuer under any Letter of Credit, together with interest
      as provided herein.

            (vi) If any Revolving Credit Lender fails to make available to the
      Revolving Credit

                                       46



      Facility Administrative Agent for the account of the L/C Issuer any amount
      required to be paid by such Revolving Credit Lender pursuant to the
      foregoing provisions of this Section 2.03(c) by the time specified in
      Section 2.03(c)(ii), such L/C Issuer shall be entitled to recover from
      such Revolving Credit Lender (acting through the Revolving Credit Facility
      Administrative Agent), on demand, such amount with interest thereon for
      the period from the date such payment is required to the date on which
      such payment is immediately available to such L/C Issuer at a rate per
      annum equal to the Federal Funds Rate from time to time in effect. A
      certificate of such L/C Issuer submitted to any Revolving Credit Lender
      (through the Revolving Credit Facility Administrative Agent) with respect
      to any amounts owing under this clause (vi) shall be conclusive absent
      manifest error.

      (d) Repayment of Participations.

            (i) At any time after the L/C Issuer has made a payment under any
      Letter of Credit and has received from any Revolving Credit Lender such
      Revolving Credit Lender's L/C Advance in respect of such payment in
      accordance with Section 2.03(c), if the Revolving Credit Facility
      Administrative Agent receives for the account of such L/C Issuer any
      payment in respect of the related Unreimbursed Amount or interest thereon
      (whether directly from the Borrower or otherwise, including proceeds of
      Cash Collateral applied thereto by the Revolving Credit Facility
      Administrative Agent), the Revolving Credit Facility Administrative Agent
      will distribute to such Revolving Credit Lender its Pro Rata Share thereof
      (appropriately adjusted, in the case of interest payments, to reflect the
      period of time during which such Revolving Credit Lender's L/C Advance was
      outstanding) in the same funds as those received by the Revolving Credit
      Facility Administrative Agent.

            (ii) If any payment received by the Revolving Credit Facility
      Administrative Agent for the account of the L/C Issuer pursuant to Section
      2.03(c)(i) is required to be returned under any of the circumstances
      described in Section 11.06 (Marshalling; Payments Set Aside) (including
      pursuant to any settlement entered into by such L/C Issuer in its
      discretion), each Revolving Credit Lender shall pay to the Revolving
      Credit Facility Administrative Agent for the account of such L/C Issuer
      its Pro Rata Share thereof on demand of the Revolving Credit Facility
      Administrative Agent, plus interest thereon from the date of such demand
      to the date such amount is returned by such Revolving Credit Lender, at a
      rate per annum equal to the Federal Funds Rate from time to time in
      effect.

      (e) Obligations Absolute. The obligation of the Borrower to reimburse the
L/C Issuer for each drawing under each Letter of Credit issued by such L/C
Issuer and to repay each L/C Borrowing shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:

            (i) any lack of validity or enforceability of such Letter of Credit,
      this Agreement, any other Loan Document or any other agreement or
      instrument relating thereto;

            (ii) the existence of any claim, counterclaim, set-off, defense or
      other right that the Borrower may have at any time against any beneficiary
      or any transferee of such Letter of Credit (or any Person for whom any
      such beneficiary or any such transferee may be acting), such L/C Issuer or
      any other Person, whether in connection with this Agreement, the
      transactions contemplated hereby or by such Letter of Credit or any
      agreement or instrument relating thereto, or any unrelated transaction;

            (iii) any draft, demand, certificate or other document presented
      under such Letter of

                                       47



      Credit proving to be forged, fraudulent, invalid or insufficient in any
      respect or any statement therein being untrue or inaccurate in any
      respect; or any loss or delay in the transmission or otherwise of any
      document required in order to make a drawing under such Letter of Credit;

            (iv) any payment by such L/C Issuer under such Letter of Credit
      against presentation of a draft or certificate that does not strictly
      comply with the terms of such Letter of Credit; or any payment made by
      such L/C Issuer under such Letter of Credit to any Person purporting to be
      a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
      creditors, liquidator, receiver or other representative of or successor to
      any beneficiary or any transferee of such Letter of Credit, including any
      arising in connection with any proceeding under any Debtor Relief Law; or

            (v) any other circumstance or happening whatsoever, whether or not
      similar to any of the foregoing, including any other circumstance that
      might otherwise constitute a defense available to, or a discharge of, the
      Borrower.

      The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower's instructions or other irregularity, the
Borrower will immediately notify the applicable L/C Issuer. The Borrower shall
be conclusively deemed to have waived any such claim against such L/C Issuer and
its correspondents unless such notice is given as aforesaid.

      (f) Role of L/C Issuer. Each Revolving Credit Lender and the Borrower
agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall
not have any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by such Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. None of the
L/C Issuer, any Agent-Related Person or any of the respective correspondents,
participants or assignees of the L/C Issuer shall be liable to any Lender for
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Revolving Credit Lenders or the Required Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct by such L/C Issuer; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Letter of Credit Application. The Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the Borrower's pursuing
such rights and remedies as it may have against the beneficiary or transferee at
law or under any other agreement. None of the L/C Issuer, any Agent-Related
Person, nor any of the respective correspondents, participants or assignees of
the L/C Issuer, shall be liable or responsible for any of the matters described
in clauses (i) through (v) of Section 2.03(e); provided, however, that
notwithstanding anything to the contrary in such clauses, the Borrower may have
a claim against the L/C Issuer, and the L/C Issuer may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by such L/C Issuer's willful misconduct or gross negligence
or such L/C Issuer's willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit issued by
it. In furtherance and not in limitation of the foregoing, the L/C Issuer may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the L/C Issuer shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

                                       48



      (g) Cash Collateral. Upon the request of the Revolving Credit Facility
Administrative Agent, (i) if an L/C Issuer has honored any full or partial
drawing request under any Letter of Credit and such drawing has resulted in an
L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any
Letter of Credit may for any reason remain outstanding and partially or wholly
undrawn, the Borrower shall immediately Cash Collateralize the then Outstanding
Amount of all L/C Obligations (determined as of the date of such L/C Borrowing
or the Letter of Credit Expiration Date, as the case may be). For purposes
hereof, "Cash Collateralize" means to pledge and deposit with or deliver to the
Collateral Agent, for the benefit of the L/C Issuer and the Revolving Credit
Lenders, as collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the applicable L/C Issuer (which documents are hereby
consented to by the Revolving Credit Lenders) in an amount equal to the
Outstanding Amount of L/C Obligations. The Borrower hereby grants to the
Collateral Agent, for the benefit of the L/C Issuer and the Revolving Credit
Lenders, a security interest in all such cash, deposit accounts and all balances
therein and all proceeds of the foregoing. Cash collateral shall be maintained
in one or more Deposit Accounts subject to a Deposit Account Control Agreement.

      (h) Applicability of ISP98. Unless otherwise expressly agreed by the
applicable L/C Issuer and the Borrower when a Letter of Credit is issued, the
rules of the "International Standby Practices 1998" published by the Institute
of International Banking Law & Practice (or such later version thereof as may be
in effect at the time of issuance) shall apply to each Letter of Credit.

      (i) Letter of Credit Fees. The Borrower shall pay to the Revolving Credit
Facility Administrative Agent for the account of each Revolving Credit Lender in
accordance with its Pro Rata Share a Letter of Credit fee for each Letter of
Credit equal to (i) the Applicable Margin applicable to Revolving Loans that are
Eurodollar Rate Loans multiplied by (ii) the daily maximum amount available to
be drawn under such Letter of Credit (whether or not such maximum amount is then
in effect under such Letter of Credit). Such Letter of Credit fees shall be
computed on a quarterly basis in arrears. Such Letter of Credit fees shall be
due and payable on the first Business Day after the end of each March, June,
September and December, commencing with the first such date to occur after the
issuance of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand. If there is any change in the Applicable Margin during any
quarter, the daily maximum amount of each Letter of Credit shall be computed and
multiplied by the Applicable Margin separately for each period during such
quarter that such Applicable Margin was in effect.

      (j) Documentary and Processing Charges Payable to L/C Issuer. The Borrower
shall pay directly to the L/C Issuer for its own account the fees specified in
Section 2.12 (Fees).

      (k) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.

2.04 SWING LINE LOANS.

      (a) The Swing Line. On the terms and subject to the conditions contained
in this Agreement, the Swing Line Lender agrees to make loans (each such loan, a
"Swing Line Loan") to the Borrower in Dollars from time to time on any Business
Day from the date hereof until the Revolving Credit Termination Date in an
aggregate amount not to exceed at any time outstanding the amount of the Swing
Line Sublimit, notwithstanding the fact that such Swing Line Loans, when
aggregated with the Pro Rata Share of the Outstanding Amount of Revolving Loans
and L/C Obligations of the Swing Line Lender in its capacity as a Revolving
Credit Lender, may exceed the amount of such Revolving Credit Lender's Revolving
Credit Commitment; provided, however, that after giving effect to any Borrowing
of Swing Line Loans, (i) the Total Revolving Outstandings shall not exceed the
Aggregate Revolving Credit

                                       49



Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of
any Revolving Credit Lender, plus such Revolving Credit Lender's Pro Rata Share
of the Outstanding Amount of all L/C Obligations, plus such Revolving Credit
Lender's Pro Rata Share of the Outstanding Amount of all Swing Line Loans shall
not exceed such Revolving Credit Lender's Revolving Credit Commitment, and
provided, further, that the Borrower shall not use the proceeds of any Swing
Line Loan to refinance any outstanding Swing Line Loan. Within the limits set
forth in this clause (a), amounts of Swing Line Loans repaid may be reborrowed
under this clause (a). Each Swing Line Loan shall be a Base Rate Loan.
Immediately upon the making of a Swing Line Loan, each Revolving Credit Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Swing Line Lender a risk participation in such Swing Line Loan
in an amount equal to the product of such Revolving Credit Lender's Pro Rata
Share multiplied by the amount of such Swing Line Loan.

      (b) Borrowing Procedures. Each Borrowing of Swing Line Loans shall be made
upon the Borrower's irrevocable notice to the Swing Line Lender and the
Revolving Credit Facility Administrative Agent, which may be given by telephone.
Each such notice must be received by the Swing Line Lender and the Revolving
Credit Facility Administrative Agent not later than 1:00 p.m. on the requested
borrowing date, and shall specify (i) the amount to be borrowed, which shall be
a minimum principal amount of $100,000, or a whole multiple of $100,000 in
excess thereof, and (ii) the requested borrowing date, which shall be a Business
Day. Each such telephonic notice must be confirmed promptly by delivery to the
Swing Line Lender and the Revolving Credit Facility Administrative Agent of a
written Swing Line Loan Request, appropriately completed and signed by a
Responsible Officer of the Borrower. Promptly after receipt by the Swing Line
Lender of any telephonic Swing Line Loan Request, the Swing Line Lender will
confirm with the Revolving Credit Facility Administrative Agent (by telephone or
in writing) that the Revolving Credit Facility Administrative Agent has also
received such Swing Line Loan Request and, if not, the Swing Line Lender will
notify the Revolving Credit Facility Administrative Agent (by telephone or in
writing) of the contents thereof. Unless the Swing Line Lender has received
notice (by telephone or in writing) from the Revolving Credit Facility
Administrative Agent (including at the request of any Revolving Credit Lender)
prior to 2:00 p.m. on the date of the proposed Borrowing of Swing Line Loans (A)
directing the Swing Line Lender not to make such Swing Line Loan as a result of
the limitations set forth in the proviso to the first sentence of Section
2.04(a) (The Swing Line), or (B) that one or more of the applicable conditions
specified in Article V (Conditions Precedent) is not then satisfied, then,
subject to the terms and conditions hereof, the Swing Line Lender will, not
later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan
Request, make the amount of its Swing Line Loan available to the Borrower.

      (c) Refinancing of Swing Line Loans.

            (i) The Swing Line Lender at any time in its sole and absolute
      discretion may request, on behalf of the Borrower (which hereby
      irrevocably requests and authorizes the Swing Line Lender to so request on
      its behalf), that each Revolving Credit Lender make a Base Rate Loan in an
      amount equal to such Revolving Credit Lender's Pro Rata Share of the
      amount of Swing Line Loans then outstanding. Such request shall be made in
      writing (which written request shall be deemed to be a Notice of Borrowing
      for purposes hereof) and in accordance with the requirements of Section
      2.02 (Borrowings, Conversions and Continuations of Loans), without regard
      to the minimum and multiples specified therein for the principal amount of
      Base Rate Loans, but subject to the unutilized portion of the Aggregate
      Revolving Credit Commitments and the conditions set forth in Section 5.02
      (Conditions Precedent to Each Credit Extension). The Swing Line Lender
      shall furnish the Borrower with a copy of the applicable Notice of
      Borrowing promptly after delivering such notice to the Revolving Credit
      Facility Administrative Agent. Each Lender shall make an amount equal to
      its Pro Rata Share of the amount specified in such Notice of Borrowing
      available to the Revolving Credit Facility Administrative Agent in

                                       50



      immediately available funds for the account of the Swing Line Lender at
      the Administrative Agent's Office of the Revolving Credit Facility
      Administrative Agent not later than 1:00 p.m. on the day specified in such
      Notice of Borrowing, whereupon, subject to Section 2.04(c)(ii), each
      Revolving Credit Lender that so makes funds available shall be deemed to
      have made a Base Rate Loan to the Borrower in such amount. The Revolving
      Credit Facility Administrative Agent shall remit the funds so received to
      the Swing Line Lender.

            (ii) If for any reason any Swing Line Loan cannot be refinanced by
      such a Borrowing of Revolving Loans in accordance with Section 2.04(c)(i),
      the request for Base Rate Loans submitted by the Swing Line Lender as set
      forth herein shall be deemed to be a request by the Swing Line Lender that
      each of the Revolving Credit Lenders fund its risk participation in the
      relevant Swing Line Loan and each Revolving Credit Lender's payment to the
      Revolving Credit Facility Administrative Agent for the account of the
      Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment
      in respect of such participation.

            (iii) If any Revolving Credit Lender fails to make available to the
      Revolving Credit Facility Administrative Agent for the account of the
      Swing Line Lender any amount required to be paid by such Lender pursuant
      to the foregoing provisions of this Section 2.04(c) by the time specified
      in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover
      from such Revolving Credit Lender (acting through the Revolving Credit
      Facility Administrative Agent), on demand, such amount with interest
      thereon for the period from the date such payment is required to the date
      on which such payment is immediately available to the Swing Line Lender at
      a rate per annum equal to the Federal Funds Rate from time to time in
      effect. A certificate of the Swing Line Lender submitted to any Revolving
      Credit Lender (through the Revolving Credit Facility Administrative Agent)
      with respect to any amounts owing under this clause (iii) shall be
      conclusive absent manifest error.

            (iv) Each Revolving Credit Lender's obligation to make Revolving
      Loans or to purchase and fund risk participations in Swing Line Loans
      pursuant to this Section 2.04(c) shall be absolute and unconditional and
      shall not be affected by any circumstance, including (A) any set-off,
      counterclaim, recoupment, defense or other right that such Revolving
      Credit Lender may have against the Swing Line Lender, the Borrower or any
      other Person for any reason whatsoever, (B) the occurrence or continuance
      of a Default, or (C) any other occurrence, event or condition, whether or
      not similar to any of the foregoing; provided, however, that each
      Revolving Credit Lender's obligation to make Revolving Loans pursuant to
      this Section 2.04(c) is subject to the conditions set forth in Section
      5.02 (Conditions Precedent to Each Credit Extension). No such purchase or
      funding of risk participations shall relieve or otherwise impair the
      obligation of the Borrower to repay Swing Line Loans, together with
      interest as provided herein.

      (d) Repayment of Participations.

            (i) At any time after any Revolving Credit Lender has purchased and
      funded a risk participation in a Swing Line Loan, if the Swing Line Lender
      receives any payment on account of such Swing Line Loan, the Swing Line
      Lender will distribute to such Revolving Credit Lender its Pro Rata Share
      of such payment (appropriately adjusted, in the case of interest payments,
      to reflect the period of time during which such Lender's risk
      participation was funded) in the same funds as those received by the Swing
      Line Lender.

            (ii) If any payment received by the Swing Line Lender in respect of
      principal or interest on any Swing Line Loan is required to be returned by
      the Swing Line Lender under any of the circumstances described in Section
      11.06 (Marshalling; Payments Set Aside) (including

                                       51



      pursuant to any settlement entered into by the Swing Line Lender in its
      discretion), each Revolving Credit Lender shall pay to the Swing Line
      Lender its Pro Rata Share thereof on demand of the Revolving Credit
      Facility Administrative Agent, plus interest thereon from the date of such
      demand to the date such amount is returned, at a rate per annum equal to
      the Federal Funds Rate. The Revolving Credit Facility Administrative Agent
      will make such demand upon the request of the Swing Line Lender.

      (e) Interest for Account of Swing Line Lender. The Swing Line Lender shall
be responsible for invoicing the Borrower for interest on the Swing Line Loans.
Until each Revolving Credit Lender funds its Revolving Loans that are Base Rate
Loans or risk participation pursuant to this Section 2.04 to refinance such
Revolving Credit Lender's Pro Rata Share of any Swing Line Loan, interest in
respect of such Pro Rata Share shall be solely for the account of the Swing Line
Lender.

      (f) Payments Directly to Swing Line Lender. The Borrower shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Swing Line Lender.

2.05 REDUCTION AND TERMINATION OF THE COMMITMENTS

      (a) The Borrower may, upon at least three Business Days' prior notice to
the applicable Administrative Agent, terminate in whole or reduce in part
ratably the unused portions of the respective Revolving Credit Commitments of
the Revolving Credit Lenders or, prior to the Closing Date, the unused portions
of the Term Loan Commitments of the Term Loan Lenders; provided, however, that
each partial reduction shall be in an aggregate amount of not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof. The amount
of any Term Loan Commitment that is not borrowed on the Closing Date shall
thereafter be terminated. In addition, all outstanding Revolving Credit
Commitments shall terminate on the Revolving Credit Termination Date.

      (b) The then current Aggregate Revolving Credit Commitments shall be
reduced on each date on which a prepayment of Revolving Loans or Swing Line
Loans is made or required to be made pursuant to Section 2.08 (Mandatory
Prepayments) (or would be required to be made had the then outstanding Revolving
Loans and Swing Line Loans equaled the Aggregate Revolving Credit Commitments
then in effect), in each case in the amount of such prepayment (or deemed
prepayment) (and the Revolving Credit Commitment of each Revolving Credit Lender
shall be reduced by its Pro Rata Share of such amount).

2.06 REPAYMENT OF LOANS.

      (a) The Borrower promises to repay the entire unpaid principal amount of
the Revolving Loans and the Swing Line Loans on the Revolving Credit Termination
Date.

      (b) The Borrower promises to repay to the Swing Line Lender, each Swing
Line Loan on the earlier to occur of (i) written demand by the Swing Line Lender
and (ii) the Revolving Credit Termination Date.

      (c) The Borrower promises to repay the Term Loans at the dates and in the
amounts set forth below:

                                       52





       Date                                                                      Amount
- ------------------                                                            ------------
                                                                           
September 30, 2005                                                            $    812,500

December 31, 2005                                                             $    812,500

March 31, 2006                                                                $    812,500

June 30, 2006                                                                 $    812,500

September 30, 2006                                                            $    812,500

December 31, 2006                                                             $    812,500

March 31, 2007                                                                $    812,500

June 30, 2007                                                                 $    812,500

September 30, 2007                                                            $    812,500

December 31, 2007                                                             $    812,500

March 31, 2008                                                                $    812,500

June 30, 2008                                                                 $    812,500

September 30, 2008                                                            $    812,500

December 31, 2008                                                             $    812,500

March 31, 2009                                                                $    812,500

June 30, 2009                                                                 $    812,500

September 30, 2009                                                            $    812,500

December 31, 2009                                                             $    812,500

March 31, 2010                                                                $    812,500

June 30, 2010                                                                 $    812,500

September 30, 2010                                                            $    812,500

December 31, 2010                                                             $    812,500

March 31, 2011                                                                $    812,500

June 30, 2011                                                                 $    812,500

September 30, 2011                                                            $    812,500

December 31, 2011                                                             $    812,500

March 31, 2012                                                                $    812,500

July 1, 2012                                                                  $303,062,500


provided, however, that the Borrower shall repay the entire unpaid principal
amount of the Term Loans on the Term Loan Maturity Date.

                                       53



2.07 OPTIONAL PREPAYMENTS.

      (a) Revolving Loans; Swing Line Loans. The Borrower may prepay the
outstanding principal amount of the Revolving Loans and Swing Line Loans in
whole or in part at any time; provided, however, that if any prepayment of any
Eurodollar Rate Loan is made by the Borrower other than on the last day of an
Interest Period for such Loan, the Borrower shall also pay any amount owing
pursuant to Section 3.05 (Funding Losses); and provided, further, that each
partial prepayment of (i) Revolving Loans shall be in an aggregate amount not
less than $5,000,000 or integral multiples of $1,000,000 in excess thereof and
(ii) Swing Line Loans shall be in an aggregate amount not less than $100,000 or
integral multiples of $100,000 in excess thereof.

      (b) Term Loans. The Borrower may, upon at least three Business Days' prior
notice to the Term Loan Facility Administrative Agent stating the proposed date
and aggregate principal amount of the prepayment, prepay the outstanding
principal amount of the Term Loans, in whole or in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid;
provided, however, that if any prepayment of any Eurodollar Rate Loan is made by
the Borrower other than on the last day of an Interest Period for such Loan, the
Borrower shall also pay any amounts owing pursuant to Section 3.05 (Funding
Losses); and provided, further, that each partial prepayment shall be in an
aggregate amount not less than $5,000,000 or integral multiples of $1,000,000 in
excess thereof and that any such partial prepayment shall be applied to reduce
ratably the remaining installments of such outstanding principal amount of the
Term Loans in the stated order of their maturities. Upon the giving of such
notice of prepayment, the principal amount of the Term Loans specified to be
prepaid shall become due and payable on the date specified for such prepayment.

      (c) The Borrower shall not voluntarily prepay the principal amount of any
Revolving Loan or any Term Loan other than as provided in this Section 2.07.

2.08 MANDATORY PREPAYMENTS.

      (a) Upon receipt by the Borrower or any of its Subsidiaries of

            (i) (x) Net Cash Proceeds arising from any Disposition, Involuntary
Disposition, Debt Issuance or (y) without duplication, Extraordinary Receipts,
in each case, the Borrower shall immediately prepay the Loans (or Cash
Collateralize the Letters of Credit) in an amount equal to 100% of such Net Cash
Proceeds or

            (ii) Net Cash Proceeds arising from any Equity Issuance, the
Borrower shall immediately prepay the Loans (or Cash Collateralize the Letters
of Credit) in an amount equal to 50% of such Net Cash Proceeds. Any such
mandatory prepayment shall be applied in accordance with clause (c) below;

provided, however, that:

                  (A) no Net Cash Proceeds of any Equity Issuance or any Debt
            Issuance shall be applied to prepay the Loans to the extent that
            such Net Cash Proceeds are required to prepay the Senior Bridge
            Loans pursuant to the Senior Bridge Credit Agreement or to redeem or
            purchase any Exchange Securities (if issued) pursuant to the
            Exchange Indenture;

                  (B) no Net Cash Proceeds of any Equity Issuance shall be
            required to be applied to prepay the Loans to the extent that they
            are directly applied by the Borrower to

                                       54



            repay, redeem or purchase any Senior Subordinated Notes or other
            Subordinated Indebtedness; provided, however, that such Net Cash
            Proceeds may only be so applied pursuant to this clause (B) if,
            immediately after giving effect to such repayment, redemption or
            purchase, the Consolidated Total Leverage Ratio shall be less than
            4.50:1;

                  (C) in the case of any Net Cash Proceeds arising from any (I)
            Equity Issuance made to finance a Permitted Acquisition, (II)
            Disposition or (III) Involuntary Disposition, (X) if the Borrower
            shall have delivered a Reinvestment Notice with respect to such Net
            Cash Proceeds, no prepayment shall be required under this Section
            2.08(a) with respect to the Net Cash Proceeds of such Reinvestment
            Event until the applicable Reinvestment Prepayment Date and (Y) on
            the applicable Reinvestment Prepayment Date, the Borrower shall
            prepay the Loans (or Cash Collateralize the Letters of Credit) in an
            amount equal to the Reinvestment Prepayment Amount applicable to
            such Reinvestment Event, if any, on the Reinvestment Prepayment Date
            with respect to such Reinvestment Event, which mandatory prepayment
            shall be applied in accordance with clause (c) below;

                  (D) the Borrower shall not be required to make a prepayment
            pursuant to this Section 2.08(a) with the Net Cash Proceeds arising
            from the Disposition or Involuntary Disposition of any Property that
            is subject to (I) a HUD Financing or (II) other Indebtedness that is
            secured by a Lien on such Property that is prior to the Lien of the
            Collateral Agent, in each case to the extent that the Borrower or
            the applicable Subsidiary is required pursuant to the documentation
            governing such HUD Financing or other Indebtedness to apply such Net
            Cash Proceeds to prepay such HUD Financing or other Indebtedness;
            and

                  (E) nothing in this Section 2.08 shall be construed to permit
            (or be a consent to) the issuance or incurrence of any Indebtedness
            or Equity Securities, the Disposition of any Property or the
            Involuntary Disposition of any Property that is not, in any such
            case, otherwise permitted by this Agreement.

      (b) The Borrower shall prepay the Loans within 95 days after the last day
of each fiscal year commencing with the fiscal year ending on or about December
31, 2006, in an amount equal to 50% of Excess Cash Flow for such fiscal year;
provided, however, that (x) if the Consolidated Total Leverage Ratio is less
than 4.5:1.00 as of the last day of the four fiscal quarter period most recently
ended, such percentage shall be reduced to 25% and (y) if the Consolidated Total
Leverage Ratio is less than 3.5:1.00 as of the last day of the four fiscal
quarter period most recently ended, such percentage shall be reduced zero. Any
such mandatory prepayment shall be applied in accordance with clause (c) below.

      (c) Subject to the provisions of Section 2.13(g) (Payments and
Computations), any prepayments made by the Borrower required to be applied in
accordance with this clause (c) shall be applied as follows: first, other than
in respect of prepayments made with the Net Cash Proceeds of a Reinvestment
Event (but including the Net Cash Proceeds of a Reinvestment Event on the
applicable Reinvestment Prepayment Date), to repay the outstanding principal
balance of the Term Loans, until such Term Loans shall have been prepaid in
full; second, to repay the outstanding principal balance of the Swing Line Loans
until such Swing Line Loans shall have been repaid in full; third, solely in the
case of any prepayments made by the Borrower with the Net Cash Proceeds of any
Disposition or Involuntary Disposition, to repay the outstanding principal
balance of the Revolving Loans until such Revolving Loans shall have been paid
in full; and then, to Cash Collateralize any L/C Obligations in the manner set
forth in Section 9.03 (Actions in Respect of Letters of Credit) until all such
L/C Obligations have been fully Cash Collateralized in the manner set forth
therein. All repayments of the Term Loans made

                                       55



pursuant to this clause (c) shall be applied to reduce ratably the remaining
installments of such outstanding principal amounts of the Term Loans in the
inverse order of their maturities. All repayments of Revolving Loans and Swing
Line Loans required to be made pursuant to this clause (c) shall result in a
permanent reduction of the Revolving Credit Commitments to the extent provided
in Section 2.05(b) (Reduction and Termination of the Commitments); provided,
however, that, if such repayment was made from the Net Cash Proceeds of a
Reinvestment Event, the Aggregate Revolving Credit Commitments shall not be
reduced by such prepayment to the extent of the Reinvestment Deferred Amount of
such Reinvestment Event until the Reinvestment Prepayment Date corresponding
thereto and, on such Reinvestment Prepayment Date, the Aggregate Revolving
Credit Commitments shall be reduced only to the extent of the Reinvestment
Prepayment Amount applicable to such Reinvestment Event, if any; and provided,
further, that, upon the occurrence of any Default or Event of Default on or
before the Reinvestment Prepayment Date corresponding to such Reinvestment
Event, the Aggregate Revolving Credit Commitments shall be reduced by the entire
Reinvestment Deferred Amount corresponding to such Reinvestment Event.

      (d) If at any time, the aggregate principal amount of Revolving Credit
Outstandings exceeds the Aggregate Revolving Credit Commitments at such time,
the Borrower shall forthwith prepay the Swing Line Loans first and then the
Revolving Loans then outstanding in an amount equal to such excess. If any such
excess remains after repayment in full of the aggregate outstanding Swing Line
Loans and Revolving Loans, the Borrower shall Cash Collateralize the Letter of
Credit Obligations in the manner set forth in Section 9.03 (Actions in Respect
of Letters of Credit).

2.09 INTEREST.

      (a) Rate of Interest. All Loans and the outstanding amount of all other
Obligations (other than pursuant to Swap Contracts that are Loan Documents, to
the extent such Swap Contracts provide for the accrual of interest on unpaid
obligations) shall bear interest, in the case of Loans, on the unpaid principal
amount thereof from the date such Loans are made and, in the case of such other
Obligations, from the date such other Obligations are due and payable until, in
all cases, paid in full, except as otherwise provided in clause (c) below, as
follows:

            (i) if a Base Rate Loan or such other Obligation, at a rate per
annum equal to the sum of (A) the Base Rate as in effect from time to time and
(B) the Applicable Margin; and

            (ii) if a Eurodollar Rate Loan, at a rate per annum equal to the sum
of (A) the Eurodollar Rate determined for the applicable Interest Period and (B)
the Applicable Margin in effect from time to time during such Interest Period.

      (b) Interest Payments. Interest accrued on (i) each Base Rate Loan (other
than Swing Line Loans) shall be payable in arrears (A) on the first Business Day
of each calendar quarter, commencing on the first such day following the making
of such Base Rate Loan, (B) in the case of Base Rate Loans that are Term Loans,
upon the payment or prepayment thereof in full or in part and (C) if not
previously paid in full, at maturity (whether by acceleration or otherwise) of
such Base Rate Loan, (ii) Swing Line Loans shall be payable in arrears on the
first Business Day of the immediately succeeding calendar quarter, (iii) each
Eurodollar Rate Loan shall be payable in arrears (A) on the last day of each
Interest Period applicable to such Loan and, if such Interest Period has a
duration of more than three months, on each date during such Interest Period
occurring every three months from the first day of such Interest Period, (B)
upon the payment or prepayment thereof in full or in part and (C) if not
previously paid in full, at maturity (whether by acceleration or otherwise) of
such Eurodollar Rate Loan and (iv) the amount of all other Obligations shall be
payable on demand from and after the time such Obligation becomes due and
payable (whether by acceleration or otherwise).

                                       56



      (c) Default Interest. Notwithstanding the rates of interest specified in
clause (a) above or elsewhere herein, effective immediately upon the occurrence
of an Event of Default and for as long thereafter as such Event of Default shall
be continuing, the principal balance of all Loans and the amount of all other
Obligations then due and payable shall bear interest at the Default Rate
applicable to such Loans or other Obligations from time to time. Such interest
shall be payable on the date that would otherwise be applicable to such interest
pursuant to clause (b) above or otherwise on demand.

2.10 CONVERSION/CONTINUATION OPTION.

      (a) The Borrower may elect (i) on any Business Day to convert Base Rate
Loans (other than Swing Line Loans) or any portion thereof to Eurodollar Rate
Loans and (ii) at the end of any applicable Interest Period, to convert
Eurodollar Rate Loans or any portion thereof into Base Rate Loans or to continue
such Eurodollar Rate Loans or any portion thereof for an additional Interest
Period; provided, however, that the aggregate amount of the Eurodollar Loans for
each Interest Period must be in the amount of (x) in the case of any Revolving
Loans, at least $1,000,000 or an integral multiple of $100,000 in excess thereof
and (y) in the case of the Term Loans, at least $1,000,000 or an integral
multiple of $1,000,000 in excess thereof. Each conversion or continuation shall
be allocated among the Loans of each Lender in accordance with such Lender's Pro
Rata Share. Each such election shall be in substantially the form of Exhibit D
(Form of Notice of Conversion or Continuation) (a "Notice of Conversion or
Continuation") and shall be made by giving the Administrative Agent at least
three Business Days' prior written notice specifying (A) the amount and type of
Loan being converted or continued, (B) in the case of a conversion to or a
continuation of Eurodollar Rate Loans, the applicable Interest Period and (C) in
the case of a conversion, the date of such conversion.

      (b) The applicable Administrative Agent shall promptly notify each
applicable Lender of its receipt of a Notice of Conversion or Continuation and
of the options selected therein. Notwithstanding the foregoing, (i) no
conversion in whole or in part of Base Rate Loans to Eurodollar Rate Loans
having Interest Periods which are longer than one week shall be permitted at any
time prior to the Syndication Completion Date and (ii) no conversion in whole or
in part of Base Rate Loans to Eurodollar Rate Loans and no continuation in whole
or in part of Eurodollar Rate Loans upon the expiration of any applicable
Interest Period shall be permitted at any time at which (A) a Default or an
Event of Default shall have occurred and be continuing or (B) the continuation
of, or conversion into, a Eurodollar Rate Loan would violate any provision of
Sections 3.02 (Illegality), 3.03 (Determination of Rates; Inability to Determine
Rates), 3.04 (Increased Cost and Reduced Return; Capital Adequacy) or 3.05
(Funding Losses). If, within the time period required under the terms of this
Section 2.10, the Administrative Agent does not receive a Notice of Conversion
or Continuation from the Borrower containing a permitted election to continue
any Eurodollar Rate Loans for an additional Interest Period or to convert any
such Loans, then, upon the expiration of the applicable Interest Period, such
Loans shall be automatically converted to Base Rate Loans, Each Notice of
Conversion or Continuation shall be irrevocable.

2.11 EVIDENCE OF DEBT.

      (a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing Indebtedness of the Borrower to such Lender
resulting from each Loan or other Credit Extension of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.

      (b) (i) Each Administrative Agent, acting as agent of the Borrower solely
for this purpose, shall establish and maintain at its address referred to in
Section 11.02 (Notices, Etc.) a record of ownership (the "Register") in which
each Administrative Agent agrees to register by book entry:

                                       57



                  (A) in the case of the Revolving Credit Facility
            Administrative Agent, such Administrative Agent's, each Revolving
            Credit Lender's and the L/C Issuer's interest in each Revolving
            Loan, each Letter of Credit and each L/C Obligation, and in the
            right to receive any payments hereunder and any assignment of any
            such interest or rights. In addition, the Revolving Credit Facility
            Administrative Agent, acting as agent of the Borrower solely for
            this purpose, shall establish and maintain accounts in the
            applicable Register in accordance with its usual practice in which
            it shall record (I) the names and addresses of the Revolving Credit
            Lenders and the L/C Issuer, (II) the Commitments of each Revolving
            Credit Lender from time to time, (III) the amount of each Revolving
            Loan made and, if a Eurodollar Rate Loan, the Interest Period
            applicable thereto, (IV) the amount of any principal or interest due
            and payable, and paid, by the Borrower to, or for the account of,
            each Revolving Credit Lender hereunder, (V) the amount that is due
            and payable, and paid, by the Borrower to, or for the account of,
            the L/C Issuer, including the amount of L/C Obligations (specifying
            the amount of any L/C Obligations in respect of Unreimbursed
            Amounts) due and payable to an L/C Issuer, and (VI) the amount of
            any sum received by the Revolving Credit Facility Administrative
            Agent or the Collateral Agent hereunder from the Borrower, whether
            such sum constitutes principal or interest (and the type of Loan to
            which it applies), fees, expenses or other amounts due under the
            Loan Documents and each Revolving Credit Lender's and L/C Issuer's,
            as the case may be, share thereof, if applicable; and

                  (B) in the case of the Term Loan Facility Administrative
            Agent, such Administrative Agent's and each Term Loan Lender's
            interest in each Term Loan and in the right to receive any payments
            hereunder and any assignment of any such interest or rights. In
            addition, the Term Loan Facility Administrative Agent, acting as
            agent of the Borrower solely for this purpose and for tax purposes,
            shall establish and maintain accounts in the applicable Register in
            accordance with its usual practice in which it shall record (I) the
            names and addresses of the Term Loan Lenders, (II) the Commitments
            of each Term Loan Lender from time to time, (III) the amount of each
            Term Loan made and, if a Eurodollar Rate Loan, the Interest Period
            applicable thereto, (IV) the amount of any principal or interest due
            and payable, and paid, by the Borrower to, or for the account of,
            each Term Loan Lender hereunder and (V) the amount of any sum
            received by the Term Loan Administrative Agent hereunder from the
            Borrower, whether such sum constitutes principal or interest (and
            the type of Loan to which it applies), fees, expenses or other
            amounts due under the Loan Documents and each Term Loan Lender's
            share thereof, if applicable.

            (ii) Notwithstanding anything to the contrary contained in this
Agreement, the Loans (including the Notes evidencing such Loans) and the L/C
Obligations are registered obligations and the right, title, and interest of the
Lenders and the L/C Issuer and their assignees in and to such Loans or L/C
Obligations, as the case may be, shall be transferable only upon notation of
such transfer in the applicable Register. A Note shall only evidence the
Lender's or a registered assignee's right, title and interest in and to the
related Loan, and in no event is any such Note to be considered a bearer
instrument or obligation. This Section 2.11(b) and Section 11.07 (Assignments
and Participations) shall be construed so that the Loans and L/C Obligations 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 and any related regulations (or any
successor provisions of the Code or such regulations).

      (c) The entries made in the Register and in the accounts therein
maintained pursuant to clauses (a) and (b) above shall, to the extent permitted
by applicable Law, be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided, however, that the failure of any

                                       58



Lender or any Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans and other Obligations in accordance with their terms. In addition, the
Loan Parties, each Administrative Agent, the Lenders and the L/C Issuer shall
treat each Person whose name is recorded in the applicable Register as a Lender
or as an L/C Issuer, as applicable, for all purposes of this Agreement.
Information contained in the Register with respect to any Lender or L/C Issuer
shall be available for inspection by the Borrower, each Administrative Agent,
the Collateral Agent, such Lender or such L/C Issuer at any reasonable time and
from time to time upon reasonable prior notice.

      (d) Notwithstanding any other provision of the Agreement, in the event
that any Lender requests that the Borrower execute and deliver a promissory note
or notes payable to such Lender in order to evidence the Indebtedness owing to
such Lender by the Borrower hereunder, the Borrower shall promptly execute and
deliver a Note or Notes to such Lender evidencing any Revolving Loans, Term
Loans and Swing Line Loans, as the case may be, of such Lender, substantially in
the forms of Exhibit E-1 (Form of Revolving Note), Exhibit E-2 (Form of Term
Loan Note) or Exhibit E-3 (Form of Swing Line Note), as applicable,
respectively.

2.12 FEES.

      (a) Unused Commitment Fee. The Borrower agrees to pay in immediately
available Dollars to each Revolving Credit Lender a commitment fee on the actual
daily amount by which the Revolving Credit Commitment of such Revolving Credit
Lender exceeds such Lender's Pro Rata Share of the sum of (i) the aggregate
Outstanding Amount of Revolving Loans and (ii) the Outstanding Amount of the
aggregate L/C Obligations (the "Unused Commitment Fee") from the date hereof
through the Revolving Credit Termination Date at the Unused Commitment Fee Rate,
payable in arrears (x) on the first Business Day of each calendar quarter,
commencing on the first such Business Day following the Closing Date and (y) on
the Revolving Credit Termination Date.

      (b) Letter of Credit Fees. The Borrower agrees to pay the following
amounts with respect to Letters of Credit issued by the L/C Issuer:

            (i) to the L/C Issuer for its own account with respect to each
Letter of Credit issued by the L/C Issuer, an issuance fee equal to 0.125% of
the maximum undrawn face amount of such Letter of Credit, payable on the date of
issuance of such Letter of Credit;

            (ii) to the Revolving Credit Facility Administrative Agent for the
ratable benefit of the Revolving Credit Lenders, with respect to each Letter of
Credit, a fee accruing in Dollars at a rate per annum equal to the Applicable
Margin for Revolving Loans that are Eurodollar Rate Loans on the maximum undrawn
face amount of such Letter of Credit, payable in arrears (A) on the first
Business Day of each calendar quarter, commencing on the first such Business Day
following the issuance of such Letter of Credit and (B) on the Revolving Credit
Termination Date; provided, however, that during the continuance of an Event of
Default, such fee shall be increased by two percent (2%) per annum (instead of,
and not in addition to, any increase pursuant to Section 2.09(c) (Interest)) and
shall be payable on demand; and

            (iii) to the L/C Issuer of any Letter of Credit, with respect to the
issuance, amendment or transfer of each Letter of Credit and each drawing made
thereunder, documentary and processing charges in accordance with such L/C
Issuer's standard schedule for such charges in effect at the time of issuance,
amendment, transfer or drawing, as the case may be.

                                       59



      (c) Additional Fees. The Borrower has agreed to pay to certain of the
Agents and the Arrangers additional fees, the amount and dates of payment of
which are embodied in the Fee Letter.

2.13 PAYMENTS AND COMPUTATIONS.

      (a) The Borrower shall make each payment hereunder (including fees and
expenses) not later than 2:00 p.m. on the day when due, in Dollars to (i) in the
case of any payments in respect of the Revolving Credit Facility, the Revolving
Credit Facility Administrative Agent and (ii) in the case of payments in respect
of the Term Loan Facility, to the Term Loan Facility Administrative Agent, in
each case, at its respective address referred to in Section 11.02 (Notices,
Etc.) in immediately available funds without set-off or counterclaim. The
applicable Administrative Agent shall promptly thereafter cause to be
distributed immediately available funds relating to the payment of principal,
interest or fees to the applicable Lenders, in accordance with the application
of payments set forth in clause (f) or (g) below, as applicable, for the account
of their respective Lending Offices; provided, however, that amounts payable
pursuant to Sections 3.02 (Illegality), 3.03 (Determination of Rates; Inability
to Determine Rates), 3.04 (Increased Cost and Reduced Return; Capital Adequacy)
or 3.05 (Funding Losses) shall be paid only to the affected Lender or Lenders
and amounts payable with respect to Swing Line Loans shall be paid only to the
Swing Line Loan Lender. Payments received by the applicable Administrative Agent
after 2:00 p.m. shall be deemed to be received on the next Business Day.

      (b) All computations of interest and of fees shall be made by the
applicable Administrative Agent on the basis of a year of 360 days, in each case
for the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest and fees are payable. Each
determination by such Administrative Agent of a rate of interest hereunder shall
be conclusive and binding for all purposes, absent manifest error.

      (c) Each payment by the Borrower of any Loan, Reimbursement Obligation
(including interest or fees in respect thereof) and each reimbursement of
various costs, expenses or other Obligations shall be made in Dollars; provided,
however, that (i) the reimbursement agreement relating to any Letter of Credit
may specify another currency for the Reimbursement Obligation in respect of such
Letter of Credit and (ii) other than for payments in respect of a Loan or
Reimbursement Obligation, Loan Documents duly executed by the Administrative
Agents or any Swap Contract may specify other currencies of payment for
Obligations created by or directly related to such Loan Document or Swap
Contract.

      (d) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest or fees, as the case may
be; provided, however, that if such extension would cause payment of interest on
or principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the immediately preceding Business Day. All
repayments of any Revolving Loans or Term Loans shall be applied as follows:
first, to repay such Loans outstanding as Base Rate Loans and then, to repay
such Loans outstanding as Eurodollar Rate Loans, with those Eurodollar Rate
Loans having earlier expiring Eurodollar Interest Periods being repaid prior to
those having later expiring Eurodollar Interest Periods.

      (e) Unless the Revolving Credit Facility Administrative Agent (in the case
of payments under the Revolving Credit Facility) or the Term Loan Facility
Administrative Agent (in the case of payments under the Term Loan Facility), as
the case may be, shall have received notice from the Borrower or the applicable
Lenders prior to the date on which any payment is due hereunder that the
Borrower will not make such payment in full, such Administrative Agent may
assume that the Borrower has made such payment in full to such Administrative
Agent on such date and such Administrative Agent

                                       60



may, in reliance upon such assumption, cause to be distributed to each
applicable Lender on such due date an amount equal to the amount then due such
Lender. If and to the extent that the Borrower shall not have made such payment
in full to the applicable Administrative Agent, each applicable Lender shall
repay to such Administrative Agent forthwith on demand such amount distributed
to such Lender together with interest thereon (at the Federal Funds Rate for the
first Business Day and thereafter, at the rate applicable to Base Rate Loans)
for each day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the applicable Administrative Agent.

      (f) Except for payments and other amounts received by the Revolving Credit
Facility Administrative Agent (in the case of payments under the Revolving
Credit Facility) or the Term Loan Facility Administrative Agent (in the case of
payments under the Term Loan Facility) and applied in accordance with the
provisions of clause (g) below (or required to be applied in accordance with
Section 2.08(c) (Mandatory Prepayments)), all payments and any other amounts
received by any Administrative Agent from or for the benefit of the Borrower
shall be applied as follows: first, in the case of payments under the Revolving
Credit Facility, to pay principal of, and interest on, any portion of the Loans
the Revolving Credit Facility Administrative Agent may have advanced pursuant to
the express provisions of this Agreement on behalf of any Revolving Credit
Lender, for which the Revolving Credit Facility Administrative Agent has not
then been reimbursed by such Lender or the Borrower, second, to pay all other
Obligations then due and payable and third, as the Borrower so designates.
Payments in respect of Swing Line Loans received by the Revolving Credit
Facility Administrative Agent shall be distributed to the Swing Line Lender;
payments in respect of Revolving Loans received by the Revolving Credit Facility
Administrative Agent shall be distributed to each Revolving Credit Lender in
accordance with such Lender's Pro Rata Share of the Aggregate Revolving Credit
Commitments; payments in respect of the Term Loans received by the Term Loan
Facility Administrative Agent shall be distributed to each Term Loan Lender in
accordance with such Lender's Pro Rata Share of the Term Loans; and all payments
of fees and all other payments in respect of any other Obligation shall be
allocated among such of the Lenders and the L/C Issuer as are entitled thereto
and, for such payments allocated to the Lenders, in proportion to their
respective Pro Rata Shares.

      (g) The Borrower hereby irrevocably waives the right to direct the
application of any and all payments in respect of the Obligations and any
proceeds of Collateral after the occurrence and during the continuance of an
Event of Default and agrees that, notwithstanding the provisions of Section
2.08(c) (Mandatory Prepayments) and clause (f) above, each Administrative Agent
may, and, upon either (A) the written direction of the Required Lenders or (B)
the acceleration of the Obligations pursuant to Section 9.02 (Remedies Upon
Event of Default) shall, instruct the Collateral Agent to deliver a Blockage
Notice to each Deposit Account Bank for each Approved Deposit Account and apply
all payments in respect of any Obligations and all funds on deposit in any Cash
Collateral Account (including all proceeds arising from a Reinvestment Event (if
any) that are held in the Cash Collateral Account pending application of such
proceeds as specified in a Reinvestment Notice) and all other proceeds of
Collateral in the following order:

            (i) first, to pay interest on and then principal of any portion of
the Revolving Loans that the Revolving Credit Facility Administrative Agent may
have advanced on behalf of any Lender for which the Revolving Credit Facility
Administrative Agent has not then been reimbursed by such Lender or the
Borrower;

            (ii) second, to pay Obligations in respect of any expense
reimbursements or indemnities and Cash Management Obligations then due to any
Agent;

            (iii) third, to pay Obligations in respect of any expense
reimbursements or indemnities and Cash Management Obligations then due to the
Lenders and the L/C Issuer;

                                       61



            (iv) fourth, to pay Obligations in respect of any fees then due to
any Agent, the Lenders and the L/C Issuer;

            (v) fifth, to pay interest then due and payable in respect of the
Loans and Reimbursement Obligations;

            (vi) sixth, to pay or prepay principal amounts on the Loans and
Reimbursement Obligations and to Cash Collateralize the outstanding L/C
Obligations in the manner described in Section 9.03 (Actions in Respect of
Letters of Credit), and to pay Cash Management Obligations and amounts owing
with respect to Swap Contracts, ratably to the aggregate principal amount of
such Loans, Reimbursement Obligations and Outstanding Amounts, Cash Management
Obligations, and Obligations owing with respect to Swap Contracts; and

            (vii) seventh, to the ratable payment of all other Obligations;

      provided, however, that if sufficient funds are not available to fund all
payments to be made in respect of any Obligation described in any of clauses
(i), (ii), (iii), (iv), (v), (vi) and (vii) above, the available funds being
applied with respect to any such Obligation (unless otherwise specified in such
clause) shall be allocated to the payment of such Obligation ratably, based on
the proportion of each Agent's and each Lender's or L/C Issuer's interest in the
aggregate outstanding Obligations described in such clauses; provided, however,
that payments that would otherwise be allocated to the Revolving Credit Lenders
shall be allocated first to repay Swing Line Loans until such Loans are repaid
in full and then to repay the Revolving Loans. The order of priority set forth
in clauses (i), (ii), (iii), (iv), (v), (vi) and (vii) above may at any time and
from time to time be changed by the agreement of each Lender directly affected
thereby without necessity of notice to or consent of or approval by the
Borrower, any Secured Party that is not a Lender or L/C Issuer or by any other
Person that is not a Lender or L/C Issuer. The order of priority set forth in
clauses (i), (ii), (iii) and (iv) above may be changed only with the prior
written consent of the Administrative Agents in addition to that of each Lender
directly affected thereby.

2.14 INCREASES IN COMMITMENTS.

      (a) So long as (x) no Default exists or would result after giving effect
to the making of the Incremental Term Loans or Incremental Revolving Loans
referred to below and the use of proceeds therefrom and (y) after giving effect
to the making of the Incremental Term Loans or Incremental Revolving Loans
referred to below and the use of proceeds therefrom, the Borrower would be in
compliance with the financial covenants set forth in Section 8.11 (Financial
Covenants) on a Pro Forma Basis as of such date and as of the last day of the
most recent fiscal quarter for which financial statements have been delivered in
accordance with Section 7.01(a) or (b) (Financial Statements), then upon written
notice to the Administrative Agents, the Borrower may from time to time request
(i) additional term loans (the "Incremental Term Loans" and the related
commitments, the "Incremental Term Loan Commitments") in an aggregate principal
amount not to exceed $100,000,000; provided, that any such increase shall be in
an aggregate amount of $50,000,000 or any whole multiple of $1,000,000 in excess
thereof, and (ii) additional revolving loans (the "Incremental Revolving Loans"
and the related commitments, the "Incremental Revolving Credit Commitments") in
an aggregate principal amount not to exceed $100,000,000; provided, that any
such increase shall be in an aggregate amount of $10,000,000 or any whole
multiple of $1,000,000 in excess thereof; provided, further, that (I) the
aggregate amount of Incremental Term Loan Loans and Incremental Revolving Loans
(and the respective related commitments) which may be provided hereunder shall
not exceed $100,000,000 and (II) any existing Lender that may be requested to
provide all or a portion of any Incremental Term Loans and related commitments
or any Incremental Revolving Loans and related commitments may elect or decline,
in its sole discretion, to provide any such loans and commitments. The
Incremental Term Loans (A) shall rank

                                       62



pari passu in right of payment and right of security in respect of the
Collateral with the Term Loans and (B) other than amortization, pricing and
maturity date, shall have the same terms as the Term Loans existing immediately
prior to the effectiveness of the amendment creating such Incremental Term
Loans; provided, however, that (x) if the interest rate spreads relating to such
new Incremental Term Loans exceed the Applicable Margin at any pricing level for
the Term Loans (including any upfront fees or original issue discount payable to
the Lenders providing such Incremental Term Loans), by more than 25 basis points
then the Applicable Margin for the Term Loans shall be adjusted to be equal to
such interest rate spreads, (y) the Incremental Term Loans shall not have a
final maturity date earlier than the Term Loan Maturity Date, and (z) the
Incremental Term Loans shall not have a weighted average life to maturity that
is shorter than the then-remaining weighted average life to maturity of the Term
Loans. Any Term Lender or additional bank or financial institution that agrees
to make available an Incremental Term Loan Commitment (an "Incremental Term
Lender") shall become a Lender or make its Incremental Term Loan Commitment
available, as the case may be, under this Agreement, pursuant to an amendment
(an "Incremental Facility Amendment") to this Agreement giving effect to the
modifications permitted by this Section 2.14 and, as appropriate, the other Loan
Documents, executed by the Loan Parties, each Incremental Term Lender and the
Administrative Agents only, and to any other documentation, in each case on
terms and documentation satisfactory to the Administrative Agents. The
Incremental Revolving Loans (A) shall rank pari passu in right of payment and
right of security in respect of the Collateral with the Revolving Loans and (B)
other than pricing and maturity date, shall have the same terms as Revolving
Loans existing immediately prior to the effectiveness of the amendment creating
such Incremental Revolving Loans; provided, however, that (x) if the interest
rate spreads and unused commitment fees relating to such new Incremental
Revolving Loans exceed the Applicable Margin and Unused Commitment Fees at any
pricing level for the Revolving Credit Facility (including any upfront fees or
original issue discount payable to the Lenders providing such Incremental
Revolving Loans) by more than 25 basis points, then the Applicable Margin and
Unused Commitment Fees for the Revolving Credit Facility shall be adjusted to be
equal to such interest rate spreads, and (y) the Incremental Revolving Loans
shall not have a final maturity date earlier than the applicable maturity date
of the Revolving Credit Facility. Any Revolving Credit Lender or additional bank
or financial institution that agrees to make available an Incremental Revolving
Commitment (an "Incremental Revolving Credit Lender") shall become a Lender or
make its Incremental Revolving Commitment available, as the case may be, under
this Agreement, pursuant to an Incremental Facility Amendment to this Agreement
giving effect to the modifications permitted by this Section 2.14 and, as
appropriate, the other Loan Documents, executed by the Loan Parties, each
Incremental Revolving Lender and the Administrative Agents, and to any other
documentation, in each case on terms and documentation satisfactory to the
Administrative Agents. An Incremental Facility Amendment may, without the
consent of any other Lenders, effect such amendments to this Agreement and the
other Loan Documents as may be necessary or appropriate, in the opinion of the
Administrative Agents, to effect the provisions of this Section 2.14.

      (b) If any Incremental Term Loan Commitments or Incremental Revolving Loan
Commitments are made in accordance with this Section 2.14, the Administrative
Agent and Borrower shall determine the effective date (each, an "Incremental
Facility Effective Date") and the final allocation of such increase. The
Administrative Agent shall promptly notify Borrower and the Lenders of the final
allocation of such increase and the Incremental Facility Effective Date. As a
condition precedent to such increase, Borrower shall deliver to the
Administrative Agent a certificate of Borrower dated as of the Incremental
Facility Effective Date signed by a Financial Officer of Borrower (i) certifying
and attaching (A) the resolutions adopted by Borrower approving or consenting to
such increase and (B) a certificate demonstrating pro forma compliance with the
Financial Covenants as set forth in Section 2.14(a) and (ii) certifying that,
before and after giving effect to such increase, (A) the representations and
warranties set forth in Article VI (Representations and Warranties) and the
other Loan Documents shall be true and correct in all material respects on and
as of the Incremental Facility Effective Date (unless expressly stated to relate
to an earlier date, in which case such representations and warranties shall be
true and

                                       63



correct in all material respects as of such earlier date), and (B) no Default
shall have occurred and be continuing.

      (c) The Borrower shall use the proceeds of any Incremental Term Loans and
Incremental Revolving Loans for working capital and general corporate purposes
(including to finance Permitted Acquisitions and making Capital Expenditures
that are not prohibited by this Agreement).

                                  ARTICLE III

                     TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 TAXES.

      (a) Subject to Section 11.15 (Tax Forms), any and all payments by any Loan
Party to or for the account of any Agent or any Lender under any Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and all liabilities with respect thereto,
excluding, in the case of each Agent and each Lender, taxes imposed on or
measured by its overall net income, and franchise taxes imposed on it (in lieu
of net income taxes), by the jurisdiction (or any political subdivision thereof)
under the Laws of which such Agent or such Lender, as the case may be, is
organized or maintains a lending office (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and liabilities being hereinafter referred to as "Taxes"). If any Loan Party
shall be required by any Laws to deduct any Taxes from or in respect of any sum
payable under any Loan Document to any Agent or any Lender, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
3.01), each of the applicable Agents and such Lender receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such Loan
Party shall make such deductions, (iii) such Loan Party shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within thirty days after the date of
such payment, such Loan Party shall furnish to the applicable Agents (which
shall forward the same to such Lender) the original or a certified copy of a
receipt evidencing payment thereof or if no receipt is available, other evidence
of payment reasonably satisfactory to such Agent.

      (b) In addition, the Borrower agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").

      (c) If the Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document to any Agent
or any Lender, the Borrower shall also pay to such Agent or to such Lender, as
the case may be, at the time interest is paid, such additional amount that such
Agent or such Lender specifies is necessary to preserve the after-tax yield
(after factoring in all taxes, including taxes imposed on or measured by net
income) that such Agent or such Lender would have received if such Taxes or
Other Taxes had not been deducted or paid.

      (d) The Borrower agrees to indemnify each Agent and each Lender for (i)
the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section
3.01) paid by such Agent and such Lender, (ii) amounts payable under Section
3.01(c) and (iii) any liability (including additions to tax, penalties, interest
and expenses)

                                       64



arising therefrom or with respect thereto, in each case whether or not such
Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. Payment under this clause (d) shall be made
within thirty days after the date the Lender or the applicable Agent makes a
demand therefor.

      (e) If any Loan Party is required to pay any amount to any Lender or any
Agent pursuant to this Section 3.01, then such Lender or such Agent, as the case
may be, shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment which may thereafter accrue, if such
change in the reasonable judgment of such Lender is not otherwise
disadvantageous to such Lender.

3.02 ILLEGALITY.

      If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans as it
would otherwise be obligated hereunder to make, maintain or fund, or materially
restricts the authority of such Lender to purchase or sell, or to take deposits
of, Dollars in the applicable Eurodollar interbank market, or to determine or
charge interest rates based upon the Eurodollar Rate, then, on notice thereof by
such Lender to the Borrower through the applicable Administrative Agent, any
obligation of such Lender to make or continue Eurodollar Rate Loans or to
convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such
Lender notifies the applicable Administrative Agent and the Borrower that the
circumstances giving rise to such determination no longer exist. Upon receipt of
such notice, the Borrower shall, upon demand from such Lender (with a copy to
the applicable Administrative Agent), prepay or, if applicable, convert all
Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender
may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such
prepayment or conversion, the Borrower shall also pay accrued interest on the
amount so prepaid or converted. Each Lender agrees to designate a different
Lending Office if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.

3.03 DETERMINATION OF RATES; INABILITY TO DETERMINE RATES.

      (a) The Eurodollar Rate for each Interest Period for Eurodollar Rate Loans
shall be determined by the applicable Administrative Agent pursuant to the
procedures set forth in the definition of "Eurodollar Rate." Such determination
shall be presumed to be correct absent manifest error and shall be binding on
the Borrower.

      (b) If any Administrative Agent or the Required Lenders determine in
connection with any request for a Eurodollar Rate Loan or a conversion to or
continuation of a Eurodollar Rate Loan that (a) deposits in Dollars are not
being offered to banks in the London interbank market for the applicable amount
and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable
means do not exist for determining the Eurodollar Base Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan or (c) the
Eurodollar Base Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
the Lenders of funding such Loan, the applicable Administrative Agent (or, if
the Required Lenders make such determination, following notice thereof) will
promptly notify the Borrower and all Lenders thereof. Thereafter, the obligation
of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended
until the applicable Administrative Agent revokes such notice. Upon receipt of
such notice, the Borrower may revoke any pending request for a Borrowing of,
conversion to or continuation of Eurodollar Rate Loans

                                       65



or, failing that, will be deemed to have converted such request into a request
for a Borrowing of Base Rate Loans in the amount specified therein.

3.04 INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY.

      (a) If any Lender determines that as a result of the introduction of or
any change in or in the interpretation of any Law, or such Lender's compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding, maintaining or purchasing participations in Eurodollar
Rate Loans or (as the case may be) issuing or participating in Letters of
Credit, or a reduction in the amount received or receivable by such Lender in
connection with any of the foregoing (excluding for purposes of this clause (a)
any such increased costs or reduction in amount resulting from (i) Taxes or
Other Taxes (as to which Section 3.01 (Taxes) shall govern), (ii) changes in the
basis of taxation of overall net income or overall gross income by the United
States or any foreign jurisdiction or any political subdivision of either
thereof under the Laws of which such Lender is organized or has its Lending
Office, and (iii) reserve requirements utilized, as to Eurodollar Rate Loans, in
the determination of the Eurodollar Rate), then from time to time upon demand of
such Lender (with a copy of such demand to the applicable Administrative Agent),
the Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such increased cost or reduction.

      (b) If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender's desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to the applicable Administrative Agent),
the Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction.

3.05 FUNDING LOSSES.

      Upon demand of any Lender (with a copy to the applicable Administrative
Agent) from time to time, the Borrower shall promptly compensate such Lender for
and hold such Lender harmless from any loss, cost or expense incurred by it as a
result of:

            (a) any continuation, conversion, payment or prepayment of any Loan
      other than a Base Rate Loan on a day other than the last day of the
      Interest Period for such Loan (whether voluntary, mandatory, automatic, by
      reason of acceleration, or otherwise);

            (b) any failure by the Borrower (for a reason other than the failure
      of such Lender to make a Loan) to prepay, borrow, continue or convert any
      Loan other than a Base Rate Loan on the date or in the amount notified by
      the Borrower; or

            (c) any assignment of a Eurodollar Rate Loan on a day other than the
      last day of the Interest Period therefor as a result of a request by the
      Borrower pursuant to Section 3.07 (Substitution of Lenders);

      including any loss of anticipated profits and any loss or expense arising
      from the liquidation or reemployment of funds obtained by it to maintain
      such Loan or from fees payable to terminate the deposits from which such
      funds were obtained. The Borrower shall also pay any customary
      administrative fees charged by such Lender in connection with the
      foregoing.

                                       66



      For purposes of calculating amounts payable by the Borrower to the Lenders
under this Section 3.05, each Lender shall be deemed to have funded each
Eurodollar Rate Loan made by it at the Eurodollar Base Rate used in determining
the Eurodollar Rate for such Loan by a matching deposit or other borrowing in
the London interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Eurodollar Rate Loan was in fact so
funded.

3.06 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION.

      A certificate of the applicable Administrative Agent or any Lender
claiming compensation under this Article III and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, the applicable Administrative
Agent or such Lender may use any reasonable averaging and attribution methods.

3.07 SUBSTITUTION OF LENDERS.

      (a) In the event that

            (i) (A) the Borrower is required to make any payment pursuant to
Section 3.01 (Taxes) that is attributable to a particular Lender, (B) it becomes
illegal for any Lender to continue to fund or make any Eurodollar Rate Loan and
such Lender notifies the Borrower pursuant to Section 3.02 (Illegality), (C) any
Lender makes a claim under Section 3.04 (Increased Costs and Reduced Return;
Capital Adequacy) or (D) any Lender becomes a Defaulting Lender,

            (ii) in the case of clause (i)(C) above, as a consequence of
increased costs in respect of which such claim is made, the effective rate of
interest payable to such Lender under this Agreement with respect to its Loans
exceeds the effective average annual rate of interest payable to the Required
Lenders under this Agreement, and

            (iii) in the case of clause (i)(A), (B) and (C) above, Lenders
holding at least 75% of the Aggregate Revolving Credit Commitments and Lenders
holding at least 75% of the Term Loan Commitments are not subject to such
increased costs or illegality, payment or proceedings (any such Lender, an
"AFFECTED LENDER"),

      the Borrower may substitute any Lender and, if reasonably acceptable to
the applicable Administrative Agent, any other Eligible Assignee (a "Substitute
Institution") for such Affected Lender hereunder, after delivery of a written
notice (a "Substitution Notice") within a reasonable time (in any case not to
exceed 90 days) following the occurrence of any of the events described in
clause (i)(A), (B), (C) or (D) above by the Borrower to the applicable
Administrative Agent and the Affected Lender that the Borrower intends to make
such substitution; provided, however, that, in the case of any Affected Lender,
if more than one such Lender claims increased costs, illegality or right to
payment arising from the same act or condition and such claims are received by
the Borrower within 30 days of each other, then the Borrower may substitute all,
but not (except to the extent the Borrower has already substituted one of such
Affected Lenders before the Borrower's receipt of the other Affected Lenders'
claim) less than all, such Lenders making such claims.

      (b) If the Substitution Notice was properly issued under this Section
3.07, the Affected Lender shall sell, and the Substitute Institution shall
purchase, all rights and claims of such Affected Lender under the Loan Documents
and the Substitute Institution shall assume, and the Affected Lender shall be
relieved of, the Affected Lender's Revolving Credit Commitments and all other
prior unperformed obligations of the Affected Lender under the Loan Documents
(other than in respect of any damages in respect of any such unperformed
obligations; provided, that in no event shall such Affected

                                       67



Lender be liable for any exemplary or punitive damages to the extent permitted
by applicable Law). Such purchase and sale (and the corresponding assignment of
all rights and claims under this Agreement) shall be effective on (and not
earlier than) the later of (i) the receipt by the Affected Lender of its Pro
Rata Share of the Revolving Credit Outstandings and its Pro Rata Share of the
Term Loans, together with any other Obligations owing to it, (ii) the receipt by
the applicable Administrative Agent of an agreement in form and substance
reasonably satisfactory to it and the Borrower whereby the Substitute
Institution shall agree to be bound by the terms of this Agreement and (iii) the
payment in full to the Affected Lender in cash of all fees, unreimbursed costs
and expenses and indemnities accrued and unpaid through such effective date.
Upon the effectiveness of such sale, purchase and assumption, the Substitute
Institution shall become a "Lender" hereunder for all purposes of this Agreement
having a Commitment, in the amount of such Affected Lender's Commitment assumed
by it and such Commitment of the Affected Lender shall be terminated; provided,
however, that all indemnities under the Loan Documents shall continue in favor
of such Affected Lender in accordance with the terms of this Agreement.

      (c) Each Lender agrees that, if it becomes an Affected Lender and its
rights and claims are assigned hereunder to a Substitute Institution pursuant to
this Section 3.07, it shall execute and deliver to the Administrative Agent an
Assignment and Assumption to evidence such assignment, together with any Note
(if such Loans are evidenced by a Note) evidencing the Loans subject to such
Assignment and Assumption; provided, however, that the failure of any Affected
Lender to execute an Assignment and Assumption shall not render such assignment
invalid.

3.08 SURVIVAL.

      All of the Borrower's obligations under this Article III shall survive
termination of the Aggregate Revolving Credit Commitments and repayment of all
Obligations.

                                   ARTICLE IV

                                    GUARANTY

4.01 THE GUARANTY.

      (a) Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Swap Contract or Cash
Management Document, the Collateral Agent and each Administrative Agent as
hereinafter provided, as primary obligor and not as surety, the prompt payment
of the Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of such extension
or renewal.

      (b) Notwithstanding any provision to the contrary contained herein or in
any other of the Loan Documents, Swap Contracts or Cash Management Documents,
the obligations of each Guarantor under this Agreement and the other Loan
Documents shall be limited to an aggregate amount equal to the largest amount
that would not render such obligations subject to avoidance under the Debtor
Relief Laws or any comparable provisions of any applicable state Law.

                                       68



4.02 OBLIGATIONS UNCONDITIONAL.

      The obligations of the Guarantors under Section 4.01 (The Guaranty) are
joint and several, absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Loan
Documents, Swap Contracts or Cash Management Documents, or any other agreement
or instrument referred to therein, or any substitution, release, impairment or
exchange of any other guarantee of or security for any of the Obligations, and,
to the fullest extent permitted by applicable Law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 4.02 that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Each Guarantor agrees that
such Guarantor shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor for amounts paid under
this Article IV until such time as the Obligations have been paid in full and
the Aggregate Revolving Credit Commitments have expired or terminated. Without
limiting the generality of the foregoing, it is agreed that, to the fullest
extent permitted by law, the occurrence of any one or more of the following
shall not alter or impair the liability of any Guarantor hereunder, which shall
remain absolute and unconditional as described above:

            (a) at any time or from time to time, without notice to any
      Guarantor, the time for any performance of or compliance with any of the
      Obligations shall be extended, or such performance or compliance shall be
      waived;

            (b) any of the acts mentioned in any of the provisions of any of the
      Loan Documents or any other agreement or instrument referred to in the
      Loan Documents shall be done or omitted;

            (c) the maturity of any of the Obligations shall be accelerated, or
      any of the Obligations shall be modified, supplemented or amended in any
      respect, or any right under any of the Loan Documents or any other
      agreement or instrument referred to in the Loan Documents shall be waived
      or any other guarantee of any of the Obligations or any security therefor
      shall be released, impaired or exchanged in whole or in part or otherwise
      dealt with;

            (d) any Lien granted to, or in favor of, the Collateral Agent, any
      Administrative Agent or any Lender or Lenders as security for any of the
      Obligations shall fail to attach or be perfected; or

            (e) any of the Obligations shall be determined to be void or
      voidable (including for the benefit of any creditor of any Guarantor) or
      shall be subordinated to the claims of any Person (including any creditor
      of any Guarantor).

      With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that any Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Loan Documents or
any other agreement or instrument referred to in the Loan Documents, or against
any other Person under any other guarantee of, or security for, any of the
Obligations.

4.03 REINSTATEMENT.

      The obligations of the Guarantors under this Article IV shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Obligations is rescinded or must be
otherwise restored by any holder of any of the Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, and each
Guarantor agrees that it will indemnify the Collateral Agent, each
Administrative Agent and each Lender on demand for all reasonable

                                       69



costs and expenses (including reasonable fees and expenses of counsel) incurred
by the Collateral Agent, such Administrative Agent or such Lender in connection
with such rescission or restoration, including any such reasonable costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar Law.

4.04 CERTAIN ADDITIONAL WAIVERS.

      Each Guarantor agrees that such Guarantor shall have no right of recourse
to security for the Obligations, except through the exercise of rights of
subrogation pursuant to Section 4.02 (Obligations Unconditional) and through the
exercise of rights of contribution pursuant to Section 4.06 (Rights of
Contribution).

4.05 REMEDIES.

      The Guarantors agree that, to the fullest extent permitted by Law, as
between the Guarantors, on the one hand, and the Agents and the Lenders, on the
other hand, the Obligations may be declared to be forthwith due and payable as
provided in Section 9.02 (Remedies Upon Event of Default) (and shall be deemed
to have become automatically due and payable in the circumstances provided in
said Section 9.02) for purposes of Section 4.01 (The Guaranty) notwithstanding
any stay, injunction or other prohibition preventing such declaration (or
preventing the Obligations from becoming automatically due and payable) as
against any other Person and that, in the event of such declaration (or the
Obligations being deemed to have become automatically due and payable), the
Obligations (whether or not due and payable by any other Person) shall forthwith
become due and payable by the Guarantors for purposes of Section 4.01 (The
Guaranty). The Guarantors acknowledge and agree that their obligations hereunder
are secured in accordance with the terms of the Collateral Documents and that
the Agents and the Lenders may exercise their remedies thereunder in accordance
with the terms thereof.

4.06 RIGHTS OF CONTRIBUTION.

      The Guarantors agree among themselves that, in connection with payments
made hereunder, each Guarantor shall have contribution rights against the other
Guarantors as permitted under applicable Law. Such contribution rights shall be
subordinate and subject in right of payment to the Obligations of such
Guarantors under the Loan Documents and no Guarantor shall exercise such rights
of contribution until all Obligations under this Agreement have been paid in
full and the Commitments have terminated.

4.07 GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.

      The guarantee in this Article IV is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Obligations
whenever arising.

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                                   ARTICLE V

                              CONDITIONS PRECEDENT

5.01 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSIONS. The obligation of each
Lender on the Closing Date to make any Loan and of the L/C Issuer on the Closing
Date to issue or maintain any Letter of Credit is subject to the satisfaction or
due waiver in accordance with Section 11.01 (Amendments; Etc.) of each of the
following conditions precedent:

      (a) Certain Documents. The Administrative Agent shall have received on or
prior to the Closing Date each of the following, each dated as of the Closing
Date unless otherwise indicated or agreed to by the Administrative Agents, in
form and substance reasonably satisfactory to the Administrative Agents:

            (i) this Agreement, duly executed and delivered by the Borrower and,
for the account of each Lender requesting the same, a Note or Notes of the
Borrower conforming to the requirements set forth herein;

            (ii) the Security Agreement, duly executed by the Borrower and each
Guarantor, together with each of the following:

                  (A) evidence satisfactory to the Administrative Agents that,
            upon the filing and recording of instruments delivered at the
            Closing Date, the Collateral Agent (for the benefit of the Secured
            Parties) shall have a valid and perfected first priority security
            interest in the Collateral (subject to only Customary Permitted
            Liens and other non-consensual Permitted Liens having priority over
            the Liens granted to the Collateral Agent), including (x) such
            documents duly executed by each Loan Party as the Agents may request
            with respect to the perfection of the Collateral Agent's security
            interests in the Collateral pursuant to the terms of the Collateral
            Documents (including financing statements under the UCC, patent,
            trademark and copyright security agreements suitable for filing with
            the U.S. Patent and Trademark Office or the U.S. Copyright Office,
            as the case may be, and other applicable documents under the laws of
            any jurisdiction with respect to the perfection of Liens created by
            the Security Agreement) and (y) copies of UCC search reports as of a
            recent date listing all effective financing statements that name any
            Loan Party as debtor, together with copies of such financing
            statements, none of which shall cover the Collateral except for
            those that shall be terminated on the Closing Date or evidence
            Permitted Liens;

                  (B) all instruments representing Pledged Notes being pledged
            pursuant to the Security Agreement duly endorsed in favor of the
            Collateral Agent or executed in blank;

                  (C) Deposit Account Control Agreements from all Deposit
            Account Banks to the extent required by Section 7.16 (Control
            Accounts; Approved Deposit Accounts); and

                  (D) Securities Account Control Agreements from all Securities
            Intermediaries with respect to all Securities Accounts and
            Securities Entitlements of the Borrower and such each Guarantor;

            (iii) the Pledge Agreement, duly executed by the Borrower and each
Guarantor, together with share certificates representing all of the certificated
Pledged Collateral being pledged pursuant to the Pledge Agreement and stock
powers or other appropriate instruments of transfer for the

                                       71



certificates evidencing such Pledged Collateral executed in blank (other than
such share certificates representing Pledged Collateral and related stock powers
and instruments of transfer as the Administrative Agents have agreed will be
delivered pursuant to Section 7.19(a));

            (iv) subject to Section 7.18 (Collateral Access Agreements and
Bailee's Letters), the Collateral Access Agreements and Bailee's Letters as set
forth on Schedule 7.18 (Collateral Access Agreements and Bailee's Letters);

            (v) Mortgages in favor of the Collateral Agent for all of the owned
Real Properties of the Loan Parties identified on Schedule 6.21(a) (Locations of
Real Property), other than those Real Properties of the Loan Parties
constituting Excluded Property and except as otherwise may be agreed by the
Administrative Agents, together with all Mortgage Supporting Documents (other
than such Mortgage Title Insurance Policies as the Administrative Agents have
agreed will be delivered pursuant to Section 7.19(b)) relating thereto;

            (vi) a favorable opinion of (A) Waller Landsen Dortch & Davis,
counsel to the Loan Parties, in substantially the form of Exhibit I (Form of
Opinion of Counsel for the Loan Parties) and (B) counsel to the Loan Parties in
each jurisdiction for which the Administrative Agents require a legal opinion in
connection with the delivery of Mortgages (other than, with respect to this
clause (B), such legal opinions as the Administrative Agents have agreed will be
delivered pursuant to Section 7.19(c)) each in form and substance satisfactory
to the Administrative Agents, and in the case of all legal opinions delivered
pursuant to this Agreement, addressed to the Agents, the Lenders and the L/C
Issuer and addressing such other matters as any Lender or L/C Issuer through any
Administrative Agent may reasonably request;

            (vii) a copy of each Related Document certified as being complete
and correct by a Responsible Officer of the Borrower;

            (viii) a copy of the articles or certificate of incorporation (or
equivalent Organization Document) of each Loan Party, certified as of a recent
date by the Secretary of State of the state of organization of such Loan Party,
together with certificates of such official attesting to the good standing of
each such Loan Party in such State as of a recent date;

            (ix) certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying (A) the names and true signatures of each officer of such
Loan Party that has been authorized to execute and deliver any Loan Document or
any other document required hereunder to be executed and delivered by or on
behalf of such Loan Party, (B) the by-laws (or equivalent Organization Document)
of such Loan Party as in effect on the date of such certification, (C) the
resolutions of such Loan Party's Board of Directors (or equivalent governing
body) approving and authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party and (D) that there
have been no changes in the certificate of incorporation (or equivalent
Organization Document) of such Loan Party from the certificate of incorporation
(or equivalent Organization Document) delivered pursuant to clause (ix) above;

            (x) a certificate of the chief financial officer of the Borrower
stating in reasonable detail that the Borrower is Solvent after giving effect to
the initial Credit Extensions, the application of the proceeds thereof in
accordance with Section 6.19 (Use of Proceeds) and the payment of all estimated
Attorney Costs, and accounting and other fees related hereto and to the other
Loan Documents and the transactions contemplated hereby and thereby;

                                       72



            (xi) a certificate of a Responsible Officer of the Borrower to the
effect that (A) the conditions set forth in Section 5.02(b) (Conditions
Precedent to Each Credit Extension) have been satisfied and (B) there shall be
no action, investigation or proceeding (whether an individual proceeding or a
series of related proceedings) or development in any action, investigation or
proceeding (whether an individual proceeding or a series of related proceedings)
that has had or could reasonably be expected to have a Material Adverse Effect
or have a material adverse effect on the ability of the parties to consummate
the Transactions, the funding of the initial Credit Extensions under this
Agreement or any of the other Transactions;

            (xii) a certificate of a Responsible Officer of the Borrower
specifying all information necessary for the Administrative Agents and the
Lenders to issue wire transfer instructions on behalf of each of the Loan
Parties for the initial and subsequent Credit Extensions to be made under this
Agreement, including sources and application of funds, disbursement
authorizations, in form reasonably acceptable to the Administrative Agents;

            (xiii) evidence reasonably satisfactory to the Administrative Agents
that the insurance coverage required by Section 7.07 (Maintenance of Insurance)
or by any Collateral Document is in full force and effect, together with
endorsements naming the Collateral Agent, on behalf of the Secured Parties, as
an additional insured or loss payee, as the case may be, under all insurance
coverage to be maintained with respect to the properties of the Borrower and the
Guarantors; and

            (xiv) such other certificates, documents, agreements and information
(including information with respect to Environmental Liabilities) respecting any
Loan Party as any Lender through any Administrative Agent may reasonably
request.

      (b) Fees and Expenses Paid. There shall have been paid to the applicable
Administrative Agent or Arranger, for the account of the Agents, the Arrangers
and the Lenders, as applicable, all fees and expenses (including Attorney Costs)
due and payable on or before the Closing Date (including all such fees described
in the Fee Letter); provided, further that any such fees payable on the Closing
Date pursuant to the Fee Letter shall be paid by the Borrower as provided
therein.

      (c) Consummation of Transactions; Etc.

            (i) the Administrative Agents shall have received a certificate, in
form and substance reasonably satisfactory to them, from a Responsible Officer
of the Borrower, for the benefit of the Agents, the Lenders and the L/C Issuer,
certifying that each of the Transactions (other than the initial Credit
Extensions and the issuance of the New Senior Subordinated Notes) has been
consummated or shall be consummated simultaneously with the making of the
initial Credit Extensions under this Agreement in accordance with the terms
hereof, the Ardent Acquisition Agreements and the Related Documents with respect
thereto, the Senior Bridge Credit Agreement, the documentation governing the AHS
Tender Offer and all other related documentation (without any waiver, amendment
or modification of any material provision thereof, except with the prior written
consent of the Administrative Agents);

            (ii) the Collateral Agent shall have received certificates
representing all of the certificated Capital Stock of AHS and its Subsidiaries
acquired pursuant to the Ardent Acquisition, together with stock powers or other
appropriate instruments of transfer for such certificates executed in blank and
such Capital Stock shall be subject to a first priority, perfected Lien in favor
of the Collateral Agent;

            (iii) the Administrative Agents shall be satisfied with (A) any
material amendments to the Ardent Acquisition Agreement and the schedules
thereto and any Related Document related thereto

                                       73



and (B) any material change to the structure of the Ardent Acquisition or any of
the other Transactions (other than the initial Credit Extensions) from that
previously disclosed to the Administrative Agents;

            (iv) the Administrative Agents shall have received, in form an
substance reasonably satisfactory to them, a certificate from a Responsible
Officer of the Borrower that the Ardent Acquired Business shall have no
Indebtedness for borrowed money outstanding on the Closing Date (other than (x)
in the event that any AHS Notes remain outstanding following the consummation of
the AHS Tender Offer, Indebtedness in respect of the AHS Untendered Notes;
provided, that cash in an amount sufficient to redeem (within 35 days of the
Closing Date, or if the AHS Trustee requires 15 days prior notice pursuant to
the terms of the AHS Indenture, within 45 days of the Closing Date) such
outstanding Indebtedness in full (including principal, accrued and unpaid
interest and any applicable premium) shall have been deposited in an escrow
account pursuant to escrow arrangements satisfactory to the Administrative
Agents and (y) Indebtedness of the Ardent Acquired Business that is permitted
pursuant to Section 8.03 (Indebtedness));

            (v) the Closing Date Equity Issuance shall have been made on terms
and conditions reasonably satisfactory to the Administrative Agents and the
Lenders; and

            (vi) the Borrower shall have received not less than $150,000,000 in
gross cash proceeds from the Senior Bridge Loans pursuant to the Senior Bridge
Credit Agreement, which shall be in form and substance satisfactory to the
Administrative Agents.

      (d) Financial Statements of the Borrower. The Lenders shall have received
(a) audited consolidated and consolidating balance sheets and related statements
of income, stockholders' equity and cash flows of the Borrower and its
Subsidiaries (other than the Ardent Acquired Business), for the fiscal years
2002, 2003 and 2004, prepared in accordance with generally accepted accounting
principles in the United States and prepared in accordance with Regulation S-X
under the Securities Act and (b) to the extent available, unaudited consolidated
and consolidating balance sheets and related statements of income, stockholders'
equity and cash flows of the Borrower and its Subsidiaries (other than the
Ardent Acquired Business) for each completed fiscal quarter since the date of
such audited financial statements (and, to the extent available, for each
completed month since the last such quarter) and in the case of clauses (a) and
(b), which audited and unaudited financial statements (x) shall be in form and
scope satisfactory to the Lenders and (y) shall not be materially inconsistent
with the financial statements previously provided to the Lenders.

      (e) Financial Statements of the Ardent Acquired Business. The Lenders
shall have received (a) audited consolidated and consolidating balance sheets
and related statements of income, stockholders' equity and cash flows of the
Ardent Acquired Business for the fiscal years 2002, 2003 and 2004, prepared in
accordance with generally accepted accounting principles in the United States
and prepared in accordance with Regulation S-X under the Securities Act and (b)
to the extent available, unaudited consolidated and consolidating balance sheets
and related statements of income, stockholders' equity and cash flows of the
Ardent Acquired Business, in each case, for each completed fiscal quarter since
the date of such audited financial statements (and, to the extent available, for
each completed month since the last such quarter) and in the case of clauses (a)
and (b), which audited and unaudited financial statements (x) shall be in form
and scope satisfactory to the Lenders and (y) shall not be materially
inconsistent with the financial statements previously provided to the Lenders.

      (f) Pro Forma Financial Statements; Projections.

            (i) The Lenders shall have received a pro forma consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the
Closing Date, after giving effect to the

                                       74



Transactions, together with a certificate of the chief financial officer of the
Borrower to the effect that such financial statements accurately present the pro
forma financial position of the Borrower and its Subsidiaries on a basis
consistent with pro forma financial statements set forth in a registration
statement filed with the SEC, and the Lenders shall be satisfied that such
balance sheets are not materially inconsistent with the forecasts previously
provided to the Lenders.

            (ii) The Borrower shall have delivered the Projections, prepared on
a quarterly basis through the end of 2006, which projections shall be
satisfactory to the Administrative Agents.

      (g) Maximum Consolidated Total Leverage Ratio. The Administrative Agents
shall have received reasonably satisfactory evidence (including a certificate of
the chief financial officer of the Borrower accompanied by satisfactory
supporting schedules and other data) that the Consolidated Total Leverage Ratio,
on a Pro Forma Basis after giving effect to the Transactions, is less than or
equal to 6.25 to 1.

5.02 CONDITIONS PRECEDENT TO EACH CREDIT EXTENSION.

The obligation of each Lender on any date (including the Closing Date) to make
any Loan and of the L/C Issuer on any date (including the Closing Date) to issue
any Letter of Credit is subject to the satisfaction of each of the following
conditions precedent:

      (a) Request for Borrowing or Issuance of Letter of Credit. (i) With
respect to any Loan, the Revolving Credit Facility Administrative Agent (in the
case of the Revolving Credit Facility) and the Term Loan Facility Administrative
Agent (in the case of the Term Loan Facility), as the case may be, shall have
received a duly executed Notice of Borrowing (or in the case of Swing Line
Loans, a duly executed Swing Line Loan Request), and, with respect to any Letter
of Credit, the Revolving Credit Facility Administrative Agent and the applicable
L/C Issuer shall have received a duly executed Letter of Credit Application.

      (b) Representations and Warranties; No Defaults. The following statements
shall be true on the date of such Loan or issuance of a Letter of Credit, both
before and after giving effect thereto and, in the case of any Loan, to the
application of the proceeds therefrom:

            (i) the representations and warranties set forth in Article VI
(Representations and Warranties) and in the other Loan Documents shall be true
and correct on and as of the Closing Date and shall be true and correct in all
material respects on and as of any such date after the Closing Date with the
same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall have been true and correct in all
material respects as of such earlier date; and

            (ii) no Default or Event of Default shall have occurred and be
continuing.

      (c) No Legal Impediments. The making of the Loans or the issuance of such
Letter of Credit on such date does not violate any Law in any material respect
on the date of or immediately following such Loan or issuance of such Letter of
Credit and is not enjoined, temporarily, preliminarily or permanently.

      (d) Permitted Incurrence. If after giving effect to such Credit Extension
the aggregate principal amount of all "Indebtedness" (as such term is defined in
the Existing Senior Subordinated Notes Indenture) outstanding under this
Agreement would exceed $85,000,000, the Borrower shall have delivered to the
Administrative Agents a certificate signed by a Responsible Officer of the
Borrower that:

                                       75



            (i) certifies that after giving effect to such Credit Extension, all
of the Obligations shall constitute "Senior Debt" under the Existing Senior
Subordinated Notes Documents;

            (ii) identifies the provision of Section 4.09 of the Existing Senior
Subordinated Notes Indenture under which such Credit Extension is incurred (it
being understood that the Borrower shall designate clause (1) of the definition
of "Permitted Debt" in Section 4.09 of the Existing Senior Subordinated Notes
Indenture to the extent the Borrower has availability under such clause); and

            (iii) contains reasonably detailed calculations demonstrating that
such Credit Extension may be incurred under such provision of Section 4.09 of
the Existing Senior Subordinated Notes Indenture.

      (e) Additional Matters. The applicable Administrative Agent shall have
received such additional documents, information and materials as any Lender,
through such Administrative Agent, may reasonably request.

      Each submission by the Borrower to the applicable Administrative Agent of
a Notice of Borrowing or Swing Line Loan Request, as the case may be, and the
acceptance by the Borrower of the proceeds of each Loan requested therein, and
each submission by the Borrower to the L/C Issuer of a Letter of Credit
Application, and the issuance of each Letter of Credit requested therein, shall
be deemed to constitute a representation and warranty by the Borrower and the
other Loan Parties as to the matters specified in clause (b) above on the date
of the making of such Loan or the issuance of such Letter of Credit.

5.03 DETERMINATIONS OF INITIAL BORROWING CONDITIONS.

      For purposes of determining compliance with the conditions specified in
Section 5.01 (Conditions Precedent to Initial Credit Extensions), each Lender
shall be deemed to have consented to, approved, accepted or be satisfied with,
each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to the Lenders unless an officer of the
applicable Administrative Agent responsible for the transactions contemplated by
the Loan Documents shall have received notice from such Lender prior to the
initial Borrowing or initial issuance of Letters of Credit hereunder specifying
its objection thereto and such Lender shall not have made available to the
applicable Administrative Agent such Lender's Pro Rata Share of such Borrowing.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

      To induce the Lenders, the L/C Issuer and the Agents to enter into this
Agreement, each of Borrower and each other Loan Party represents and warrants to
the Lenders, the L/C Issuer and the Agents, on and as of the Closing Date and
after giving effect to the Ardent Acquisition and the making of the Credit
Extensions and the other financial accommodations on the Closing Date and on and
as of each date as required by Section 5.02(b)(i) (Conditions Precedent to Each
Credit Extension) that:

6.01 EXISTENCE, QUALIFICATION AND POWER.

      Each Loan Party (a) is a corporation, partnership or limited liability
company duly organized or formed, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation or organization, (b) has all
requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own its assets and carry on its
business as now or currently

                                       76



proposed to be conducted and (ii) execute, deliver and perform its obligations
under the Loan Documents to which it is a party, and (c) is duly qualified and
is licensed and in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license; except in each case referred to in
clause (b)(i) or (c), to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.

6.02 AUTHORIZATION; NO CONTRAVENTION.

      The execution, delivery and performance by each Loan Party of each Loan
Document to which such Loan Party is party, have been duly authorized by all
necessary corporate or other organizational action, and do not (a) contravene or
violate the terms of such Loan Party's Organization Documents; (b) conflict with
or result in any breach or contravention of, or the creation of any Lien under,
(i) any Related Document or other Contractual Obligation to which such Loan
Party is a party or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Loan Party or the
Property of such Loan Party is subject; (c) violate any Law (including
Regulation U or Regulation X issued by the FRB); or (d) result in a limitation
on any licenses, permits or other approvals applicable to the business,
operations or properties of such Loan Party or adversely affect the ability of
such Loan Party to participate in any Medical Reimbursement Programs.

6.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS.

      No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Loan Party of this Agreement or any other Loan
Document, other than (i) those that have already been obtained and are in full
force and effect and (ii) filings to perfect the Liens created by the Collateral
Documents.

6.04 BINDING EFFECT.

      Each Loan Document has been duly authorized, executed and delivered by
each Loan Party that is party thereto. Each Loan Document constitutes a legal,
valid and binding obligation of each Loan Party that is party thereto,
enforceable against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable Debtor Relief Laws or by equitable
principles relating to enforceability.

6.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT; SOLVENCY.

      (a) The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; and (iii) show all material
Indebtedness and other liabilities, direct or contingent, of the Borrower and
its Subsidiaries as of the date thereof, including liabilities for taxes,
commitments and Indebtedness.

      (b) From the date of the Audited Financial Statements to and including the
Closing Date, there has been no Disposition by the Borrower or any Subsidiary,
or any Involuntary Disposition, of any material part of the business or Property
of the Borrower and its Subsidiaries, taken as a whole, and no purchase or other
Acquisition by any of them of any business or Property (including any Capital
Stock of any other Person) material in relation to the consolidated financial
condition of the Borrower and its Subsidiaries, taken as a whole, in each case,
which is not reflected in the foregoing financial statements or

                                       77



in the notes thereto and has not otherwise been disclosed in writing to the
Agents, the Arrangers and the Lenders on or prior to the Closing Date.

      (c) The Projections have been prepared by the Borrower in light of the
past operations of its business, and reflect projections for the seven year
period beginning on the Closing Date. The Projections are based upon estimates
and assumptions stated therein, all of which the Borrower believes to be
reasonable and fair in light of current conditions and current facts known to
the Borrower and, as of the Closing Date, reflect the Borrower's good faith and
reasonable estimates of the future financial performance of the Borrower and its
Subsidiaries and of the other information projected therein for the periods set
forth therein (it being understood that the Projections are not a guaranty of
future performance and that actual results during the periods covered by the
Projections may differ from the projected results therein and that such
differences may be material).

      (d) The financial statements delivered pursuant to Section 7.01(a) and (b)
(Financial Statements) have been prepared in accordance with GAAP (except as may
otherwise be permitted under Section 7.01(a) and (b) (Financial Statements)) and
present fairly (on the basis disclosed in the footnotes to such financial
statements) in all material respects the consolidated financial condition,
results of operations and cash flows of the Borrower and its Subsidiaries as of
the dates thereof and for the periods covered thereby.

      (e) Since December 31, 2004, there has been no event or circumstance that
has had or could reasonably be expected to have a Material Adverse Effect.

      (f) Both before and after giving effect to (a) the Loans and other Credit
Extensions to be made or extended on the Closing Date or such other date as
Loans and other Credit Extensions requested hereunder are made or extended, (b)
the disbursement of the proceeds of such Loans pursuant to the instructions of
the Borrower, (c) the Ardent Acquisition and the consummation of the other
Transactions contemplated hereby and (d) the payment and accrual of all
transaction costs in connection with the foregoing, each Loan Party is Solvent.

6.06 LITIGATION.

      There are no actions, suits, investigations, litigation, criminal
prosecutions, civil investigative demands, imposition of criminal or civil fines
or penalties, proceedings, claims or disputes pending or, to the knowledge of
the Loan Parties, threatened or contemplated, at Law, in equity, in arbitration
or before any Governmental Authority, by or against the Borrower or any of its
Subsidiaries or against any of their respective Properties or revenues that (a)
purport to affect or pertain to this Agreement or any other Loan Document, or
(b) if determined adversely, could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.

6.07 NO DEFAULT; NO BURDENSOME RESTRICTIONS.

      (a) Neither the Borrower nor any Subsidiary is in default under or with
respect to any Contractual Obligation that could reasonably be expected to have
a Material Adverse Effect.

      (b) No Default has occurred and is continuing.

      (c) Neither the Borrower nor any Subsidiary (i) is a party to any
Contractual Obligation the compliance with one or more of which would have, in
the aggregate, a Material Adverse Effect or the performance of which by any such
Person, either unconditionally or upon the happening of an event, would result
in the creation of a Lien (other than a Permitted Lien) on the assets or
Properties of any such

                                       78



Person or (ii) is subject to one or more charter or corporate restrictions that
would, in the aggregate, have a Material Adverse Effect.

6.08 OWNERSHIP OF PROPERTY; LIENS.

      Each of the Borrower and its Subsidiaries has good record and marketable
title in fee simple to, or valid leasehold interests in, all Real Property
necessary or used in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. No Property of the Borrower or any
of its Subsidiaries is subject to any Liens, other than Permitted Liens.

6.09 ENVIRONMENTAL COMPLIANCE.

      Except as could not reasonably be expected to have a Material Adverse
Effect:

      (a) Each of the Facilities and all operations at the Facilities are and,
to the knowledge of the Borrower and its Subsidiaries, have been in compliance
with all applicable Environmental Laws and there are no conditions relating to
the Facilities or the Businesses that could reasonably be expected to give rise
to liability under any applicable Environmental Laws.

      (b) None of the Facilities contains, or has previously contained, any
Hazardous Materials at, on or under the Facilities in amounts or concentrations
that constitute or constituted a violation of, or could reasonably be expected
to give rise to liability under, Environmental Laws.

      (c) Neither the Borrower nor any Subsidiary has received any written
notice of, or inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or Environmental Laws with regard to any of the Facilities
or the Businesses, nor does any Responsible Officer of any Loan Party have
knowledge or reason to believe that any such notice will be received or is being
threatened.

      (d) Hazardous Materials have not been transported or disposed of from any
Facilities of the Borrower or its Subsidiaries (irrespective of whether such
Facilities are now, or were previously, owned, leased or operated by such
Person), or generated, treated, stored or disposed of at, on or under any of the
Facilities or any other location, in each case by or on behalf the Borrower or
any Subsidiary in violation of, or in a manner that would be reasonably likely
to give rise to liability under, any applicable Environmental Law.

      (e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Responsible Officers of the Loan Parties,
threatened, under any Environmental Law to which the Borrower or any Subsidiary
is or will be named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Borrower, any Subsidiary, the Facilities or the Businesses.

      (f) There has been no Release or, threat of Release of Hazardous Materials
at or from the Facilities, or arising from or related to the operations
(including disposal) of the Borrower or any Subsidiary in connection with the
Facilities or otherwise in connection with the Businesses, in violation of or in
amounts or in a manner that could reasonably be expected to give rise to
liability under Environmental Laws.

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      (g) As of the Closing Date, the Borrower and its Subsidiaries have
provided the Administrative Agents with copies of all material environmental
reports, assessments, audits and/or documentation relating to any current or
former Facilities or current Environmental Liabilities to the extent in the
possession, custody or control of the Borrower or any of its Subsidiaries.

6.10 INSURANCE.

      The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies and, to the extent not
prohibited by Section 7.07 (Maintenance of Insurance) or Section 8.02
(Investments) of this Agreement, with PSI Surety, in such amounts (after giving
effect to any self-insurance compatible with the following standards), with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Borrower or the applicable Subsidiary operates.

6.11 TAXES.

      The Borrower and its Subsidiaries have filed all federal, state and other
material tax returns and reports required to be filed, and have paid all
federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against the Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.

6.12 ERISA COMPLIANCE.

      (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Internal Revenue Code and other federal or
state Laws. Each Plan that is intended to qualify under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the IRS
or an application for such a letter is currently being processed by the IRS with
respect thereto and, to the knowledge of the Loan Parties, nothing has occurred
which would prevent, or cause the loss of, such qualification. Each Loan Party
and each ERISA Affiliate have made all required contributions to each Plan
subject to Section 412 of the Internal Revenue Code, and no application for a
funding waiver or an extension of any amortization period pursuant to Section
412 of the Internal Revenue Code has been made with respect to any Plan.

      (b) There are no pending or, to the knowledge of the Loan Parties,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

      (c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) no Loan Party or
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) no Loan Party or any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and
no event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; and (v) no Loan Party or any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.

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6.13 SUBSIDIARIES.

      (a) As of the Closing Date, the authorized capital stock of the Borrower
consists of 48,000,000 shares of common stock, $0.01 par value per share, of
which 32,405,000 shares are issued and outstanding. As of the Closing Date,
except as set forth on Schedule 6.13 (Ownership of Borrower; Subsidiaries), no
Capital Stock of the Borrower is subject to any outstanding option, warrant,
right of conversion or purchase or any similar right. As of the Closing Date,
there are no agreements or understandings to which the Borrower is a party with
respect to the voting, sale or transfer of any shares of Capital Stock of the
Borrower or any agreement restricting the transfer or hypothecation of any such
shares. All of the outstanding capital stock of the Borrower has been validly
issued, is fully paid and non-assessable.

      (b) Set forth on Schedule 6.13 (Ownership of Borrower; Subsidiaries) is a
complete and accurate list as of the Closing Date of each Subsidiary (separately
identifying any Subsidiary that is an Immaterial Subsidiary), together with the
percentage of outstanding shares of each class owned (directly or indirectly) by
the Borrower or any Subsidiary. None of the shares of Capital Stock of any
Subsidiary is subject to any outstanding options, warrants, rights of conversion
or purchase or any similar right. All of the outstanding Capital Stock of each
Subsidiary is validly issued, fully paid and non-assessable.

6.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT.

      (a) The Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the FRB), or extending
credit for the purpose of purchasing or carrying margin stock. No proceeds of
any Loan will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin stock
in contravention of Regulation T, U or X of the FRB.

      (b) None of the Borrower, any Person Controlling the Borrower or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.

6.15 DISCLOSURE.

      No report, financial statement, certificate or other information furnished
(whether in writing or orally) by or on behalf of any Loan Party to any
Arranger, any Agent or any Lender (including the Confidential Information
Memorandum) in connection with the Transactions, the other transactions
contemplated hereby and the negotiation of this Agreement or delivered hereunder
(as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Loan Parties represent only that such information was prepared
in good faith based upon assumptions believed to be reasonable at the time (it
being understood that such projected financial information is not a guaranty of
future performance and that actual results during the periods covered by the
Projections may differ from the projected results therein and that such
differences may be material).

6.16 COMPLIANCE WITH LAWS.

      (a) Each of the Borrower and each Subsidiary is in compliance with the
requirements of all

                                       81



Laws (including Medicare Regulations, Medicaid Regulations, HIPAA, 42 U.S.C.
Section 1320a-7b and 42 U.S.C. Section 1395nn) and all orders, writs,
injunctions, decrees, licenses and permits applicable to it, its Properties or
the Facilities, except in such instances in which (i) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (ii) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.

      (b) Without limiting the generality of the foregoing clause (a):

            (i) neither the Borrower nor any Subsidiary, nor any individual
      employed by the Borrower or any Subsidiary, would reasonably be expected
      to have criminal culpability or to be excluded from participation in any
      Medical Reimbursement Program for corporate or individual actions or
      failures to act known to the Borrower or any Subsidiary where such
      culpability or exclusion has resulted or could reasonably be expected to
      result in an Exclusion Event;

            (ii) to the knowledge of the Loan Parties, no officer or other
      member of management continues to be employed by the Borrower or any
      Subsidiary who may reasonably be expected to have individual culpability
      for matters under investigation by the OIG or other Governmental Authority
      unless such officer or other member of management has been, within a
      reasonable period of time after discovery of such actual or potential
      culpability, either suspended or removed from positions of responsibility
      related to those activities under challenge by the OIG or other
      Governmental Authority;

            (iii) current billing policies, arrangements, protocols and
      instructions of the Borrower and its Subsidiaries comply with requirements
      of Medical Reimbursement Programs and are administered by properly trained
      personnel, except where any such failure to comply would not reasonably be
      expected to result in an Exclusion Event; and

            (iv) current medical director compensation arrangements of the
      Borrower and its Subsidiaries comply with state and federal anti-kickback,
      fraud and abuse, and self-referral laws, including without limitation 42
      U.S.C. Section 1320a-7b and 42 U.S.C. Section 1395nn, and all regulations
      promulgated under such laws, except where any such failure to comply would
      not reasonably be expected to result in an Exclusion Event.

      (c) The Borrower has in place a compliance program for the Borrower and
its Subsidiaries that is reasonably designed to provide effective internal
controls that promote adherence to, prevent and detect material violations of
any Laws applicable to the Borrower and its Subsidiaries, and which includes the
implementation of internal audits and monitoring on a regular basis to monitor
compliance with the compliance program and with Laws.

6.17 INTELLECTUAL PROPERTY; LICENSES; ETC.

      (a) The Borrower and its Subsidiaries own, or possess the legal right to
use, all of the trademarks, service marks, trade names, copyrights, patents,
patent rights, Internet domain names, franchises, licenses and other
intellectual property rights (collectively, "IP Rights") that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person.

      (b) Set forth on Schedule 6.17 (IP Rights) is a list of all IP Rights
registered or pending registration with the United States Copyright Office or
the United States Patent and Trademark Office and owned by any Loan Party, or
that any Loan Party has the right to use, as of the Closing Date.

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      (c) Except for such claims and infringements that could not reasonably be
expected to have a Material Adverse Effect, no claim has been asserted and is
pending by any Person challenging or questioning the use of any IP Rights or the
validity or effectiveness of any IP Rights, nor does any Loan Party know of any
such claim.

      (d) To the knowledge of the Responsible Officers of the Loan Parties, the
use of any IP Rights, slogan or other advertising device, product, process,
method, substance, part or component, or other material now employed, or now
contemplated to be employed, by the Borrower or any of its Subsidiaries or the
granting of a right or a license in respect of any the foregoing from the
Borrower or any Subsidiary does not infringe on the rights of any Person.

      (e) As of the Closing Date, none of the IP Rights owned by any of the Loan
Parties is subject to any licensing agreement or similar arrangement except as
set forth on Schedule 6.17 (IP Rights).

6.18 BROKER'S FEES.

      Neither the Borrower nor any Subsidiary has any obligation to any Person
in respect of any finder's, broker's, investment banking or other similar fee in
connection with any of the transactions contemplated under the Loan Documents.

6.19 USE OF PROCEEDS.

      (a) The proceeds of the Revolving Loans and the Letters of Credit are
being used by the Borrower (and, to the extent distributed to them by the
Borrower, each other Loan Party) solely (i) for the payment of transaction
costs, fees and expenses incurred in connection with this Agreement, the
Transactions and the other transactions contemplated hereby and (ii) for working
capital and general corporate purposes (including consummating the Ardent
Acquisition and Permitted Acquisitions and making Capital Expenditures that are
not prohibited under this Agreement); provided, however, that on the Closing
Date after giving effect to the initial extensions of credit hereunder and the
consummation of the Transactions scheduled to occur on the Closing Date, the
Revolving Credit Outstandings shall not exceed $75,000,000.

      (b) The proceeds of the Term Loans are being used by the Borrower solely
(i) to finance the Ardent Acquisition and for the payment of related transaction
costs, fees and expenses and (ii) for the payment of transaction costs, fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby on or prior to the Closing Date.

6.20 LABOR MATTERS.

      There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower or any Subsidiary as of the Closing Date
and neither the Borrower nor any Subsidiary has suffered any strikes, walkouts,
work stoppages or other material labor difficulty within the last five years.

6.21 BUSINESS LOCATIONS.

      Set forth on Schedule 6.21(a) (Locations of Real Property) is a list of
all Real Property located in the United States that is owned or leased by any
Loan Party as of the Closing Date. Set forth on Schedule 6.21(b) (Locations of
Tangible Personal Property) is a list of all locations where any tangible
personal property of any Loan Party is located as of the Closing Date. Set forth
on Schedule 6.21(c) (Locations of Chief Executive Office) is the chief executive
office, tax payer identification number and organizational identification number
of each Loan Party as of the Closing Date. The exact legal name and state of

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organization of each Loan Party is as set forth on the signature pages hereto.
Except as set forth on Schedule 6.21(e) (Changes in Legal Name, State of
Formation and Structure), no Loan Party has during the five years preceding the
Closing Date (i) changed its legal name, (ii) changed its state of formation, or
(iii) been party to a merger, consolidation or other change in structure.

6.22 PERFECTION OF SECURITY INTERESTS IN THE COLLATERAL.

      The Collateral Documents create valid security interests in, and Liens on,
the Collateral purported to be covered thereby, which security interests and
Liens are perfected security interests and Liens, prior to all other Liens
(other than Permitted Liens having priority over the Liens of the Collateral
Agent pursuant to the Loan Documents).

6.23 SUBORDINATION.

      (a) The Obligations are "Senior Debt" under (i) the Existing Senior
Subordinated Notes Documents and (ii) following issuance of the New Senior
Subordinated Notes, the New Senior Subordinated Notes Documents.

      (b) The Obligations are "Designated Senior Debt" under each of the Senior
Subordinated Notes Documents and, other than the Senior Bridge Loans, no other
Indebtedness or other obligations constitute "Designated Senior Debt" under any
of the Senior Subordinated Notes Documents,.

6.24 RELATED DOCUMENTS.

      (a) The execution, delivery and performance by each Loan Party of the
Related Documents to which it is a party and the consummation of the
transactions contemplated thereby by such Loan Party:

            (i) are within such Loan Party's respective corporate, limited
      liability company, partnership or other powers;

            (ii) have been duly authorized by all necessary corporate or other
      action, including the consent of stockholders where required;

            (iii) do not and will not (A) contravene or violate any Loan Party's
      Organization Documents, (B) violate any Law applicable to any Loan Party,
      or any order or decree of any Governmental Authority or arbitrator except
      to the extent such violation could not reasonably be expected to have a
      Material Adverse Effect, (C) conflict with or result in the breach or
      contravention of, constitute a default under, or result in or permit the
      termination or acceleration of, any Contractual Obligation of any Loan
      Party or any of its Subsidiaries, except for those that, in the aggregate,
      could not reasonably be expected to have a Material Adverse Effect or (D)
      result in the creation or imposition of any Lien upon any property of any
      Loan Party or any of its Subsidiaries other than a Permitted Lien; and

            (iv) do not require the consent of, authorization by, approval of,
      notice to, or filing or registration with, any Governmental Authority or
      any other Person, other than those that (A) will have been obtained at the
      Closing Date, each of which will be in full force and effect on the
      Closing Date, none of which will on the Closing Date impose materially
      adverse conditions upon the exercise of control by the Borrower over any
      of its Subsidiaries and (B) in the aggregate, if not obtained, could not
      reasonably be expected to have a Material Adverse Effect.

      (b) Each of the Related Documents has been or at the Closing Date will
have been duly

                                       84



executed and delivered by each Loan Party party thereto and at the Closing Date
will be the legal, valid and binding obligation of each Loan Party that is party
thereto, enforceable against such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable Debtor Relief Laws or by
equitable principles relating to enforceability.

      (c) None of the Related Documents has been amended or modified in any
respect and no provision therein has been waived, except in each case to the
extent permitted by Section 8.17 (Modification of Related Documents), and each
of the representations and warranties therein are true and correct in all
material respects and no default or event that, with the giving of notice or
lapse of time or both, would be a default has occurred thereunder.

6.25 FRAUD AND ABUSE.

      To the knowledge of the Responsible Officers of the Loan Parties, neither
the Borrower nor any Subsidiary nor any of their respective officers or
directors has engaged in any activities that are prohibited under any applicable
provision of the Social Security Act and the regulations promulgated thereunder,
including HIPAA, the Medicare Regulations or the Medicaid Regulations that could
reasonably be expected to have a Material Adverse Effect.

6.26 LICENSING AND ACCREDITATION.

      (a) Except to the extent it would not reasonably be expected to have a
Material Adverse Effect, each of the Borrower and its Subsidiaries has, to the
extent applicable: (i) obtained (or been duly assigned) all required
certificates of need or determinations of need as required by the relevant state
Governmental Authority for the acquisition, construction, expansion of,
investment in or operation of its businesses and Facilities as currently
operated; (ii) obtained and maintains in good standing all required licenses,
permits, authorizations and approvals of each Governmental Authority necessary
to the conduct of its business and Facilities; (iii) to the extent prudent and
customary in the industry in which it is engaged, obtained and maintains
accreditation from all generally recognized accrediting agencies; (iv) entered
into and maintains in good standing its Medicare Provider Agreements and
Medicaid Provider Agreements; and (v) ensured that all such required licenses
are in full force and effect on the date hereof and have not been revoked or
suspended or otherwise limited.

      (b) To the knowledge of the Loan Parties, each Contract Provider is duly
licensed by each state, state agency, commission or other Governmental Authority
having jurisdiction over the provision of such services by such Person in the
locations where the Borrower and its Subsidiaries conduct business, to the
extent such licensing is required to enable such Person to provide the
professional services provided by such Person and otherwise as is necessary to
enable the Borrower and its Subsidiaries to operate as currently operated and as
contemplated to be operated.

6.27 REIMBURSEMENT FROM MEDICAL REIMBURSEMENT PROGRAMS.

      The accounts receivable of Borrower and its Subsidiaries have been and
will continue to be adjusted to reflect the reimbursement policies (both those
most recently published in writing as well as those not in writing which have
been verbally communicated) of Medical Reimbursement Programs, including without
limitation Medicare, Medicaid, Blue Cross/Blue Shield, private insurance
companies, health maintenance organizations, preferred provider organizations,
alternative delivery systems, managed care systems, government contracting
agencies and other third party payors. In particular, accounts receivable
relating to such Medical Reimbursement Programs do not and shall not exceed in
any material respect amounts any obligee is entitled to receive under any
capitation arrangement, fee schedule, discount formula, cost-based reimbursement
or other adjustment or limitation to its usual

                                       85



charges.

6.28 MEDICARE AND MEDICAID NOTICES AND FILINGS RELATED TO HEALTH CARE BUSINESS.

      To the extent applicable and except to the extent as would not be
reasonably be expected to have a Material Adverse Effect: (i) each of the
Borrower and each of its Subsidiaries has timely filed all reports required to
be filed in connection with Medicare and applicable Medicaid programs and due on
or before the date hereof, and all required reports and administrative forms and
filings are true and complete in all material respects; (ii) there are no
claims, actions, proceedings or appeals pending (and neither Borrower nor any of
its Subsidiaries has filed anything that would result in any claims, actions or
appeals) before any Governmental Authority with respect to any Medicare or
Medicaid cost reports or claims filed by the Borrower or any of its Subsidiaries
on or before the date hereof, or with respect to any adjustments, denials,
recoupments or disallowances by any intermediary, carrier, other insurer,
commission, board or agency in connection with any cost reports or claims; (iii)
no validation review, survey, inspection, audit, investigation or program
integrity review related to the Borrower or any Subsidiary has been conducted by
any Governmental Authority or government contractor in connection with the
Medicare or Medicaid programs, and no such reviews are scheduled, pending or,
threatened against or affecting the Borrower or any Subsidiary; and (iv) each of
the Borrower and its Subsidiaries has timely filed all material reports, data
and other information required by any other Governmental Authority with
authority to regulate the Borrower or any such Subsidiary or its business in any
manner.

                                  ARTICLE VII

                              AFFIRMATIVE COVENANTS

      Each of the Borrower and each other Loan Party agrees with the Lenders,
the L/C Issuer and the Agents to each of the following, as long as any
Obligation or any Revolving Credit Commitment remains outstanding and, in each
case, unless the Required Lenders otherwise consent in writing, that it shall
and shall cause each Subsidiary to:

7.01 FINANCIAL STATEMENTS.

      Deliver to the Administrative Agents and each Lender, in form and detail
satisfactory to the Administrative Agents and the Required Lenders:

      (a) as soon as available, but in any event within ninety (90) days after
the end of each fiscal year of the Borrower, consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such fiscal
year, and the related consolidated and consolidating statements of income or
operations, retained earnings, shareholders' equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures as of
the end of and for the previous fiscal year, all in reasonable detail and
prepared in accordance with GAAP, audited and accompanied by a report and
opinion of Ernst & Young or other independent certified public accountants of
nationally recognized standing reasonably acceptable to the Administrative
Agents, which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any "going concern" or
like qualification or exception or any qualification or exception as to the
scope of such audit; and

      (b) as soon as available, but in any event within forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year of
the Borrower, consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated and consolidating statements of income or operations, retained
earnings, shareholders' equity and cash flows for such fiscal quarter and for
the portion of the Borrower's fiscal year then ended,

                                       86



setting forth in each case in comparative form the figures as of the end of and
for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail and
certified by a Responsible Officer of the Borrower as fairly presenting in all
material respects the financial condition, results of operations, shareholders'
equity and cash flows of the Borrower and its Subsidiaries in accordance with
GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes.

As to any information contained in the Borrower's periodic reports filed with
the SEC on Form 10-K or Form 10-Q, as the case may be, furnished pursuant to
Section 7.02(e)(i) (Certificates; Other Information), the Borrower shall not be
separately required to furnish such information under clause (a) or (b) above,
but the foregoing shall not be in derogation of the obligation of the Borrower
to furnish the information and materials described in clauses (a) and (b) above
at the times specified therein.

7.02 CERTIFICATES; OTHER INFORMATION.

      Deliver to the Administrative Agents and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:

      (a) concurrently with the delivery of the financial statements referred to
in Section 7.01(a) (Financial Statements), a certificate of its independent
certified public accountants certifying such financial statements; and

      (b) concurrently with the delivery of the financial statements referred to
in Sections 7.01(a) and (b) (Financial Statements):

            (i) a duly completed Compliance Certificate signed by a Responsible
      Officer of the Borrower; and

            (ii) (A) a certificate of a Responsible Officer of the Borrower
      certifying that the Corporate Chart attached thereto (or the last
      Corporate Chart delivered pursuant to this clause (ii)) is true, correct,
      complete and current as of the date of such financial statements; provided
      that following the delivery of the initial Corporate Chart required to be
      delivered pursuant to this clause (ii), the Borrower shall not be required
      to deliver additional Corporate Charts unless any changes have been made
      to the corporate structure of the Borrower and its Subsidiaries or the
      other information presented in the Corporate Chart from that presented in
      the Corporate Chart then most recently delivered by the Borrower pursuant
      to this clause (ii); and

                 (B) a certificate of a Responsible Officer of the Borrower in
      form and substance satisfactory to the Administrative Agents that, to the
      knowledge of the Borrower, all certificates, statements, updates and other
      documents (including updated schedules) required to be delivered pursuant
      to the Security Agreement and/or the Pledge Agreement by any Loan Party in
      the preceding fiscal period fiscal period have been delivered thereunder
      (or such delivery requirement was otherwise duly waived or extended).

      The reporting requirements set forth in this clause (ii) are in addition
      to, and are not intended to and shall not replace or otherwise modify, any
      obligation of any Loan Party under any Loan Document (including other
      notice or reporting requirements). Compliance with the reporting
      obligations in this clause (ii) shall only provide notice to the
      Administrative Agents and shall not, by itself, modify any obligation of
      any Loan Party under any Loan Document, update any Schedule to this
      Agreement or any schedule to any other Loan Document or cure, or otherwise

                                       87



      modify in any way, any failure to comply with any covenant, or any breach
      of any representation or warranty, contained in any Loan Document or any
      other Default or Event of Default;

      (c) within thirty (30) days after end of each fiscal year, the annual
business plan and budget of the Borrower and its Subsidiaries containing, among
other things, projected financial statements for each fiscal quarter of the next
fiscal year;

      (d) copies of any detailed audit reports, management letters or
recommendations promptly after being submitted to the board of directors (or the
audit committee of the board of directors) of the Borrower by independent
accountants in connection with the accounts or books of the Borrower or any
Subsidiary, or any audit of any of them;

      (e) promptly after the same are available, (i) copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Borrower, and copies of all annual, regular, periodic
and special reports and registration statements which the Borrower may file or
be required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934 or to a holder of any Indebtedness owed by the Borrower or
any Subsidiary in its capacity as such a holder and not otherwise required to be
delivered to the Administrative Agents pursuant hereto and (ii) upon the request
of any Administrative Agent all reports and written information to and from the
United States Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational Health and
Safety Administration, or any state or local agency responsible for health and
safety matters, or any successor agencies or authorities concerning
environmental, health or safety matters; and

      (f) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary, or compliance
with the terms of the Loan Documents, as any Administrative Agent or any Lender
may from time to time reasonably request.

      Documents required to be delivered pursuant to Section 7.01(a) or (b)
(Financial Statements) or Section 7.02(e) above may (to the extent any such
documents are included in materials otherwise filed with the SEC) be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrower posts such documents, or provides a link
thereto on the Borrower's website on the Internet at the website address listed
on Schedule 11.02 (Lending Offices and Addresses for Notices); or (ii) on which
such documents are posted on the Borrower's behalf on IntraLinks(TM) or other
Approved Electronic Platform to which each Lender and each Administrative Agent
have access; provided, that: (i) the Borrower shall deliver paper copies of such
documents to the Administrative Agents or any Lender that requests the Borrower
to deliver such paper copies until a written request to cease delivering paper
copies is given by the applicable Administrative Agent or such Lender and (ii)
the Borrower shall notify (which may be by facsimile or electronic mail) each
Administrative Agent and each Lender of the posting of any such documents and
provide to each Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. Notwithstanding anything contained
herein, in every instance the Borrower shall be required to provide paper copies
of the Compliance Certificates required by Section 7.02(b) above to the
Administrative Agents and each of the Lenders. Except for such Compliance
Certificates, the Administrative Agents shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Borrower with
any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.

7.03 NOTICES.

      (a) Promptly (and in any event within five (5) Business Days) after any
Loan Party obtains knowledge thereof, notify the Administrative Agents and each
Lender of the occurrence of any Default.

                                       88



      (b) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agents and each Lender of any matter that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

      (c) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agents and each Lender of the occurrence of any ERISA Event.

      (d) Promptly notify the Administrative Agents and each Lender of any
material change in accounting policies or financial reporting practices by the
Borrower or any Subsidiary.

      (e) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agent and each Lender of any litigation, investigation or
proceeding affecting any Loan Party in which the amount involved or relief
sought would reasonably be expected to have a Material Adverse Effect.

      (f) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agents and each Lender of (i) the institution of any
investigation, review or proceeding against any Loan Party to suspend, revoke or
terminate (or that may result in the termination of) any Medicaid Provider
Agreement or Medicare Provider Agreement, or any such investigation or
proceeding that may result in an Exclusion Event or (ii) any notice of loss or
threatened loss of accreditation, loss of participation under any Medical
Reimbursement Program or loss of applicable health care license, in the case of
clauses (i) and (ii), that would reasonably be expected to result in a Material
Adverse Effect.

      (g) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agents and each Lender of any event or condition which has caused
the representations and warranties set forth in Section 6.09 (Environmental
Compliance) to be untrue or incorrect and, upon request by any Administrative
Agent, furnish or cause to be furnished to the Administrative Agents, at the
Loan Parties' expense, a report of an environmental assessment of reasonable
scope, form and depth, (including, where appropriate, invasive soil or
groundwater sampling) by a consultant reasonably acceptable to the
Administrative Agents as to the nature and extent of the presence of any
Hazardous Materials on any Facilities and as to the compliance by the Borrower
or any of its Subsidiaries with Environmental Laws at such Facilities. If the
Loan Parties fail to deliver such an environmental report within seventy-five
(75) days after receipt of such written request then the Administrative Agents
may arrange for same, and the Loan Parties hereby grant to the Administrative
Agents and their respective representatives access to the Facilities to
reasonably undertake such an assessment (including, where appropriate, invasive
soil or groundwater sampling). The reasonable cost of any assessment arranged
for by the Administrative Agents pursuant to this provision will be payable by
the Loan Parties on demand and added to the obligations secured by the
Collateral Documents.

      Each notice pursuant to this Section 7.03 shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower or the
applicable Loan Party has taken and proposes to take with respect thereto. Each
notice pursuant to Section 7.03(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.

7.04 PAYMENT OF OBLIGATIONS.

      Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by
the Borrower or such Subsidiary; and (b) all lawful claims which, if unpaid,
would by law become a Lien upon its Property

                                       89



unless the same are being contested in good faith by appropriate proceedings
diligently conducted and adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiary.

7.05 PRESERVATION OF EXISTENCE, ETC.

      (a) Preserve, renew and maintain in full force and effect its legal
existence under the Laws of the jurisdiction of its organization except in a
transaction permitted by Section 8.04 (Fundamental Changes) or 8.05
(Dispositions).

      (b) Preserve, renew and maintain in full force and effect its good
standing under the Laws of the jurisdiction of its organization, except to the
extent the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

      (c) Take all reasonable action to maintain all rights, privileges,
permits, licenses, franchises, certifications and approvals as are necessary for
the conduct of its business as currently conducted and herein contemplated,
including without limitation professional licenses, CLIA certifications,
Medicare Provider Agreements and Medicaid Provider Agreements, except to the
extent the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

      (d) Preserve or renew all of its material registered patents, copyrights,
trademarks, trade names and service marks, except to the extent the failure to
do so could not reasonably be expected to have a Material Adverse Effect.

7.06 MAINTENANCE OF PROPERTIES.

      (a) Maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear and Involuntary Dispositions excepted.

      (b) Make all necessary repairs thereto and renewals and replacements
thereof, except to the extent the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

      (c) Use the standard of care typical in the industry in the operation and
maintenance of its facilities.

7.07 MAINTENANCE OF INSURANCE.

      Maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance, business
interruption insurance and reinsurance) with PSI Surety (to the extent PSI
Surety is capitalized in accordance with this Agreement) and/or financially
sound and reputable insurance companies and reinsurance companies or
associations (as applicable), in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrower or the
applicable Subsidiary operates. The Collateral Agent shall be named as loss
payee or mortgagee, as its interest may appear, and/or additional insured with
respect to any such insurance providing coverage in respect of any Collateral,
and each provider of any such insurance shall agree, by endorsement upon the
policy or policies issued by it or by independent instruments furnished to the
Collateral Agent, that it will give the Collateral Agent thirty (30) days prior
written notice before any such policy or policies shall be altered or canceled.

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7.08 COMPLIANCE WITH LAWS.

      Except the extent the failure to do so would not reasonably be expected to
result in a Material Adverse Effect:

      (a) Comply with the requirements of all Laws (including without limitation
Titles XVIII and XIX of the Social Security Act, HIPAA, Medicare Regulations,
Medicaid Regulations) and all orders, writs, injunctions and decrees applicable
to it or to its business or Property, except in such instances in which such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted;

      (b) Ensure that (i) billing policies, arrangements, protocols and
instructions will comply with reimbursement requirements under Medicare,
Medicaid and other Medical Reimbursement Programs and will be administered by
properly trained personnel; and (ii) medical director compensation arrangements
and other arrangements with referring physicians will comply with applicable
state and federal self-referral and anti-kickback laws, including without
limitation 42 U.S.C. Section 1320a-7b(b)(1) - (b)(2) 42 U.S.C. and 42 U.S.C.
Section 1395nn; and

      (c) Make commercially reasonable efforts to implement policies that are
consistent with HIPAA on or before the date that any provision of HIPAA becomes
applicable to the Borrower and its Subsidiaries.

7.09 BOOKS AND RECORDS.

      (a) Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of the
Borrower or such Subsidiary, as the case may be.

      (b) Maintain such books of record and account in conformity in all
material respects with all applicable requirements of any Governmental Authority
having regulatory jurisdiction over the Borrower or such Subsidiary, as the case
may be.

7.10 ACCESS; INSPECTION RIGHTS.

      (a) Permit representatives and independent contractors of the
Administrative Agents, the Collateral Agent and each Lender to visit and inspect
any of its properties, to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and independent
public accountants (provided that the Borrower shall be provided an opportunity
to attend such meetings), all at the expense of the Lenders and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Borrower; provided, however, that
when an Event of Default exists, the Agents or any Lender (or any of their
respective representatives or independent contractors) may do any of the
foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice.

      (b) Permit representatives and independent contractors of the Collateral
Agent or the Administrative Agents to conduct an annual audit of the Collateral
at the expense of the Borrower upon reasonable advance notice to the Borrower.
To the extent required by applicable Law, prior to receiving any information
that contains patient information subject to (i) state privacy laws, (ii) the
Drug Abuse Prevention, Treatment and Rehabilitation Act, 42 U.S.C. 290ee-3 et
seq., (iii) the HIPAA, 42 U.S.C. 1320d et seq., or (iv) regulations promulgated
pursuant to the foregoing statutes, each Agent and the

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Lenders agree to execute an agreement reasonably satisfactory to the
Administrative Agents and the Lenders that complies with the requirements
relating to "business associates" as set forth in 45 C.F.R. 502(e) and any
applicable state Laws.

7.11 USE OF PROCEEDS.

      Use the proceeds of the Loans and other Credit Extensions as provided in
Section 6.19 (Use of Proceeds).

7.12 ADDITIONAL SUBSIDIARIES AND GUARANTEES.

      (a) Within thirty (30) days (or such longer period as the Administrative
Agents may agree) after (x) the acquisition or formation of any Subsidiary
(other than an Excluded Subsidiary) or (y) any Subsidiary ceases to be an
Excluded Subsidiary:

            (i) notify the Administrative Agents thereof in writing, together
      with notice of (A) the jurisdiction of formation of such Subsidiary, (B)
      number of shares of each class of Capital Stock of such Subsidiary
      outstanding, (C) number and percentage of outstanding shares of each class
      of Capital Stock of such Subsidiary owned (directly or indirectly) by the
      Borrower or any Subsidiary and (D) number and effect, if exercised, of all
      outstanding options, warrants, rights of conversion or purchase and all
      other similar rights with respect thereto; and

            (ii) cause such Subsidiary (other than any Excluded Subsidiary) to
      (A) become a Guarantor by executing and delivering to the Administrative
      Agents a Joinder Agreement and joinder agreements pursuant to which such
      Subsidiary shall become a party to the Pledge Agreement and Security
      Agreement or such other document as the Administrative Agents shall deem
      appropriate for such purposes, and (B) deliver to the Agents documents of
      the types referred to in clauses (iii), (iv), (v), (vi), (ix) and (x) of
      Section 5.01(a) (Conditions Precedent to Initial Credit Extensions) and
      favorable opinions of counsel to such Person acceptable to the
      Administrative Agents (which shall cover, among other things, the
      legality, validity, binding effect and enforceability of the documentation
      referred to in clause (A) and the creation and perfection of security
      interests and Liens), all in form, content and scope reasonably
      satisfactory to the Agents; provided, however, (x) if such Subsidiary is a
      Foreign Subsidiary and compliance with clause (a) above would reasonably
      be expected to cause any material adverse tax consequences to the Borrower
      and its Subsidiaries taken as a whole, then such Subsidiary shall not be
      required to comply with this clause (ii) and (y) if such Subsidiary is an
      Immaterial Subsidiary, then such Subsidiary shall not be required to
      comply with this clause (ii) so long as the aggregate amount of assets
      owned by all Immaterial Subsidiaries that are not Guarantors does not, as
      of any date of determination, exceed $250,000 in the aggregate.

      (b) Guarantee of Other Indebtedness. If any Subsidiary that is not a
Guarantor (including any Foreign Subsidiary and any Excluded Subsidiary)
provides a Guarantee in respect of any Senior Subordinated Notes, any other
Subordinated Indebtedness or any other Indebtedness of the Borrower in excess of
the Threshold Amount, such Subsidiary shall, concurrent with providing the
Guarantee in respect of such Subordinated Indebtedness, Senior Secured
Indebtedness or any other Indebtedness of the Borrower in excess of the
Threshold Amount, (i) become a Guarantor by executing and delivering to the
Administrative Agents a Joinder Agreement and joinder agreements pursuant to
which such Subsidiary shall become a party to the Pledge Agreement and Security
Agreement or such other document as the Administrative Agents shall deem
appropriate for such purposes and (ii) deliver to the Agents documents of the
types referred to in clauses (iii), (iv), (v), (vi), (ix) and (x) of Section
5.01(a) (Conditions Precedent to Initial Credit Extensions) and favorable
opinions of counsel to such Person (which shall cover, among

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other things, the legality, validity, binding effect and enforceability of the
documentation referred to in clause (A) and the creation and perfection of
security interests and Liens), all in form, content and scope reasonably
satisfactory to the Agents.

7.13  ERISA COMPLIANCE.

      Do, and cause each of its ERISA Affiliates to do, each of the following:
(a) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Internal Revenue Code and other federal or
state Law; (b) cause each Plan that is qualified under Section 401(a) of the
Internal Revenue Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Internal Revenue Code.

7.14  ENVIRONMENTAL COMPLIANCE.

      Do, and cause each Subsidiary of the Borrower to, comply in all material
respects with Environmental Laws and, without limiting the foregoing, the
Borrower shall, at its sole cost and expense, upon receipt of any notification
or otherwise obtaining knowledge of any Release or other event that has any
reasonable likelihood of any of the Borrower or any Subsidiary of the Borrower
incurring Environmental Liabilities in excess of the Threshold Amount in the
aggregate, (a) conduct, or pay for consultants to conduct, tests or assessments
of environmental conditions at such operations or properties, including the
investigation and testing of subsurface conditions and (b) take such Remedial
Action and undertake such investigation or other action as required by
Environmental Laws or as any Governmental Authority requires or as is
appropriate and consistent with good business practice to address the Release or
event and otherwise ensure compliance with Environmental Laws.

7.15  ADDITIONAL COLLATERAL.

      To the extent not delivered to the Administrative Agent on or before the
Closing Date (including in respect of after-acquired property and, as
applicable, Persons that become Subsidiaries of any Loan Party after the Closing
Date), the Borrower agrees promptly (and in any event, within 30 days of the
Closing Date or the date of acquisition of such property or Persons (or such
later date as may be agreed to by the Administrative Agents)) to do, or cause
each Subsidiary of the Borrower to do, each of the following:

      (a) at all times (except in respect of all owned and leased Property of
each Loan Party acquired after the Closing Date, in which case, no later than 30
days after (x) the Closing Date or (y) (if later) the date of acquisition of
such property (or such later date as may be agreed to by the Administrative
Agents)) the Loan Parties will (subject to Section 7.12 (Additional Subsidiaries
and Guarantees)) (a) cause all of the owned and leased Property (other than
Excluded Property) of each Loan Party to be subject at all times to first
priority, perfected Liens and, in the case of owned and leased Real Property,
title insured Liens in favor of the Administrative Agent to secure the
Obligations pursuant to the terms and conditions of the Collateral Documents or,
with respect to any such Property acquired subsequent to the Closing Date, such
other additional security documents or joinders to existing Collateral Documents
as the Administrative Agents may reasonably request, subject in any case to
Permitted Liens and (b) deliver such other documentation as the Administrative
Agents may reasonably request in connection with the foregoing, including
appropriate UCC-1 financing statements, Mortgage Supporting Documents,
Collateral Access Agreements, Bailee's Letters, certified resolutions,
Organization Documents and other authorizing documents of such Person, favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to above and the perfection of the Collateral Agent's Liens thereunder)
and other items of the types required to be delivered pursuant to clauses (iii),
(iv), (v), (vi), (ix) and (x) of Section

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5.01(a) (Conditions Precedent to Initial Credit Extensions), all in form,
content and scope reasonably satisfactory to the Administrative Agents.

      (b) without limiting the generality of the above, the Loan Parties will
(subject to Section 7.12 (Additional Subsidiaries and Guarantees)) cause (a)
100% of the issued and outstanding Capital Stock of each Domestic Subsidiary and
(b) 66% (or such greater percentage that, due to a change in an applicable Law
after the date hereof, (1) could not reasonably be expected to cause the
undistributed earnings of such Foreign Subsidiary as determined for United
States federal income tax purposes to be treated as a deemed dividend to such
Foreign Subsidiary's United States parent and (2) could not reasonably be
expected to cause any material adverse tax consequences to the Borrower and its
Subsidiaries taken as a whole) of the issued and outstanding Voting Stock and
100% of the issued and outstanding Capital Stock that is not Voting Stock in
each Foreign Subsidiary directly owned by the Borrower or any Domestic
Subsidiary to be subject at all times to a first priority, perfected Lien in
favor of the Collateral Agent for the benefit of the Secured Parties pursuant to
the terms and conditions of the Collateral Documents or such other security
documents as the Administrative Agents shall reasonably request.

      (c) with respect to each Account for which either the perfection,
enforceability, or validity of the Collateral Agent's Liens in such Account, or
the Administrative Agent's right or ability to obtain direct payment to the
Administrative Agent of the proceeds of such Account, is governed by any
federal, state, or local statutory requirements other than those of the Uniform
Commercial Code, the Loan Parties will take such steps as the Administrative
Agent may from time to time reasonably request, including compliance with the
Federal Assignment of Claims Act of 1940, the Social Security Act, the Medicare
Regulations and the Medicaid Regulations.

7.16  CONTROL ACCOUNTS; APPROVED DEPOSIT ACCOUNTS

      (a) Cause each of the Loan Parties to (i) deposit in an Approved Deposit
Account all cash it receives, (ii) not establish or maintain any Securities
Account that is not a Control Account and (iii) not establish or maintain any
Deposit Account other than with a Deposit Account Bank; provided, however, that
each of the Borrower and each of the Loan Parties may (i) maintain payroll,
withholding tax and other fiduciary accounts that are not subject to a Deposit
Account Control Agreement, (ii) maintain accounts with the Agents and (iii)
maintain other Deposit Accounts that are not subject to Deposit Account Control
Agreements as long as the aggregate balance in all such accounts does not exceed
$2,500,000 as at the end of each Business Day. The Borrower shall ensure that
the Deposit Accounts that are not subject to Deposit Account Control Agreements
shall, on each Business Day, be swept to one or more Deposit Accounts that are
subject to Deposit Account Control Agreements with a Deposit Account Bank to the
extent necessary to comply with the requirements of the immediately preceding
sentence.

      (b) Each of the Agents may establish one or more Cash Collateral Accounts
with such depositaries and Approved Securities Intermediaries as it in its sole
discretion shall determine; provided, however, that no Cash Collateral Account
shall be established with respect to the assets of any Subsidiary that is not a
Loan Party. The Borrower agrees that each such Cash Collateral Account shall
meet the requirements set forth in the definition of "Cash Collateral Account".
Without limiting the foregoing, funds on deposit in any Cash Collateral Account
may be invested (but the applicable Agent shall be under no obligation to make
any such investment) in Cash Equivalents at the direction of the applicable
Agent and, except during the continuance of an Event of Default, each Agent
agrees with the Borrower to issue Entitlement Orders for such investments in
Cash Equivalents as requested by the Borrower; provided, however, that no Agent
shall have any responsibility for, or bear any risk of loss of, any such
investment or income thereon. None of the Borrower, any Subsidiary of the
Borrower or any other Loan Party or Person claiming on behalf of or through the
Borrower, any Subsidiary of the Borrower or any other Loan Party shall have any
right to demand payment of any funds held in any Cash Collateral Account at any

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time prior to the termination of all outstanding Letters of Credit and the
payment in full of all then outstanding and payable monetary Obligations. Each
Agent shall apply all funds on deposit in a Cash Collateral Account as provided
in Section 2.08(c) (Mandatory Prepayments).

7.17  INTEREST RATE CONTRACTS.

      On or prior to the date that is 90 days after the Closing Date, the
Borrower shall enter into one or more Swap Contracts (including Swap Contracts,
if any, existing on the Closing Date) on terms and with counterparties
reasonably satisfactory to the Administrative Agents, covering a notional amount
sufficient to ensure that interest on at least 50% of the Consolidated Funded
Indebtedness is paid (or is effectively paid) on a fixed rate basis for a period
of at least three years following the Closing Date; provided, however, that in
the event that the Consolidated Total Leverage Ratio shall be less than 3.0:1.0
(determined as of the last day of the four fiscal quarter period most recently
ended), the Borrower shall not be required to maintain such Swap Contracts.

7.18  COLLATERAL ACCESS AGREEMENTS AND BAILEE'S LETTERS

      (a) To the extent not delivered to the Collateral Agent on or prior to the
Closing Date, use commercially reasonable efforts to obtain, within 90 days
after the Closing Date (or such later date as shall be acceptable to the Agents
in their sole discretion), and deliver to the Collateral Agent such Collateral
Access Agreements and Bailee's Letters specified on Schedule 7.18 (Collateral
Access Agreements and Bailee's Letters).

      (b) With respect to any leased Real Property of any Loan Party now
existing or acquired or used after the Closing Date, to the extent that at any
date of determination the monthly rental obligations of such Loan Party with
respect to such leased Real Property exceed $20,000 per month, use commercially
reasonable efforts to obtain Collateral Access Agreements from the owner or
lessor of such Real Property and deliver such Collateral Access Agreements to
the Collateral Agent within 90 days of such date of determination (or such later
date as the Administrative Agents may agree).

      (c) With respect to any Collateral of any Loan Party that is now or
hereafter becomes stored or otherwise located at a location that is not owned or
leased by a Loan Party, to the extent that at any date of determination the fair
market value of such Collateral exceeds $100,000 at any individual location or
$250,000 in the aggregate for all such Collateral, use commercially reasonable
efforts to obtain Bailee's Letters from the owner or lessor of the Real Property
at such location where Collateral is stored or otherwise located and deliver
such Bailee's Letters to the Collateral Agent within 90 days of such date of
determination (or such later date as the Administrative Agents may agree).

7.19  CERTAIN POST-CLOSING DATE REQUIREMENTS

      (a) T o the extent not delivered pursuant to Section 5.01(a)(iii) to the
Collateral Agent on or prior to the Closing Date, deliver to the Agents such
share certificates representing Pledged Collateral and related stock powers and
instruments of transfer as shall be required by the Administrative Agents not
later than ten Business Days after the Closing Date (or such later date as the
Administrative Agents may agree).

      (b) To the extent not delivered pursuant to Section 5.01(a)(v) to the
Administrative Agents on or prior to the Closing Date, deliver to the Agents
such Mortgage Title Insurance Policies as shall be required by the
Administrative Agents not later than three Business Days after the Closing Date
(or such later date as the Administrative Agents may agree).

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      (c) To the extent not delivered pursuant to Section 5.01(a)(vi) to the
Administrative Agents on or prior to the Closing Date, deliver to the Agents
such legal opinions as shall be required by the Administrative Agents in
connection with the delivery of Mortgages not later than three Business Days
after the Closing Date (or such later date as the Administrative Agents may
agree).

                                  ARTICLE VIII

                               NEGATIVE COVENANTS

      Each of the Borrower and each other Loan Party agrees with the Lenders,
the L/C Issuer and the Agents that as long as any Obligation or any Revolving
Credit Commitment remains outstanding and, in each case, unless the Required
Lenders otherwise consent in writing, no Loan Party shall, nor shall it permit
any Subsidiary to, directly or indirectly:

8.01  LIENS.

      Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, other than the following:

      (a) Liens created pursuant to any Loan Document;

      (b) Liens existing on the date hereof and listed on Schedule 8.01
(Existing Liens) and any renewals or extensions thereof, provided that the
Property covered thereby is not increased and any renewal or extension of the
obligations secured or benefited thereby is permitted by Section 8.03(b)
(Indebtedness);

      (c) Liens (other than Liens imposed under ERISA) for taxes, assessments or
governmental charges or levies not yet due or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

      (d) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other Liens imposed by law or pursuant
to customary reservations or retentions of title arising in the ordinary course
of business, provided that such Liens secure only amounts not yet due and
payable or, if due and payable, are unfiled and no other action has been taken
to enforce the same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with GAAP have
been established;

      (e) pledges or deposits in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

      (f) deposits to secure the performance of bids, trade contracts, licenses
and leases (other than Indebtedness), statutory obligations, surety bonds (other
than bonds related to judgments or litigation), performance bonds and other
obligations of a like nature incurred in the ordinary course of business;

      (g) easements, rights-of-way, restrictions and other similar encumbrances
affecting Real Property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;

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      (h) Liens securing judgments for the payment of money (or appeal or other
surety bonds relating to such judgments) not in excess of the Threshold Amount
(except to the extent covered by independent third-party insurance as to which
the insurer has acknowledged in writing its obligation to cover), unless any
such judgment remains undischarged for a period of more than thirty (30)
consecutive days during which execution is not effectively stayed;

      (i) Liens securing Indebtedness permitted under Section 8.03(c)
(Indebtedness); provided that (i) such Liens do not at any time encumber any
Property other than the Property financed by such Indebtedness, (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the Property being acquired on the date of acquisition
and (iii) such Liens attach to such Property concurrently with or within ninety
days after the acquisition thereof;

      (j) leases, licenses or subleases granted to others solely to the extent
that such leases, licenses or subleases do not interfere in any material respect
with the business of the Borrower or any Subsidiary;

      (k) any interest of title of a lessor under, and Liens arising from UCC
financing statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, operating leases permitted by this
Agreement;

      (l) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 8.02 (Investments);

      (m) normal and customary rights of setoff upon deposits of cash in favor
of banks or other depository institutions;

      (n) Liens of a collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection;

      (o) Liens created or deemed to exist by the establishment of trusts for
the purpose of satisfying (i) Governmental Reimbursement Program Costs of the
Borrower and its Subsidiaries and (ii) other actions or claims pertaining to the
same or related matters or other Medical Reimbursement Programs, provided, that
in each case, the Borrower and such Subsidiary shall have established adequate
reserves for such claims or actions;

      (p) Liens of sellers of goods to the Borrower and any of its Subsidiaries
arising under Article 2 of the Uniform Commercial Code or similar provisions of
applicable Law in the ordinary course of business, covering only the goods sold
and securing only the unpaid purchase price for such goods and related expenses;

      (q) Liens on the Property of PSI Surety created or deemed to exist in
connection with its self-insurance programs;

      (r) Liens on the Property of the HUD Financing Subsidiaries securing HUD
Financings to the extent such HUD Financings are permitted under this Agreement;
and

      (s) Liens on the Property (other than Accounts) of Aeries Healthcare of
Illinois, Inc. securing the applicable HUD Financing.

      (t) Liens securing Indebtedness permitted by Section 8.03(n); provided,
that such Liens shall only attach to the proceeds of insurance which have been
financed by such Indebtedness.

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8.02  INVESTMENTS.

      Make any Investments, except:

      (a) Investments consisting of cash or Cash Equivalents;

      (b) Investments consisting of Accounts and promissory notes created,
acquired or made and trade credit extended in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;

      (c) Investments consisting of stock, obligations, securities or other
property received in settlement of Accounts from financially troubled obligors
in the ordinary course of business;

      (d) Investments existing as of the Closing Date and set forth in Schedule
8.02 (Existing Investments);

      (e) Guarantees permitted by Section 8.03 (Indebtedness);

      (f) Permitted Acquisitions;

      (g) loans and advances to employees, directors and officers in the
ordinary course of business (other than any such loans or advance that would be
in violation of Section 4.02 of the Sarbanes-Oxley Act) in an aggregate amount
for all such loans and advances not to exceed $1,000,000 at any time
outstanding;

      (h) Investments made by any Loan Party in any Subsidiary that is not a
Loan Party; provided, that the aggregate outstanding amount of all such
Investments permitted pursuant to this clause (h) shall not exceed $1,000,000 at
any time;

      (i) Investments by any Foreign Subsidiary in another Foreign Subsidiary;

      (j) Investments in any Person that is a Loan Party prior to giving effect
to such Investment;

      (k) Investments in PSI Surety to pay its reasonable general corporate and
overhead expenses and to cause PSI Surety to maintain the minimum amount of
capital required by applicable Laws, provided that the aggregate amount of
Investments in PSI Surety pursuant to this clause (k) shall not exceed
$2,000,000 in any fiscal year;

      (l) Investments consisting of non-cash consideration received in
connection with a Disposition permitted under Section 8.05 (Dispositions);

      (m) Investments consisting of Physician Support Obligations; provided,
that (i) in the case of any such Investment that is a Guarantee, such Guarantee
is permitted under Section 8.03(i) (Indebtedness) and (ii) the aggregate amount
of all such Investments does not exceed $5,000,000 at any one time outstanding;

      (n) Investments arising under Swap Contracts permitted under Section
8.03(d) (Indebtedness); and

      (o) Investments not otherwise permitted by the foregoing clauses in an
amount outstanding amount for all such Investments permitted pursuant to this
clause (o) not to exceed $25,000,000.

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8.03  INDEBTEDNESS.

      Create, incur, assume or suffer to exist any Indebtedness, except:

      (a) Indebtedness under the Loan Documents;

      (b) Indebtedness of the Borrower and its Subsidiaries set forth in
Schedule 8.03 (Existing Indebtedness);

      (c) purchase money Indebtedness (including obligations in respect of
Capital Leases or Synthetic Leases) hereafter incurred by the Borrower or any of
its Subsidiaries to finance the purchase of Fixed Assets, provided that (i) such
Indebtedness when incurred shall not exceed the purchase price of the asset(s)
financed, (ii) no such Indebtedness shall be refinanced for a principal amount
in excess of the principal balance outstanding thereon at the time of such
refinancing and (iii) the total amount of all such Indebtedness at any time
outstanding shall not exceed $10,000,000;

      (d) obligations (contingent or otherwise) of the Borrower or any
Subsidiary existing or arising under any Swap Contract, provided that (i) such
obligations are entered into by such Person in the ordinary course of business
for the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a "market view"; and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

      (e) intercompany Indebtedness permitted under Section 8.02 (Investments);

      (f) Indebtedness arising under the Senior Bridge Credit Facility
(including any Exchange Securities) in an aggregate principal amount not to
exceed $150,000,000 (as such amount may be increased to the extent any interest
accrued thereon is to be paid-in-kind) and any refinancing thereof by the
issuance of the New Senior Subordinated Notes or of any other Indebtedness which
(i) is subordinated to the prior payment in cash of the Obligations, is not
scheduled to mature prior to the date that is ninety-one (91) days after the
scheduled Term Loan Maturity Date and has no scheduled amortization or payments
of principal prior to the Term Loan Maturity Date and (ii) has terms and
conditions which are acceptable to CGMI and are not materially less favorable to
the Borrower or the Lenders than the terms of the Senior Bridge Credit Facility
(including any Exchange Securities);

      (g) additional HUD Financings incurred or assumed after the Closing Date
in an aggregate principal amount not to exceed $25,000,000 outstanding at any
time;

      (h) Earn-Out Obligations in an aggregate amount not to exceed $30,000,000
at any one time outstanding, provided that such Earn-Out Obligations are
subordinated to the Obligations in a manner and to an extent acceptable to the
Administrative Agents;

      (i) Guarantees by any Loan Party of Indebtedness incurred by Qualified
Physicians in the ordinary course of business; provided, that (i) the aggregate
amount of all such Indebtedness that is Guaranteed by the Loan Parties does not
exceed $5,000,000 and (ii) any such Guarantee shall be expressly subordinated in
right of payment to the Obligations;

      (j) other additional unsecured Indebtedness entered into on and after the
Closing Date in an aggregate principal amount not to exceed $15,000,000 at any
one time outstanding;

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      (k) Permitted Subordinated Indebtedness (on terms and conditions
acceptable to the Administrative Agents) issued after the Closing Date (i) in an
aggregate principal amount not to exceed $50,000,000 at any one time outstanding
and (ii) in an aggregate principal amount in excess of $50,000,000 solely to the
extent that the Net Cash Proceeds of such Indebtedness are applied to prepay the
Loans as provided in Section 2.08 (Mandatory Prepayments); and

      (l) subject to Section 8.13 (c) (Prepayment of Other Indebtedness;
Modification of Debt Agreements), renewals, refinancings and extensions of
Indebtedness permitted under clauses (b), (c) and (f) (and in the case of such
clause (f), with respect to the New Senior Subordinated Notes or any other
Indebtedness which refinances the Senior Bridge Facility (including any Exchange
Securities) and satisfies the requirements of such clause (f)) on terms and
conditions not materially less favorable to the applicable obligors or the
Lenders; provided, that the principal amount of such Indebtedness so renewed,
refinanced or extended shall not be renewed, refinanced or extended for a
principal amount in excess of the principal balance outstanding thereof at the
time of such renewal, refinancing or extension.

      (m) Guarantees with respect to Indebtedness permitted under this Section
8.03 (Indebtedness)

      (n) Indebtedness consisting of the financing of insurance premiums in the
ordinary course of business.

8.04  FUNDAMENTAL CHANGES.

      Merge, dissolve, liquidate, consolidate with or into another Person, or
(except to the extent expressly permitted by Section 8.05) Dispose of (whether
in one transaction or in a series of transactions) all or substantially all of
its assets and Properties (whether now owned or hereafter acquired) to or in
favor of any Person; provided, that, notwithstanding the foregoing provisions of
this Section 8.04 but subject to the terms of Sections 7.12 (Additional
Subsidiaries and Guarantees) and 7.15 (Additional Collateral), (a) the Borrower
may merge or consolidate with any Subsidiary, provided that the Borrower shall
be the continuing or surviving corporation of such merger or consolidation, (b)
any Subsidiary may merge or consolidate with any other Subsidiary, provided that
(i) if a Guarantor is a party thereto, then a Guarantor shall be the continuing
or surviving corporation of such merger or consolidation and (ii) if a Guarantor
is not a party thereto and a Domestic Subsidiary is a party thereto, then a
Domestic Subsidiary shall be the continuing or surviving corporation of such
merger or consolidation, (c) any Subsidiary may merge with any Person that is
not a Loan Party in connection with a Disposition permitted under Section 8.05
(Dispositions), (d) the Borrower or any Subsidiary may merge with any Person
that is not a Loan Party in connection with a Permitted Acquisition provided
that, if such transaction involves the Borrower, the Borrower shall be the
continuing or surviving corporation of such merger, and (e) any Wholly Owned
Subsidiary may dissolve, liquidate or wind up its affairs at any time provided
that such dissolution, liquidation or winding up, as the case may be, could not
have a Material Adverse Effect.

8.05  DISPOSITIONS.

      Except as otherwise permitted under Section 8.04 (Fundamental Changes),
make any Disposition unless:

      (a) if such Disposition is an Investment, such transaction is not
prohibited by the terms of Section 8.02 (Investments);

      (b) if such transaction is a Sale and Leaseback Transaction, such
transaction is not prohibited by the terms of Section 8.16 (Sale and Leaseback
Transactions; Operating Leases);

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      (c) such transaction does not involve the sale or other disposition of a
minority equity interest in any Subsidiary;

      (d) such transaction does not involve a sale or other disposition of
Accounts other than Accounts owned by or attributable to other Property
concurrently being Disposed of in a transaction otherwise permitted under this
Section 8.05;

      (e) no Default has occurred and is continuing or would result from giving
effect to such Disposition;

      (f) the consideration paid in connection therewith shall be cash or Cash
Equivalents received contemporaneous with the consummation of such Disposition
and shall be in an amount not less than the fair market value of the Property
disposed of; and

      (g) the aggregate fair market value of all the Property sold or otherwise
Disposed of by the Borrower and its Subsidiaries in any fiscal year shall not
exceed an amount equal to seven and one-half percent (7.5%) of the aggregate
consolidated net book value of the Fixed Assets of the Borrower and its
Subsidiaries as of the end of the immediately preceding fiscal year.

8.06  RESTRICTED PAYMENTS.

      Declare or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, except that:

      (a) each Subsidiary may make Restricted Payments to the holders of its
Capital Stock;

      (b) the Borrower and each Subsidiary may declare and make dividend
payments or other distributions payable solely in the Capital Stock of the
Person making such dividend or distribution; and

      (c) the Borrower may repurchase the Capital Stock of the Borrower held by
departing employees, former employees, directors and former directors of the
Borrower or any of its Subsidiaries in an amount not to exceed $1,500,000 in the
aggregate during any fiscal year of the Borrower.

8.07  CHANGE IN NATURE OF BUSINESS.

      Engage in any material line of business substantially different from those
lines of business conducted by the Borrower and its Subsidiaries on the Closing
Date or any business substantially related or incidental thereto.

8.08  TRANSACTIONS WITH AFFILIATES AND INSIDERS.

      Enter into or permit to exist any transaction or series of transactions
with any officer, director or Affiliate of such Person other than (a)
transactions between Loan Parties, (b) intercompany transactions expressly
permitted by Section 7.07 (Maintenance of Insurance), Section 8.02
(Investments), Section 8.03 (Indebtedness), Section 8.04 (Fundamental Changes),
Section 8.05 (Dispositions) or Section 8.06 (Restricted Payments), (c)
reasonable compensation and reimbursement of expenses of, and indemnification
of, officers and directors, and (d) except as otherwise specifically limited in
this Agreement, other transactions which are entered into in the ordinary course
of such Person's business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length transaction
with a Person other than an officer, director or Affiliate.

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8.09  BURDENSOME AGREEMENTS.

      Enter into or permit to exist any Contractual Obligation that encumbers or
restricts the ability of the Borrower or any Subsidiary (other than any Excluded
Subsidiary) to (a) pay dividends or make any other distributions to any Loan
Party on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, (b) pay any Indebtedness or other
obligation owed to any Loan Party, (c) make loans or advances to any Loan Party,
(d) sell, lease or transfer any of its Property to any Loan Party, (e) grant any
Lien on any of its Property to secure the Obligations pursuant to the Loan
Documents or any renewals, refinancings, exchanges, refundings or extension
thereof or (f) act as a Loan Party pursuant to the Loan Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a) through (e) above) for
(i) this Agreement and the other Loan Documents, (ii) any document or instrument
governing Indebtedness incurred pursuant to Section 8.03(c) (Indebtedness),
provided that any such restriction contained therein relates only to the asset
or assets constructed or acquired in connection therewith, (iii) any Permitted
Lien or any document or instrument governing any Permitted Lien, provided that
any such restriction contained therein relates only to the asset or assets
subject to such Permitted Lien, (iv) customary restrictions and conditions
contained in any agreement relating to the sale or other Disposition of any
Property permitted under Section 8.05 (Dispositions) pending the consummation of
such sale or other Disposition and (v) in the case of the matters referred to in
clause (a) through (d) above, Contractual Obligations of any Person that becomes
a Subsidiary after the Closing Date, provided that such Contractual Obligations
were in existence at the time such Person became a Subsidiary and were not
created in contemplation of or in connection with such Person becoming a
Subsidiary.

8.10  USE OF PROCEEDS.

      Use the proceeds of any Credit Extension, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U of the FRB) or to extend credit to
others for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose.

8.11  FINANCIAL COVENANTS.

      (a) Maximum Consolidated Total Leverage Ratio. At any time, permit the
Consolidated Total Leverage Ratio as of the last day of any four consecutive
fiscal quarter period, taken together as one accounting period, of the Borrower
and its Subsidiaries set forth below to be greater than the ratio set forth
below opposite such four fiscal quarter period:



FOUR-QUARTER PERIOD ENDING:                       MAXIMUM CONSOLIDATED TOTAL LEVERAGE RATIO
- ---------------------------                       -----------------------------------------
                                               
June 30, 2005                                                     6.00 to 1.00

September 30, 2005                                                6.00 to 1.00

December 31, 2005                                                 6.00 to 1.00

March 31, 2006                                                    6.00 to 1.00

June 30, 2006                                                     6.00 to 1.00

September 30, 2006                                                5.50 to 1.00



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December 31, 2006                                                 5.50 to 1.00

March 31, 2007 and thereafter                                     4.50 to 1.00



      (b) Minimum Consolidated Interest Coverage Ratio. At any time, permit the
Consolidated Interest Coverage Ratio as of the last day of any four consecutive
fiscal quarter period, taken together as one accounting period, of the Borrower
and its Subsidiaries set forth below to be less than the ratio set forth below
opposite such four fiscal quarter period:



FOUR-QUARTER PERIOD ENDING:                       MINIMUM CONSOLIDATED INTEREST COVERAGE RATIO
- ---------------------------                       --------------------------------------------
                                               
June 30, 2005                                                     2.25 to 1.00

September 30, 2005                                                2.25 to 1.00

December 31, 2005                                                 2.25 to 1.00

March 31, 2006                                                    2.25 to 1.00

June 30, 2006                                                     2.25 to 1.00

September 30, 2006                                                2.25 to 1.00

December 31, 2006                                                 2.25 to 1.00

March 31, 2007                                                    2.50 to 1.00

June 30, 2007                                                     2.50 to 1.00

September 30, 2007                                                2.50 to 1.00

December 31, 2007                                                 2.50 to 1.00

March 31, 2008                                                    2.75 to 1.00

June 30, 2008                                                     2.75 to 1.00

September 30, 2008                                                2.75 to 1.00

December 31, 2008                                                 2.75 to 1.00

March 31, 2009 and thereafter                                     3.00 to 1.00


8.12  CAPITAL EXPENDITURES.

      Permit Capital Expenditures of Borrower and its Subsidiaries on a
consolidated basis to exceed in the aggregate in any fiscal year an amount equal
to ten percent (10%) of the aggregate consolidated net book value of the Fixed
Assets of the Borrower and its Subsidiaries as of the end of the immediately
preceding fiscal year.

8.13  PREPAYMENT OF OTHER INDEBTEDNESS; MODIFICATION OF DEBT AGREEMENTS.

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      (a) Amend or modify any of the terms of the Senior Bridge Credit Facility,
any Exchange Securities, any Senior Subordinated Notes or of any other
Subordinated Indebtedness of the Borrower or any Subsidiary (or the Senior
Subordinated Notes Indenture or any other indenture or agreement entered into in
connection therewith) if such amendment or modification would add or change any
terms in a manner adverse to the Borrower, any Subsidiary, the Agents or the
Lenders (including any amendment or modification that would shorten the final
maturity or average life to maturity or require any payment to be made sooner
than originally scheduled or increase the interest rate applicable thereto) or
confer additional material rights to the holder of such Indebtedness in a manner
adverse to Borrower, any Subsidiary, the Agents or the Lenders (other than
supplements to the Senior Subordinated Note Indentures which add one or more
Subsidiaries of the Borrower as guarantors thereunder, which Subsidiaries are,
or shall concurrently therewith become, Guarantors pursuant to this Agreement).

      (b) Amend or modify any of the subordination provisions of any
Subordinated Indebtedness.

      (c) Make any optional principal prepayment with respect to Indebtedness
arising under the Senior Bridge Credit Facility or any Exchange Securities prior
to the scheduled maturity thereof; provided, however, that the foregoing shall
not restrict a refinancing or repayment thereof directly with the proceeds of
(i) any Equity Issuance and (ii) any Indebtedness issued under Section 8.03 (f)
or (l) (Indebtedness) which satisfies the requirements of such sections.

      (d) Make (or give any notice with respect thereto) any principal payment
(including any prepayment, whether optional or mandatory, upon conversion or
otherwise) on, or redeem, repurchase, acquire for value (including without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange any Senior Subordinated Notes or any other Subordinated
Indebtedness, other than:

            (i) in the case of the AHS Untendered Notes, the redemption or
purchase thereof pursuant to the Transactions; and

            (ii) in each other case, a refinancing or repayment thereof directly
with the proceeds of (A) any Equity Issuance to the extent that such proceeds
are not required to be applied to prepay the Loans or other Credit Extensions in
accordance with Section 2.08 (Mandatory Prepayments) and (B) any Indebtedness
issued under Section 8.03 (k) or (l) (Indebtedness);

            provided, that any Indebtedness issued or incurred pursuant to
clauses (i) or (ii) above shall not have (1) a shorter final maturity or shorter
average life to maturity or require any payment to be made sooner than is
scheduled therefor under the terms of the documentation governing the
Indebtedness being refunded, refinanced or exchanged, (2) interest rates
materially in excess of the then prevailing market interest rates as determined
by the Administrative Agents, (3) except as otherwise agreed to by the
Administrative Agents, terms materially less favorable to the Lenders than the
terms of the Indebtedness so refinanced or (4) require the payment of a fee to
the holders of such Indebtedness being refunded, refinanced or exchanged (unless
such fee is approved by the Administrative Agents).

8.14  ORGANIZATION DOCUMENTS; FISCAL YEAR; LEGAL NAME, STATE OF FORMATION AND
      FORM OF ENTITY.

      (a) Amend, modify or change its Organization Documents in a manner that
(i) materially affects the rights and privileges of the Borrower or any
Subsidiary of the Borrower or (ii) is adverse to the interests of the Agents,
the Lenders and the L/C Issuer under the Loan Documents or in the Collateral.

      (b) Change its fiscal year.

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      (c) Without providing twenty (20) days prior written notice to the Agents,
change its name, state of formation or form of organization.

8.15  OWNERSHIP OF SUBSIDIARIES.

      Notwithstanding any other provisions of this Agreement to the contrary,
(i) permit any Person (other than the Borrower or any Wholly Owned Subsidiary)
to own any Capital Stock of any Subsidiary, except to qualify directors where
required by applicable Law or to satisfy other requirements of applicable Law
with respect to the ownership of Capital Stock of Foreign Subsidiaries, (ii)
permit any Subsidiary to issue or have outstanding any shares of preferred
Capital Stock or (iii) create, incur, assume or suffer to exist any Lien on any
Capital Stock of any Subsidiary.

8.16  SALE AND LEASEBACK TRANSACTIONS; OPERATING LEASES.

      (a) Enter into any Sale and Leaseback Transaction.

      (b) Create or suffer to exist any obligations for the payment of rent for
any property under lease or agreement to lease, except:

            (i) leases in existence as of the Closing Date, and any renewal,
refunding, extension or refinancing thereof; provided that with respect to
Capital Leases and Synthetic Leases (A) the amount of such Capital Lease or
Synthetic Lease is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to the fees and expenses
reasonably incurred in connection with such refinancing, and (B) none of the
instruments and agreements evidencing or governing such Capital Lease or
Synthetic Lease shall be amended, modified or supplemented after the Closing
Date, including in connection with any refinancing, refunding, renewal or
extension, to change any terms of subordination, repayment or rights of
enforcement, conversion, put, exchange or other rights, or to make any covenants
or events of default materially more restrictive or in any event more
restrictive than as set forth herein, from such terms and rights as in effect on
the Closing Date; and

            (ii) operating leases (other than those constituting Synthetic
Leases) entered into or assumed by the Borrower or any Subsidiary after the
Closing Date in the ordinary course of business.

8.17  MODIFICATION OF RELATED DOCUMENTS.

      (a) Alter, rescind, terminate, amend, supplement, waive or otherwise
modify any provision of any Related Document, except for (i) modifications to
the terms of the Senior Bridge Credit Agreement, any of the Senior Subordinated
Notes or any other Subordinated Indebtedness (or any indenture or agreement
entered into in connection therewith) permitted under Section 8.13 (Prepayment
of Other Indebtedness; Modification of Debt Agreements) and (ii) modifications
that do not materially affect the rights and privileges of the Borrower or any
Subsidiary under such Related Document and that do not materially affect the
interests of the Secured Parties under the Loan Documents or in the Collateral;
or

      (b) Permit any breach or default to exist under any Related Document or
take or fail to take any action thereunder, if to do so could reasonably be
expected to have a Material Adverse Effect.

8.18  NO SPECULATIVE TRANSACTIONS.

      Engage in any transaction involving Swap Contracts or any similar
speculative transactions of the type contemplated within the definition of "Swap
Contract" in Section 1.01 (Defined Terms) except as

                                      105


required by Section 7.17 (Interest Rate Contracts) or for the sole purpose of
hedging in the normal course of business and consistent with industry practices.

8.19  COMPLIANCE WITH ERISA.

      Permit, nor shall any ERISA Affiliate, cause or permit to occur, (a) an
event that could result in the imposition of a Lien under Section 412 of the
Code or Section 302 or 4068 of ERISA or (b) ERISA Events that would have a
Material Adverse Effect in the aggregate.

8.20  ENVIRONMENTAL.

      Allow a Release of any Hazardous Material in violation of any
Environmental Law; provided, however, that the Borrower and the other Loan
Parties shall not be deemed in violation of this Section 8.20 if all
Environmental Liabilities incurred or reasonably expected to be incurred by the
Loan Parties as the consequence of all such Releases shall not exceed the
Threshold Amount in the aggregate.

8.21  ADDITIONAL SENIOR DEBT.

      Designate any Indebtedness (other than the Obligations and the Senior
Bridge Loans) as "Designated Senior Debt" (or any other comparable terms) under
any of the Senior Subordinated Notes Documents.

                                   ARTICLE IX

                         EVENTS OF DEFAULT AND REMEDIES

9.01  EVENTS OF DEFAULT.

      Each of the following shall constitute an Event of Default:

      (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i)
when and as required to be paid herein, any amount of principal of any Loan or
any L/C Obligation, or (ii) within three (3) days after the same becomes due,
any interest on any Obligation or any fee under any of the Loan Documents or
(iii) within five (5) days after the same becomes due, any other Obligation or
other amount payable hereunder or under any other Loan Document; or

      (b) Specific Covenants.

            (i) Any Loan Party fails to perform or observe any term, covenant or
      agreement contained in any of Section 7.01 (Financial Statements), 7.02
      (Certificates; Other Information), 7.03 (Notices), or 7.16(a) (Control
      Accounts; Approved Deposit Accounts) and such failure continues for five
      (5) Business Days; or

            (ii) Any Loan Party fails to perform or observe any term, covenant
      or agreement contained in any of Section 7.05(a) (Preservation of
      Existence, Etc.), 7.10 (Access; Inspection Rights), 7.11 (Use of
      Proceeds), 7.12 (Additional Subsidiaries and Guarantees), 7.15 (Additional
      Collateral), 7.19 (Certain Post-Closing Date Requirements) or Article VIII
      (Negative Covenants); or

      (c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in clauses (a) or (b) above) contained in
any Loan Document on its part to be

                                      106


performed or observed and such failure continues for thirty (30) days after the
earlier of (i) a Responsible Person of any Loan Party becoming aware of such
failure or (ii) notice thereof to any Loan Party by any Administrative Agent; or

      (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be incorrect or
misleading in any material respect when made or deemed made; or

      (e) Cross-Default. (i) The Borrower or any Subsidiary fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise, and after giving effect to any applicable
grace period) in respect of any Indebtedness or Guarantee (other than
Indebtedness hereunder and Indebtedness under Swap Contracts) having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) in excess of the Threshold Amount; (ii) the Borrower or any
Subsidiary fails to observe or perform any other agreement or condition relating
to any such Indebtedness or Guarantee or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (iii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any event
of default under such Swap Contract as to which the Borrower or any Subsidiary
is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount; or

      (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its Property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for sixty calendar days; or any proceeding under any Debtor Relief
Law relating to any such Person or to all or any material part of its Property
is instituted without the consent of such Person and continues undismissed or
unstayed for sixty calendar days, or an order for relief is entered in any such
proceeding; or

      (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
Property of any such Person and is not released, vacated or fully bonded within
thirty days after its issue or levy; or

      (h) Judgments. There is entered against the Borrower or any Subsidiary (i)
one or more final judgments or orders for the payment of money in an aggregate
amount exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer has acknowledged

                                      107


in writing its obligation to cover; provided, however, that up to $2,000,000 of
coverage with respect to any Judgment may be provided by PSI Surety and
provided, further, that such dollar limit may be increased by the Administrative
Agents in their discretion), or (ii) any one or more non-monetary final
judgments that have, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (B)
there is a period of ten (10) consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, is not
in effect; or

      (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

      (j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect or ceases to give the Collateral Agent, for the benefit of the
Lenders, any material part of the Liens purported to be created thereby; or any
Loan Party or any other Person contests in any manner the validity or
enforceability of any Loan Document or the Liens purported to be created
thereby; or any Loan Party denies that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
any Loan Document; or

      (k) Change of Control. There occurs any Change of Control; or

      (l) Senior Subordinated Notes; Senior Bridge Facility.

            (i) There shall occur an "Event of Default" (or any comparable term)
under, and as defined in, any of the Senior Subordinated Notes Documents or the
Senior Bridge Credit Agreement, (ii) any of the Obligations for any reason shall
cease to be "Senior Debt" (or any comparable term) under, and as defined in, any
of the Senior Subordinated Notes Documents, (iii) any Indebtedness, other than
the Obligations and the Senior Bridge Loans, shall constitute "Designated Senior
Debt" (or any comparable term) under, and as defined in, any of the Senior
Subordinated Notes Documents or (iv) the subordination provisions of any of the
Senior Subordinated Notes Documents shall, in whole or in part, terminate, cease
to be effective or cease to be legally valid, binding and enforceable against
any holder of any of the Senior Subordinated Notes.

      (m) Exclusion Event. There shall occur an Exclusion Event that could
reasonably be expected to result in a Material Adverse Effect.

9.02  REMEDIES UPON EVENT OF DEFAULT.

      During the continuance of any Event of Default,

      (a) (i) the Revolving Credit Facility Administrative Agent may, and at the
request of the Required Revolving Credit Lenders, shall, (ii) the Term Loan
Facility Administrative Agent may, and at the request of the Required Term Loan
Lenders, shall and/or (iii) either Administrative Agent may, and at the request
of the Required Lenders, shall, in each case, by notice to the Borrower and the
other Agents, declare that all or any portion of the relevant Commitments be
terminated, whereupon the obligation of

                                      108


each Lender to make any Loan and the L/C Issuer to issue any Letter of Credit
shall immediately terminate; and

      (b) (i) the Revolving Credit Facility Administrative Agent may, and at the
request of the Required Revolving Credit Lenders, shall, (ii) the Term Loan
Facility Administrative Agent may, and at the request of the Required Term Loan
Lenders, shall and/or (iii) either Administrative Agent may, and at the request
of the Required Lenders, shall, in each case, by notice to the Borrower and the
other Agents, declare the Loans, all interest thereon and all other amounts and
Obligations payable under this Agreement to be forthwith due and payable,
whereupon the Loans, all such interest and all such amounts and Obligations
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower;

provided, however, that upon the occurrence of the Events of Default specified
in Section 9.01(f) (Insolvency Proceedings, Etc.) or Section 9.01(g) (Inability
to Pay Debts; Attachment), (x) the Commitments of each Lender to make Loans and
the commitments of each Lender and L/C Issuer to issue or participate in Letters
of Credit shall each automatically be terminated and (y) the Loans, all such
interest and all such amounts and Obligations shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower and the other Loan
Parties. In addition to the remedies set forth above, the Collateral Agent may
exercise any remedies provided for by the Collateral Documents in accordance
with the terms thereof or any other remedies provided by applicable Law.

9.03  ACTIONS IN RESPECT OF LETTERS OF CREDIT.

      At any time (i) upon the Revolving Credit Termination Date, (ii) after the
Revolving Credit Termination Date when the aggregate funds on deposit in Cash
Collateral Accounts shall be less than outstanding amount of all L/C
Obligations, (iii) as may be required by Section 2.08(c) or (d) (Mandatory
Prepayments), the Borrower shall pay to the Revolving Credit Facility
Administrative Agent in immediately available funds at the applicable
Administrative Agent's office referred to in Section 11.02 (Notices, Etc.), for
deposit in a Cash Collateral Account, (x) in the case of clauses (i) and (ii)
above, the amount required to that, after such payment, the aggregate funds on
deposit in the Cash Collateral Accounts equals or exceeds the sum of all
outstanding L/C Obligations and (y) in the case of clause (iii) above, the
amount required by Section 2.08(c) or (d) (Mandatory Prepayments). The Revolving
Credit Facility Administrative Agent may (and may direct the Collateral Agent
to), from time to time after funds are deposited in any Cash Collateral Account,
apply funds then held in such Cash Collateral Account to the payment of any
amounts, in accordance with Section 2.08(c) or (d) (Mandatory Prepayments) and
Section 2.13(g) (Payments and Computations), as shall have become or shall
become due and payable by the Borrower to the L/C Issuer or Lenders in respect
of the L/C Obligations. The Revolving Credit Facility Administrative Agent shall
promptly give written notice of any such application; provided, however, that
the failure to give such written notice shall not invalidate any such
application.

                                   ARTICLE X

                                     AGENTS

10.01 AUTHORIZATION AND ACTION

      (a) (i) Each Revolving Credit Lender, the Swing Line Lender and the L/C
Issuer hereby appoints Bank of America as the Revolving Credit Facility
Administrative Agent hereunder and each such Revolving Credit Lender, the Swing
Line Lender and the L/C Issuer authorizes the Revolving Credit Facility
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under

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this Agreement and the other Loan Documents as are delegated to the Revolving
Credit Facility Administrative Agent under such agreements and to exercise such
powers as are reasonably incidental thereto. Without limiting the foregoing,
each Revolving Credit Lender, the Swing Line Lender and the L/C Issuer hereby
authorizes the Revolving Credit Facility Administrative Agent to execute and
deliver, and to perform its obligations under, each of the Loan Documents to
which the Revolving Credit Facility Administrative Agent is a party, to exercise
all rights, powers and remedies that the Revolving Credit Facility
Administrative Agent may have under such Loan Documents.

            (ii) Each Term Loan Lender hereby appoints CNAI as the Term Loan
Facility Administrative Agent hereunder and each such Term Loan Lender
authorizes the Term Loan Facility Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Term Loan Facility Administrative
Agent under such agreements and to exercise such powers as are reasonably
incidental thereto. Without limiting the foregoing, each Term Loan Lender hereby
authorizes the Term Loan Facility Administrative Agent to execute and deliver,
and to perform its obligations under, each of the Loan Documents to which the
Term Loan Facility Administrative Agent is a party, to exercise all rights,
powers and remedies that the Term Loan Facility Administrative Agent may have
under such Loan Documents.

            (iii) Each Administrative Agent, each Lender and the L/C Issuer
hereby appoints Bank of America as the Collateral Agent hereunder and each
Administrative Agent, each Lender and the L/C Issuer authorizes the Collateral
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the
Collateral Agent under such agreements and to exercise such powers as are
reasonably incidental thereto. Without limiting the foregoing, each
Administrative Agent, each Lender and the L/C Issuer hereby authorizes the
Collateral Agent to execute and deliver, and to perform its obligations under,
each of the Loan Documents to which the Collateral Agent is a party, to exercise
all rights, powers and remedies that the Collateral Agent may have under such
Loan Documents and, in the case of the Collateral Documents, to act as agent for
the Administrative Agents, the Lenders, the L/C Issuer and the other Secured
Parties under such Collateral Documents.

      (b) As to any matters not expressly provided for by this Agreement and the
other Loan Documents (including enforcement or collection), no Agent shall be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, Required
Revolving Credit Lenders or Required Term Loan Lenders, as the case may be, and
such instructions shall be binding upon all Lenders and the L/C Issuer;
provided, however, that no Agent shall be required to take any action that (i)
such Agent in good faith believes exposes it to personal liability unless such
Agent receives an indemnification satisfactory to it from the Lenders and the
L/C Issuer with respect to such action or (ii) is contrary to this Agreement or
applicable Law. Each Agent agrees to give to each other Agent, each Lender and
the L/C Issuer prompt notice of each notice given to it by any Loan Party
pursuant to the terms of this Agreement or the other Loan Documents.

      (c) In performing its functions and duties hereunder and under the other
Loan Documents, (i) the Revolving Credit Facility Administrative Agent is acting
solely on behalf of the Swing Line Lender, the Revolving Credit Lenders and the
L/C Issuer, (ii) the Term Loan Facility Administrative Agent is acting solely on
behalf of the Term Loan Lenders and (iii) the Collateral Agent is acting solely
on behalf of the Administrative Agents, the Lenders and the L/C Issuer, except,
in the cases of the Administrative Agents, to the limited extent provided in
Section 2.11(b) (Evidence of Debt), and each of their respective duties are
entirely administrative in nature. No Agent assumes, and shall not be deemed to
have assumed, any obligation other than as expressly set forth herein and in the
other Loan Documents or any other relationship as the agent, fiduciary or
trustee of or for any Lender, L/C Issuer or holder of any other

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Obligation. Any of the Agents may perform any of its respective duties under any
Loan Document by or through its agents or employees.

      (d) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and the
L/C Issuer shall have all of the benefits and immunities (i) provided to the
Administrative Agents in this Article X (Agents) with respect to any acts taken
or omissions suffered by the L/C Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and the applications and agreements
for letters of credit pertaining to such Letters of Credit as fully as if the
term "Administrative Agent" as used in this Article X (Agents) and in the
definition of "Agent-Related Person" included the L/C Issuer with respect to
such acts or omissions, and (ii) as additionally provided herein with respect to
the L/C Issuer.

10.02 ADMINISTRATIVE AGENT'S RELIANCE, ETC.

      None of the Agents, any of its respective Affiliates or any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it, him, her or them under or in
connection with this Agreement or the other Loan Documents, except for its, his,
her or their own gross negligence or willful misconduct. Without limiting the
foregoing, each Administrative Agent and, other than in respect of clause (a),
the Collateral Agent (a) may treat the payee of any Note as its holder until
such Note has been assigned in accordance with Section 11.07 (Assignments and
Participations), (b) may rely on the Register to the extent set forth in Section
2.11 (Evidence of Debt), (c) may consult with legal counsel (including counsel
to the Borrower or any other Loan Party), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts, (d) makes no warranty or representation to any
other Agent, any Lender or L/C Issuer and shall not be responsible to any other
Agent, any Lender or L/C Issuer for any statements, warranties or
representations made by or on behalf of the Borrower or any of its Subsidiaries
in or in connection with this Agreement or any other Loan Document, (e) shall
not have any duty to ascertain or to inquire either as to the performance or
observance of any term, covenant or condition of this Agreement or any other
Loan Document, as to the financial condition of any Loan Party or as to the
existence or possible existence of any Default or Event of Default, (f) shall
not be responsible to any other Agent, any Lender or L/C Issuer for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the attachment, perfection or priority of any Lien created or purported
to be created under or in connection with, this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto or
thereto and (g) shall incur no liability under or in respect of this Agreement
or any other Loan Document by acting upon any notice, consent, certificate or
other instrument or writing (which writing may be a telecopy or electronic mail)
or any telephone message believed by it to be genuine and signed or sent by the
proper party or parties.

10.03 POSTING OF APPROVED ELECTRONIC COMMUNICATIONS

      (a) Each of the Agents, Lenders, the L/C Issuer, the Borrower and each
Guarantor agrees that each Administrative Agent and the Collateral Agent may,
but shall not be obligated to, make the Approved Electronic Communications
available to the applicable Lenders and the L/C Issuer, as the case may be, by
posting such Approved Electronic Communications on IntraLinks(TM) or a
substantially similar electronic platform chosen by the Agents to be their
electronic transmission system for matters in connection with this Agreement and
the other Loan Documents (the "Approved Electronic Platform").

      (b) Although the Approved Electronic Platform and its primary web portal
are secured with generally-applicable security procedures and policies
implemented or modified by the applicable Agent from time to time (including, as
of the Closing Date, a dual firewall and a User ID/Password

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Authorization System) and the Approved Electronic Platform is secured through a
single-user-per-deal authorization method whereby each user may access the
Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders,
the L/C Issuer, the Borrower and the Guarantors acknowledges and agrees that the
distribution of material through an electronic medium is not necessarily secure
and that there are confidentiality and other risks associated with such
distribution. In consideration for the convenience and other benefits afforded
by such distribution and for the other consideration provided hereunder, the
receipt and sufficiency of which is hereby acknowledged, each of the Lenders,
the L/C Issuer, the Borrower and the Guarantors hereby approves distribution of
the Approved Electronic Communications through the Approved Electronic Platform
and understands and assumes the risks of such distribution.

      (c) The Approved Electronic Communications and the Approved Electronic
Platform are provided "as is" and "as available". None of the Agents or any of
their respective Affiliates or any of the other Agent-Related Persons warrant
the accuracy, adequacy or completeness of the Approved Electronic Communications
and the Approved Electronic Platform and each expressly disclaims liability for
errors or omissions in the Approved Electronic Communications and the Approved
Electronic Platform. No warranty of any kind, express, implied or statutory
(including any warranty of merchantability, fitness for a particular purpose,
non-infringement of third party rights or freedom from viruses or other code
defects) is made by any of the Agent-Related Persons in connection with the
Approved Electronic Communications or the Approved Electronic Platform.

      (d) Each of the Agents, the Lenders, the L/C Issuer, the Borrower and the
Subsidiary Guarantors agree that the Agents (or any of them) may, but (except as
may be required by applicable Law) shall not be obligated to, store the Approved
Electronic Communications on the Approved Electronic Platform in accordance with
such Agent's generally-applicable document retention procedures and policies.

      (e) The Borrower hereby acknowledges that certain of the Lenders may be
"public-side" Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
"Public Lender"). The Borrower hereby agrees that (a) all Approved Electronic
Communications that are to be made available to Public Lenders shall be clearly
and conspicuously marked "PUBLIC" which, at a minimum, shall mean that the word
"PUBLIC" shall appear prominently on the first page thereof; (b) by marking
Approved Electronic Communications "PUBLIC," the Borrower shall be deemed to
have authorized the Agents, the L/C Issuer and the Lenders to treat such
Approved Electronic Communications as not containing any material non-public
information with respect to the Borrower or its securities for purposes of
United States federal and state securities laws (provided, however, that to the
extent such Approved Electronic Communications constitute Information, they
shall be treated as set forth in Section 11.07 (Assignments and Participations);
(y) all Approved Electronic Communications marked "PUBLIC" are permitted to be
made available through a portion of the Approved Electronic Platform designated
as "Public Investor;" and (z) the Agents, the L/C Issuer and the Lenders shall
be entitled to treat any Approved Electronic Communications that are not marked
"PUBLIC" as being suitable only for posting on a portion of the Approved
Electronic Platform not marked as "Public Investor."

10.04 THE AGENTS INDIVIDUALLY.

      With respect to its respective Pro Rata Share, each of CNAI and Bank of
America shall have and may exercise the same rights and powers hereunder and is
subject to the same obligations and liabilities as and to the extent set forth
herein for any other Lender. The terms "Lenders", "Revolving Credit Lenders",
"Term Loan Lenders", "Required Lenders", "Required Revolving Credit Lenders" and
"Required Term Loan Lenders" and any similar terms shall, unless the context
clearly otherwise indicates, include, without limitation, each Agent in its
individual capacity as a Lender, a Revolving Credit Lender,

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Term Loan Lender or as one of the Required Lenders, as the case may be. Each of
CNAI and Bank of America and their respective Affiliates may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or other
business with, any Loan Party as if such Person were not acting as an Agent
under the Loan Documents.

10.05 LENDER CREDIT DECISION.

      Each Lender and the L/C Issuer acknowledges that it shall, independently
and without reliance upon any Agent or any other Lender conduct its own
independent investigation of the financial condition and affairs of the Borrower
and each other Loan Party in connection with the making and continuance of the
Loans and with the issuance of the Letters of Credit. Each Lender and the L/C
Issuer also acknowledges that it shall, independently and without reliance upon
any Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and other Loan Documents.

10.06 INDEMNIFICATION.

      Each (a) Revolving Credit Lender and the Swing Line Lender agrees to
indemnify the Collateral Agent and the Revolving Credit Facility Administrative
Agent and each of its respective Affiliates, and each of their respective
directors, officers, employees, agents and advisors (to the extent not
reimbursed by the Borrower) and (b) each Term Loan Lender agrees to indemnify
the Collateral Agent and the Term Loan Facility Administrative Agent and each of
its respective Affiliates, and each of their respective directors, officers,
employees, agents and advisors (to the extent not reimbursed by the Borrower),
in each case from and against such Lender's aggregate Pro Rata Share of any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements (including reasonable fees, expenses
and disbursements of financial and legal advisors) of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against, the
applicable Agent or any of its Affiliates, directors, officers, employees,
agents and advisors in any way relating to or arising out of this Agreement or
the other Loan Documents or any action taken or omitted by the applicable Agent
under this Agreement or the other Loan Documents; provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's or such Affiliate's gross negligence or willful
misconduct. Without limiting the foregoing, each Lender agrees to reimburse each
applicable Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including Attorney Costs and reasonable fees, expenses and
disbursements of financial advisors) incurred by such Agent in connection with
the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of its rights or responsibilities under, this
Agreement or the other Loan Documents, to the extent that such Agent is not
reimbursed for such expenses by the Borrower or another Loan Party.

10.07 SUCCESSOR AGENTS

      (a) Revolving Credit Facility Administrative Agent. The Revolving Credit
Facility Administrative Agent may resign at any time by giving written notice
thereof to the other Agents, the Revolving Credit Lenders, the Swing Line Lender
and the Borrower.

            (i) Upon any such resignation, CNAI shall have the right (in its
sole discretion) but not the obligation to become the successor Revolving Credit
Facility Administrative Agent by delivering written notice of such acceptance to
the other Agents, the Revolving Credit Lenders, the L/C Issuer, the Swing Line
Lender and the Borrower within 15 days after its receipt of the retiring
Revolving Credit Facility Administrative Agent's notice of resignation.

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            (ii) In the event that CNAI shall not have agreed to act as
successor Revolving Credit Facility Administrative Agent as provided in the
preceding clause (i) or in the event that CNAI is the retiring Revolving Credit
Facility Administrative Agent, the Required Revolving Credit Lenders shall have
the right to appoint a successor Revolving Credit Facility Administrative Agent.
If no successor Revolving Credit Facility Administrative Agent shall have been
so appointed by the Required Revolving Credit Lenders, and shall have accepted
such appointment, within 30 days after the retiring Revolving Credit Facility
Administrative Agent's giving of notice of resignation, then the retiring
Revolving Credit Facility Administrative Agent may, on behalf of the Revolving
Credit Facility Lenders, appoint a successor Revolving Credit Facility
Administrative Agent, selected from among the Revolving Credit Facility Lenders.
In either case, such appointment shall be subject to the prior written approval
of the Borrower and the other Agents (which approval may not be unreasonably
withheld and, in the case of the Borrower only, shall not be required upon the
occurrence and during the continuance of an Event of Default).

            (iii) Upon CNAI agreeing to act as a successor Revolving Credit
Facility Administrative Agent in accordance with clause (i) above or the
acceptance of any appointment as Revolving Credit Facility Administrative Agent
by a successor Revolving Credit Facility Administrative Agent in accordance with
clause (ii) above, as the case may be, such successor Revolving Credit Facility
Administrative Agent shall succeed to, and become vested with, all the rights,
powers, privileges and duties of the retiring Revolving Credit Facility
Administrative Agent, and the retiring Revolving Credit Facility Administrative
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. Prior to any retiring Revolving Credit Facility
Administrative Agent's resignation hereunder as Revolving Credit Facility
Administrative Agent, the retiring Revolving Credit Facility Administrative
Agent shall take such action as may be reasonably necessary to assign to the
successor Revolving Credit Facility Administrative Agent its rights as Revolving
Credit Facility Administrative Agent under the Loan Documents. After such
resignation, the retiring Revolving Credit Facility Administrative Agent shall
continue to have the benefit of this Article X as to any actions taken or
omitted to be taken by it while it was Revolving Credit Facility Administrative
Agent under this Agreement and the other Loan Documents.

      (b) Term Loan Facility Administrative Agent. The Term Loan Facility
Administrative Agent may resign at any time by giving written notice thereof to
the other Agents, the Term Loan Lenders and the Borrower.

            (i) Upon any such resignation, Bank of America shall have the right
(in its sole discretion) but not the obligation to become the successor Term
Loan Facility Administrative Agent by delivering written notice of such
acceptance to the other Agents, the Term Loan Lenders and the Borrower within 15
days after its receipt of the retiring Term Loan Facility Administrative Agent's
notice of resignation.

            (ii) In the event that Bank of America shall not have agreed to act
as successor Term Loan Facility Administrative Agent as provided in the
preceding clause (i) or in the event that Bank of America is the retiring Term
Loan Facility Administrative Agent, the Required Term Loan Lenders shall have
the right to appoint a successor Term Loan Facility Administrative Agent. If no
successor Term Loan Facility Administrative Agent shall have been so appointed
by the Required Term Loan Lenders, and shall have accepted such appointment,
within 30 days after the retiring Term Loan Facility Administrative Agent's
giving of notice of resignation, then the retiring Term Loan Facility
Administrative Agent may, on behalf of the Term Loan Facility Lenders, appoint a
successor Term Loan Facility Administrative Agent, selected from among the Term
Loan Facility Lenders. In either case, such appointment shall be subject to the
prior written approval of the Borrower and the other Agents (which

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approval may not be unreasonably withheld and, in the case of the Borrower only,
shall not be required upon the occurrence and during the continuance of an Event
of Default).

            (iii) Upon Bank of America agreeing to act as a successor Term Loan
Facility Administrative Agent in accordance with clause (i) above or the
acceptance of any appointment as Term Loan Facility Administrative Agent by a
successor Term Loan Facility Administrative Agent in accordance with clause (ii)
above, as the case may be, such successor Term Loan Facility Administrative
Agent shall succeed to, and become vested with, all the rights, powers,
privileges and duties of the retiring Term Loan Facility Administrative Agent,
and the retiring Term Loan Facility Administrative Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. Prior to any retiring Term Loan Facility Administrative Agent's
resignation hereunder as Term Loan Facility Administrative Agent, the retiring
Term Loan Facility Administrative Agent shall take such action as may be
reasonably necessary to assign to the successor Term Loan Facility
Administrative Agent its rights as Term Loan Facility Administrative Agent under
the Loan Documents. After such resignation, the retiring Term Loan Facility
Administrative Agent shall continue to have the benefit of this Article X as to
any actions taken or omitted to be taken by it while it was Term Loan Facility
Administrative Agent under this Agreement and the other Loan Documents.

      (c) Collateral Agent. The Collateral Administrative Agent may resign at
any time by giving written notice thereof to the other Agents, the Lenders, the
L/C Issuer, the Swing Line Lender and the Borrower.

            (i) Upon any such resignation, CNAI shall have the right (in its
sole discretion) but not the obligation to become the successor Collateral Agent
by delivering written notice of such acceptance to the other Agents, the
Lenders, the L/C Issuer, the Swing Line Lender and the Borrower within 15 days
after its receipt of the retiring Collateral Agent's notice of resignation

            (ii) In the event that CNAI shall not have agreed to act as
successor Collateral Agent as provided in the preceding clause (i) or in the
event that CNAI is the retiring Collateral Agent, the Required Lenders shall
have the right to appoint a successor Collateral Agent. If no successor
Collateral Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Collateral
Agent's giving of notice of resignation, then the retiring Collateral Agent may,
on behalf of the Secured Parties, appoint a successor Collateral Agent, selected
from among the Lenders. In either case, such appointment shall be subject to the
prior written approval of the Borrower and the other Agents (which approval may
not be unreasonably withheld and, in the case of the Borrower only, shall not be
required upon the occurrence and during the continuance of an Event of Default).
Upon the acceptance of any appointment as Collateral Agent by a successor
Collateral Agent, such successor Collateral Agent shall succeed to, and become
vested with, all the rights, powers, privileges and duties of the retiring
Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations under this Agreement and the other Loan Documents. Prior
to any retiring Collateral Agent's resignation hereunder as Collateral Agent,
the retiring Collateral Agent shall take such action as may be reasonably
necessary to assign to the successor Collateral Administrative Agent its rights
as Collateral Agent under the Loan Documents. After such resignation, the
retiring Collateral Agent shall continue to have the benefit of this Article X
as to any actions taken or omitted to be taken by it while it was Collateral
Agent under this Agreement and the other Loan Documents.

10.08 PAYING AGENTS; COLLATERAL AND GUARANTY MATTERS.

      (a) (i) The Swing Line Lender, each Revolving Credit Lender and the L/C
Issuer agrees that any action taken by the Revolving Credit Facility
Administrative Agent or the Required Lenders (or, where required by the express
terms of this Agreement, a greater proportion of the Lenders) in accordance

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with the provisions of this Agreement or of the other Loan Documents, and the
exercise by the Revolving Credit Facility Administrative Agent or the Required
Lenders (or, where so required, such greater proportion) of the powers set forth
herein or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon the Swing Line Lender and all of
the Revolving Credit Lenders, the L/C Issuer and the other Secured Parties.
Without limiting the generality of the foregoing, the Revolving Credit Facility
Administrative Agent shall have the sole and exclusive right and authority to
act as the disbursing and collecting agent for the Revolving Credit Lenders and
the L/C Issuer with respect to all payments and collections arising in
connection with the Revolving Credit Facility.

            (ii) Each Term Loan Lender agrees that any action taken by the Term
Loan Facility Administrative Agent or the Required Lenders (or, where required
by the express terms of this Agreement, a greater proportion of the Lenders) in
accordance with the provisions of this Agreement or of the other Loan Documents,
and the exercise by the Term Loan Facility Administrative Agent or the Required
Lenders (or, where so required, such greater proportion) of the powers set forth
herein or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all of the Term Loan Lenders and
other Secured Parties. Without limiting the generality of the foregoing, the
Term Loan Facility Administrative Agent shall have the sole and exclusive right
and authority to act as the disbursing and collecting agent for the Term Loan
Lenders with respect to all payments and collections arising in connection with
the Term Loan Facility any other Obligations under the Loan Documents (other
than in respect of the Revolving Credit Facility or any Swap Contracts or Cash
Management Documents that constitute Loan Documents).

      (b) Each Lender and the L/C Issuer agrees that any action taken by the
Collateral Agent or the Required Lenders (or, where required by the express
terms of this Agreement, a greater proportion of the Lenders) in accordance with
the provisions of this Agreement or of the other Loan Documents, and the
exercise by the Collateral Agent or the Required Lenders (or, where so required,
such greater proportion) of the powers set forth herein or therein, together
with such other powers as are reasonably incidental thereto, shall be authorized
and binding upon the Lenders, the L/C Issuer and the other Secured Parties.
Without limiting the generality of the foregoing, the Collateral Agent shall
have the sole and exclusive right and authority to (i) act as the disbursing and
collecting agent for the Lenders and the L/C Issuer with respect to all payments
and collections arising in connection with the Collateral Documents; provided,
that the Collateral Agent shall pay such amounts to the applicable
Administrative Agent for application in accordance with the provisions of this
Agreement and the other Loan Documents, (ii) execute and deliver each Collateral
Document and accept delivery of each such agreement delivered by the Borrower or
any of its Subsidiaries, (iii) act as collateral agent for the Administrative
Agents, the Lenders, the L/C Issuer and the other Secured Parties for purposes
of the perfection of all security interests and Liens created by such agreements
and all other purposes stated therein, provided, however, that the Collateral
Agent hereby appoints, authorizes and directs each Administrative Agent, each
Lender and the L/C Issuer to act as collateral sub-agent for the Collateral
Agent, the Administrative Agents, the Lenders and the L/C Issuer for purposes of
the perfection of all security interests and Liens with respect to the
Collateral, including any Deposit Accounts maintained by a Loan Party with, and
cash and Cash Equivalents held by, such Administrative Agent, Lender or such L/C
Issuer, (iv) manage, supervise and otherwise deal with the Collateral, (v) take
such action as is necessary or desirable to maintain the perfection and priority
of the security interests and Liens created or purported to be created by the
Collateral Documents and (vi) except as may be otherwise specifically restricted
by the terms hereof or of any other Loan Document, exercise all remedies given
to the Collateral Agent, the Lenders, the L/C Issuer and the other Secured
Parties with respect to the Collateral under the Loan Documents relating
thereto, applicable Law or otherwise.

      (c) (i) Each of the Administrative Agents, the Lenders and the L/C Issuer
hereby consents to the release and hereby directs, in accordance with the terms
hereof, the Collateral Agent to

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release (or, in the case of clause (b) below, release or subordinate) any Lien
held by the Collateral Agent for the benefit of the Secured Parties against any
of the following:

                  (A) all of the Collateral and all Loan Parties, upon
            termination of the Commitments and payment and satisfaction in full
            of all Loans, all Reimbursement Obligations and all other
            Obligations that the Agents have been notified in writing are then
            due and payable (and, in respect of contingent L/C Obligations, with
            respect to which Cash Collateral in the amount of such L/C
            Obligations has been deposited or a back-stop letter of credit has
            been issued, in either case in Dollars and on terms satisfactory to
            the Administrative Agents and the L/C Issuer);

                  (B) any assets that are subject to a Lien permitted by Section
            8.01(i) (Liens); and

                  (C) any part of the Collateral contributed to a HUD Subsidiary
            or sold or otherwise Disposed of by a Loan Party if such
            contribution, sale or other Disposition is permitted by this
            Agreement (or permitted pursuant to a waiver of or consent to a
            transaction otherwise prohibited by this Agreement).

            (ii) Each of the Administrative Agents, the Lenders and the L/C
Issuer hereby directs the Collateral Agent to execute and deliver or file such
termination and partial release statements and do such other things as are
necessary to release Liens to be released pursuant to this Section 10.08
promptly upon the effectiveness of any such release. Upon request by the Agents,
the Required Lenders will confirm in writing the authority of the Collateral
Agent to release or subordinate its interest in particular types of Property
pursuant to this Section 10.08 (c).

      (d) Each of the Lenders and the L/C Issuer hereby consents to the release
and hereby directs the Administrative Agents, at their option and in their
discretion, to release any Guarantor from its Obligations under the Guaranty if
such Person ceases to be a Subsidiary as a result of a transaction permitted
under this Agreement (or permitted pursuant to a waiver of or consent to a
transaction otherwise prohibited by this Agreement). Upon request by the
Administrative Agents, the Required Lenders will confirm in writing the
Administrative Agents' authority to release any Guarantor from its Obligations
under the Guaranty pursuant to this Section 10.08(d).

10.09 COLLATERAL MATTERS RELATING TO RELATED OBLIGATIONS

      The benefit of the Loan Documents and of the provisions of this Agreement
relating to the Collateral shall extend to and be available in respect of any
Obligation arising under any Swap Contract or Cash Management Obligation or that
is otherwise owed to Persons other than the Agents, the Lenders and the L/C
Issuer (collectively, "Related Obligations") solely on the condition and
understanding, as among the Agents and all Secured Parties, that (a) the Related
Obligations shall be entitled to the benefit of the Loan Documents and the
Collateral to the extent expressly set forth in this Agreement and the other
Loan Documents and to such extent the Collateral Agent shall hold, and have the
right and power to act with respect to, the Guaranty and the Collateral on
behalf of and as agent for the holders of the Related Obligations, but each
Agent is otherwise acting solely as agent for the Lenders and the L/C Issuer and
shall have no fiduciary duty, duty of loyalty, duty of care, duty of disclosure
or other obligation whatsoever to any holder of Related Obligations, (b) all
matters, acts and omissions relating in any manner to the Guaranty, the
Collateral, or the omission, creation, perfection, priority, abandonment or
release of any Lien, shall be governed solely by the provisions of this
Agreement and the other Loan Documents and no separate Lien, right, power or
remedy shall arise or exist in favor of any Secured Party under any separate
instrument or agreement or in respect of any Related Obligation, (c) each
Secured

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Party shall be bound by all actions taken or omitted, in accordance with the
provisions of this Agreement and the other Loan Documents, by any Agent and the
Required Lenders, each of whom shall be entitled to act at its sole discretion
and exclusively in its own interest given its own Commitments and its own
interest in the Loans, L/C Obligations and other Obligations to it arising under
this Agreement or the other Loan Documents, without any duty or liability to any
other Secured Party or as to any Related Obligation and without regard to
whether any Related Obligation remains outstanding or is deprived of the benefit
of the Collateral or becomes unsecured or is otherwise affected or put in
jeopardy thereby, (d) no holder of Related Obligations and no other Secured
Party (except the Agents, the Lenders and the L/C Issuer, to the extent set
forth in this Agreement) shall have any right to be notified of, or to direct,
require or be heard with respect to, any action taken or omitted in respect of
the Collateral or under this Agreement or the Loan Documents and (e) no holder
of any Related Obligation shall exercise any right of setoff, banker's lien or
similar right except to the extent provided in Section 11.09 (Set-off) and then
only to the extent such right is exercised in compliance with Section 11.16
(Sharing of Payments, Etc.).

10.10 ARRANGERS; OTHER AGENTS. None of the Arrangers, the Lenders or other
Persons identified on the facing page or signature pages of this Agreement as a
"documentation agent," "co-documentation agent," "co-agent," "book manager,"
"book-running manager," "lead manager," "arranger," "lead arranger" or
"co-arranger" shall have any right, power, obligation, liability, responsibility
or duty under this Agreement other than, in the case of such Persons in their
respective capacities as Lenders, those applicable to all Lenders as such.
Without limiting the foregoing, none of the Arrangers, the Lenders or other
Persons so identified shall have or be deemed to have any fiduciary relationship
with any Lender. Each Lender acknowledges that it has not relied, and will not
rely, on any of the Arrangers, the Lenders or other Persons so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.

                                   ARTICLE XI

                                  MISCELLANEOUS

11.01 AMENDMENTS, ETC.

      (a) No amendment or waiver of any provision of this Agreement or any other
Loan Document nor consent to any departure by any Loan Party therefrom shall in
any event be effective unless the same shall be in writing and (x) in the case
of an amendment to cure any ambiguity, omission, defect or inconsistency, signed
by the Administrative Agents, the Borrower and the other Loan Parties, (y) in
the case of any such waiver or consent, signed by the Required Lenders (or by
the Administrative Agents with the consent of the Required Lenders) and (z) in
the case of any other amendment (except as provided in clause (iii) below and
except as provided in Section 2.14 (Increases in Commitments)), by the Required
Lenders (or the Administrative Agents with the consent of the Required Lenders),
the Borrower and the other Loan Parties, and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by each Lender directly affected thereby, in
addition to the parties required by clauses (x), (y) or (z) above, do any of the
following:

            (i) waive any condition specified in Section 5.01 (Conditions
Precedent to Initial Credit Extensions) or 5.02 (Conditions Precedent to Each
Credit Extension), except with respect to a condition based upon another
provision hereof, the waiver of which requires only the concurrence of the
Required Lenders and, in the case of the conditions specified in Section 5.01
(Conditions Precedent to Initial Credit Extensions), subject to the provisions
of Section 5.03 (Determination of Initial Borrowing Conditions);

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            (ii) extend or increase the Commitment of such Lender or subject
such Lender to any additional obligation (or reinstate any Revolving Credit
Commitment terminated pursuant to Section 2.08 (Mandatory Prepayments) or 9.02
(Remedies Upon Event of Default));

            (iii) extend the scheduled final maturity of any Loan owing to such
Lender, or waive, reduce or postpone any scheduled date fixed for the payment or
reduction of principal of any such Loan (it being understood that Section 2.08
(Mandatory Prepayments) does not provide for scheduled dates fixed for payment)
or for the reduction of such Lender's Commitment; provided, however, that any
extension of the Revolving Credit Termination Date shall require the consent
only of each Administrative Agent, the L/C Issuer and each Revolving Credit
Lender;

            (iv) reduce or forgive the principal amount of any Loan or
Reimbursement Obligation owing to such Lender (other than by the payment or
prepayment thereof pursuant to the terms of this Agreement);

            (v) reduce the rate of interest on any Loan or Reimbursement
Obligations outstanding to such Lender except as otherwise permitted hereunder
or any fee payable hereunder to such Lender;

            (vi) postpone any scheduled date fixed for payment of such interest
or fees owing to such Lender or waive any such payment;

            (vii) change the aggregate number of Lenders required for any or all
Lenders to take any action hereunder;

            (viii) release all or substantially all of the Collateral except as
provided in Section 10.08 (Paying Agents; Collateral and Guaranty Matters) or
release the Borrower from its payment obligation to such Lender under this
Agreement or the Notes owing to such Lender (if any) or release any material
Guarantor from its obligations under the Guaranty except in connection with the
sale or other Disposition of such material Guarantors (or all or substantially
all of the assets thereof) permitted by this Agreement (or permitted pursuant to
a waiver or consent of a transaction otherwise prohibited by this Agreement); or

            (ix) amend Section 2.13 (Payments and Computations), Section
10.08(c) or (d) (Paying Agents; Collateral and Guaranty Matters), this Section
11.01, Section 11.16 (Sharing of Payments, Etc.) or the definitions of the terms
"Required Lenders," "Required Revolving Credit Lenders," "Required Term Loan
Lenders," or "Pro Rata Share";

      and provided, further, that (v) any modification of the application of
payments to the Term Loan pursuant to Section 2.08 (Mandatory Prepayments) shall
require the consent of the Required Term Loan Lenders and any such modification
of the application of payments to the Revolving Loans pursuant to Section 2.08
(Mandatory Prepayments) or the reduction of the Revolving Credit Commitments
pursuant to Section 2.05 (Reduction or Termination of the Commitments) shall
require the consent of the Required Revolving Credit Lenders, (w) no amendment,
waiver or consent shall, unless in writing and signed by any Special Purpose
Vehicle that has been granted an option pursuant to Section 11.07(e)
(Assignments and Participations) affect the grant or nature of such option or
the right or duties of such Special Purpose Vehicle hereunder, (x) no amendment,
waiver or consent shall, unless in writing and signed by the L/C Issuer in
addition to the Lenders required above to take such action, affect the rights or
duties of the L/C Issuer under this Agreement or the other Loan Documents, (y)
no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement or the other

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Loan Documents and (z) no amendment, waiver or consent shall, unless in writing
and signed by the Collateral Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Collateral Agent under this
Agreement or the other Loan Documents.

      (b) Each Administrative Agent may, but shall have no obligation to, with
the written concurrence of any applicable Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances unless otherwise required hereunder.

      (c) If, in connection with any proposed amendment, modification, waiver or
termination (a "Proposed Change") requiring the consent of all affected Lenders,
the consent of Required Lenders is obtained but the consent of other Lenders
whose consent is required is not obtained (any such Lender whose consent is not
obtained as described in this Section 11.01 being referred to as a
"Non-Consenting Lender"), then, so long as the Lender acting as the Revolving
Credit Facility Administrative Agent (in the case of Revolving Lenders) and the
Lender acting as the Term Loan Facility Administrative Agent (in the case of
Term Loan Lenders) is not a Non-Consenting Lender, at the Borrower's request, an
Eligible Assignee reasonably acceptable to the applicable Administrative Agent
shall have the right with such Administrative Agent's consent and in such
Administrative Agent's reasonable discretion (but shall have no obligation) to
purchase from all (and not less than all) such Non-Consenting Lenders, and each
such Non-Consenting Lender agrees that it shall, upon the applicable
Administrative Agent's request, sell and assign to (i) the Lender acting as the
Revolving Credit Facility Administrative Agent or such Eligible Assignee, all of
the Revolving Credit Commitments and Revolving Credit Outstandings of each such
Non-Consenting Lender if such Non-Consenting Lender is a Revolving Lender and
(ii) the Lender acting as the Term Loan Facility Administrative Agent or such
Eligible Assignee, all of the Outstanding Amount of the Term Loan owing to each
such Non-Consenting Lender if such Non-Consenting Lender is a Term Loan Lender,
in each case for an amount equal to the principal balance of all such Revolving
Loans or Term Loans, as applicable, held by the Non-Consenting Lenders and all
accrued and unpaid interest and fees with respect thereto through the date of
sale; provided, however, that each such Eligible Assignee shall consent to such
Proposed Change and shall pay, to the extent not paid by the Borrower, the
$3,500 assignment fee pursuant to Section 11.07; provided, further, that such
purchase and sale shall be recorded in the Register maintained by the applicable
Administrative Agent and shall not be effective until (x) the applicable
Administrative Agent shall have received from each such Eligible Assignee a duly
executed Assignment and Assumption and (y) each such Non-Consenting Lender shall
have received payments of all the Outstanding Amounts of the Revolving Loans or
the Outstanding Amount of the Term Loan, as applicable, held by it and all
accrued and unpaid interest and fees with respect thereto through the date of
the sale. Each Lender agrees that, if it becomes a Non-Consenting Lender, it
shall execute and deliver to the applicable Administrative Agent an Assignment
and Assumption to evidence such sale and purchase and shall deliver to the
applicable Administrative Agent any Note (if the assigning Lender's Loans are
evidenced by Notes) subject to such Assignment and Assumption; provided,
however, that the failure of any Non-Consenting Lender to execute an Assignment
and Assumption shall not render such sale and purchase (and the corresponding
assignment) invalid and such assignment shall be recorded in the applicable
Register.

11.02 NOTICES, ETC.

      (a) Addresses for Notices. All notices, demands, requests and other
communications provided for in this Agreement shall be given in writing, or by
any telecommunication device capable of creating a written record (including
electronic mail), and addressed to the party to be notified as follows:

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            (i)   if to the Borrower:

                  Psychiatric Solutions, Inc.
                  840 Crescent Centre Drive
                  Suite 460
                  Franklin, TN 37067
                  Attention: Brent Turner
                  Telecopy no: (615) 312-5711
                  E-Mail Address: bturner@psysolutions.com

            (ii) if to the L/C Issuer, at the address set forth under its name
on Schedule 11.02 (Lending Offices and Addresses for Notices);

            (iii) if to any Lender, at its Lending Office specified opposite its
name on Schedule 11.02 (Lending Offices and Addresses for Notices) or on the
signature page of any applicable Assignment and Assumption;

            (iv) if to the Revolving Credit Facility Administrative Agent, the
Collateral Agent or the Swing Line Lender:

                  BANK OF AMERICA, N.A.
                  231 South LaSalle Street
                  Chicago, Illinois  60697
                  Mail Code: IL1-231-08-30
                  Attention: Walter Batson
                  Telecopy no: (877) 207-2381
                  E-Mail Address: walter.k.batson@bankofamerica.com

                  with a copy to the Term Loan Facility Administrative Agent at
                  its address below

            (v)   if to the Term Loan Facility Administrative Agent:

                  CITICORP NORTH AMERICA, INC.
                  390 Greenwich Street
                  New York, New York 10013
                  Attention: Dawayne Sims
                  Telecopy no: (212) 994-0961
                  E-Mail Address: dawayne.sims@citigroup.com

                  with a copy to the Revolving Credit Facility Administrative
                  Agent at its address above

      or at such other address as shall be notified in writing (x) in the case
of the Borrower, the Administrative Agents, the Collateral Agent and the Swing
Line Lender, to the other parties and (y) in the case of all other parties, to
the Borrower, the Administrative Agents and the Collateral Agent. All such
notices and communications shall be effective upon personal delivery (if
delivered by hand, including any overnight courier service), when deposited in
the mails (if sent by mail), or when properly delivered (if sent by a
telecommunications device or through the Internet); provided, however, that
notices and communications to an Administrative Agent pursuant to Article II
(The Commitments and Credit

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Extensions) or Article X (Agents) shall not be effective until received by the
applicable Administrative Agent.

      (b) Effectiveness of Notices. All notices, demands, requests, consents and
other communications described in clause (a) above shall be effective (i) if
delivered by hand, including any overnight courier service, upon personal
delivery, (ii) if delivered by mail, when deposited in the mails, (iii) if
delivered by posting to an Approved Electronic Platform, an Internet website or
a similar telecommunication device requiring a user prior access to such
Approved Electronic Platform, website or other device, when such notice, demand,
request, consent and other communication shall have been made generally
available on such Approved Electronic Platform, Internet website or similar
device to the class of Person being notified (regardless of whether any such
Person must accomplish, and whether or not any such Person shall have
accomplished, any action prior to obtaining access to such items, including
registration, disclosure of contact information, compliance with a standard user
agreement or undertaking a duty of confidentiality) and (iv) if delivered by
electronic mail or any other telecommunications device, when transmitted to an
electronic mail address (or by another means of electronic delivery) as provided
in clause (a) above; provided, however, that notices and communications to any
Agent pursuant to Article II (The Commitments and Credit Extensions) or Article
X (Agents) shall not be effective until received by such Agent.

      (c) Use of Electronic Platform. Notwithstanding clauses (a) and (b) above
(unless the any Agent requests that the provisions of clause (a) and (b) above
be followed) and any other provision in this Agreement or any other Loan
Document providing for the delivery of, any Approved Electronic Communication by
any other means, the Loan Parties shall deliver all Approved Electronic
Communications to the applicable Agent by properly transmitting such Approved
Electronic Communications electronically (in a format acceptable to the
applicable Administrative Agent) to (i) in the case of the Term Loan
Administrative Agent, oploanswebadmin@citigroup.com, (ii) in the case of the
Revolving Credit Facility Administrative Agent, _____________(1) or (iii) in any
case, such other electronic mail address (or similar means of electronic
delivery) as the applicable Agent may notify the Borrower and the other Agents.
Nothing in this clause (c) shall prejudice the right of any Agent or any Lender
or L/C to deliver any Approved Electronic Communication to any Loan Party in any
manner authorized in this Agreement.

11.03 NO WAIVER; CUMULATIVE REMEDIES.

      No failure on the part of any Lender, L/C Issuer or any Agent to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by Law.

11.04 ATTORNEY COSTS, EXPENSES AND TAXES.

      (a) Each of the Borrower and each other Loan Party agrees upon demand to
pay, or reimburse each Agent for all of such Agent's reasonable external audit,
legal, appraisal, valuation, filing, document duplication and reproduction and
investigation expenses and for all other reasonable out-of-pocket costs and
expenses of every type and nature (including (x) the Attorney Costs of counsel
to the Administrative Agents and the Collateral Agent, Weil, Gotshal & Manges
LLP, (y) the Attorney Costs of such other local legal counsel as may be retained
by the Agents in connection with the security arrangements contemplated by the
Loan Documents and, if necessary or reasonably advisable in

- ----------------------
(1) BofA to advise.

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connection with the Loan Documents, regulatory counsel, and (z) the costs and
expenses of auditors, accountants, appraisers, printers, insurance and
environmental advisors, and other consultants and agents) incurred by the Agents
in connection with any of the following: (i) the Agents' audit and investigation
of the Borrower and its Subsidiaries in connection with the preparation,
negotiation or execution of any Loan Document or the Agents' periodic audits of
the Borrower or any of its Subsidiaries, as the case may be, (ii) the
preparation, negotiation, execution or interpretation of this Agreement
(including the satisfaction or attempted satisfaction of any condition set forth
in Article V (Conditions Precedent)), any Loan Document or any proposal letter
or commitment letter issued in connection therewith, or the making of the Loans
or other Credit Extensions hereunder, (iii) the creation, perfection or
protection of the Liens under any Loan Document (including any Attorney Costs
for local counsel in various jurisdictions), (iv) the ongoing administration of
this Agreement and the Loans and other Credit Extensions, including consultation
with attorneys in connection therewith and with respect to the rights and
responsibilities of the Agents hereunder and under the other Loan Documents, (v)
the protection, collection or enforcement of any Obligation or the enforcement
of any Loan Document, (vi) the commencement, defense or intervention in any
court proceeding relating in any way to the Obligations, the Borrower, any other
Loan Party, any of the Borrower's Subsidiaries, the Ardent Acquisition, the
other Transactions, the Related Documents, this Agreement or any other Loan
Document, (vii) the response to, and preparation for, any subpoena or request
for document production with which any Agent is served or deposition or other
proceeding in which any Agent is called to testify, in each case, relating in
any way to the Obligations, the Borrower, any other Loan Party, any of the
Borrower's Subsidiaries, the Ardent Acquisition, the Related Documents, this
Agreement or any other Loan Document or (viii) any amendment, consent, waiver,
assignment, restatement, or supplement to any Loan Document or the preparation,
negotiation and execution of the same.

      (b) Each of the Borrower and each other Loan Party further agrees to pay
or reimburse each of the Agents and each of the Lenders and the L/C Issuer upon
demand for all out-of-pocket costs and expenses (including Attorney Costs,
allocated costs of internal counsel and costs of settlement), incurred by any
Agent, such Lenders or such L/C Issuer in connection with any of the following:
(i) in enforcing any Loan Document or Obligation or any security therefor or
exercising or enforcing any other right or remedy available by reason of an
Event of Default, (ii) in connection with any refinancing or restructuring of
the credit arrangements provided hereunder in the nature of a "work-out" or in
any insolvency or bankruptcy proceeding, (iii) in commencing, defending or
intervening in any litigation or in filing a petition, complaint, answer, motion
or other pleadings in any legal proceeding relating to the Obligations, the
Borrower, any other Loan Party, any of the Borrower's Subsidiaries and related
to or arising out of the transactions contemplated hereby or by any other Loan
Document or Related Document or (iv) in taking any other action in or with
respect to any suit or proceeding (bankruptcy or otherwise) described in clause
(i), (ii) or (iii) above.

      (c) All amounts due under this Section 11.04 shall be payable within ten
Business Days after demand therefor. The agreements in this Section 11.04 shall
survive the termination of the Commitments and repayment of all Obligations.

11.05 INDEMNIFICATION BY THE BORROWER; LIMITATION OF LIABILITY.

      (a) Indemnification.

            (i) Each of the Borrower and each other Loan Party agrees to
indemnify and hold harmless each Agent, each Arranger, each Lender and the L/C
Issuer (including each Person obligated on a Swap Contract that is a Loan
Document if such Person was a Lender or L/C Issuer at the time of it entered
into such Swap Contract) and each of their respective Affiliates, and each of
the directors, officers, employees, agents, trustees, representatives,
attorneys, consultants and advisors of or to any of

                                      123


the foregoing (including those retained in connection with the satisfaction or
attempted satisfaction of any condition set forth in Article V (Conditions
Precedent) (each such Person being an "Indemnitee") from and against any and all
claims, damages, liabilities, obligations, losses, penalties, actions,
judgments, suits, costs, disbursements and expenses, joint or several, of any
kind or nature (including reasonable fees, disbursements and expenses of
financial and legal advisors to any such Indemnitee) that may be imposed on,
incurred by or asserted against any such Indemnitee in connection with or
arising out of any investigation, litigation or proceeding, whether or not such
investigation, litigation or proceeding is brought by any such indemnitee or any
of its directors, security holders or creditors or any such Indemnitee,
director, security holder or creditor is a party thereto, whether direct,
indirect, or consequential and whether based on any federal, state or local law
or other statutory regulation, securities or commercial law or regulation, or
under common law or in equity, or on contract, tort or otherwise, in any manner
relating to or arising out of this Agreement, any other Loan Document, any
Obligation, any Letter of Credit, any Related Document, or any act, event or
transaction related or attendant to any thereof, or the use or intended use of
the proceeds of the Credit Extensions or in connection with any investigation of
any potential matter covered hereby (collectively, the "Indemnified Matters");
provided, however, that neither the Borrower nor any other Loan Party shall have
any liability under this Section 11.05 to an Indemnitee with respect to any
Indemnified Matter that has resulted primarily from the gross negligence or
willful misconduct of that Indemnitee, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order. Without limiting the
foregoing, "Indemnified Matters" shall include (A) all Environmental Liabilities
arising from or connected with the past, present or future operations of the
Borrower or any of its Subsidiaries involving any property subject to a
Collateral Document, or damage to real or personal property or natural resources
or harm or injury alleged to have resulted from any Release of Hazardous
Materials on, upon or into such property or any contiguous real estate, (B) any
costs or liabilities incurred in connection with any Remedial Action concerning
the Borrower or any of its Subsidiaries, (C) any costs or liabilities incurred
in connection with any Lien in favor of any Governmental Authority for
Environmental Liabilities and (D) any costs or liabilities incurred in
connection with any other matter under any Environmental Law, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (49
U.S.C. Section 9601 et seq.) and applicable state property transfer laws,
whether, with respect to any such matter, such Indemnitee is a mortgagee
pursuant to any leasehold mortgage, a mortgagee in possession, the successor in
interest to the Borrower or any of its Subsidiaries, or the owner, lessee or
operator of any property of the Borrower or any of its Subsidiaries by virtue of
foreclosure, except, with respect to those matters referred to in clauses (A),
(B), (C) and (D) above, to the extent (x) incurred following foreclosure by any
Agent, any Lender or the L/C Issuer, or any Agent, any Lender or the L/C Issuer
having become the successor in interest to the Borrower or any of its
Subsidiaries and (y) attributable to acts of such Agent, such Lender or such L/C
Issuer or any agent on behalf of such Agent, such Lender or such L/C Issuer.

            (ii) Each of the Borrower and each other Loan Party shall indemnify
the Agents, Lenders and the L/C Issuer for, and hold the Agents, the Lenders and
the L/C Issuer harmless from and against, any and all claims for brokerage
commissions, fees and other compensation made against the Agents, the Lenders
and the L/C Issuer for any broker, finder or consultant with respect to any
agreement, arrangement or understanding made by or on behalf of the Borrower or
any other Loan Party or any of its respective Subsidiaries in connection with
the transactions contemplated by this Agreement.

            (iii) Each of the Borrower and each of the other Loan Parties, at
the request of any Indemnitee, shall have the obligation to defend against any
investigation, litigation or proceeding or requested Remedial Action, in each
case contemplated in clause (a) above, and the Borrower and such other Loan
Parties, in any event, may participate in the defense thereof with legal counsel
of the Borrower's choice. In the event that such indemnitee requests the
Borrower or any Loan Party to defend against such investigation, litigation or
proceeding or requested Remedial Action, the Borrower or such Loan Party shall
promptly do so and such Indemnitee shall have the right to have legal counsel of
its

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choice participate in such defense. No action taken by legal counsel chosen by
such Indemnitee in defending against any such investigation, litigation or
proceeding or requested Remedial Action, shall vitiate or in any way impair the
obligation and duty hereunder of the Borrower and such other Loan Parties to
indemnify and hold harmless such Indemnitee.

            (iv) Each of the Borrower and each other Loan Party agrees that any
indemnification or other protection provided to any Indemnitee pursuant to this
Agreement (including pursuant to this Section 11.05) or any other Loan Document
shall (A) survive payment in full of the Obligations and (B) inure to the
benefit of any Person that was at any time an Indemnitee under this Agreement or
any other Loan Document.

      (b) Limitation of Liability.

            (i) Each of the Borrower and each other Loan Party agrees that no
Indemnitee shall have any liability (whether in contract, tort or otherwise) to
any Loan Party or any of their respective Subsidiaries or any of their
respective equity holders or creditors for or in connection with the
transactions contemplated hereby and in the other Loan Documents and Related
Documents, except to the extent such liability is determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
primarily from such Indemnitee's gross negligence or willful misconduct. In no
event, however, shall any Indemnitee be liable on any theory of liability for
any special, indirect, consequential or punitive damages (including any loss of
profits, business or anticipated savings). Each of the Borrower and each of the
other Loan Parties hereby waives, releases and agrees (each for itself and on
behalf of its Subsidiaries) not to sue upon any such claim for any special,
indirect, consequential or punitive damages, whether or not accrued and whether
or not known or suspected to exist in its favor.

            (ii) IN NO EVENT SHALL ANY AGENT AFFILIATE HAVE ANY LIABILITY TO ANY
LOAN PARTY, LENDER, L/C ISSUER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND,
INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT OR CONTRACT OR OTHERWISE) ARISING OUT OF ANY
LOAN PARTY OR ANY AGENT AFFILIATE'S TRANSMISSION OF APPROVED ELECTRONIC
COMMUNICATIONS THROUGH THE INTERNET OR ANY USE OF THE APPROVED ELECTRONIC
PLATFORM, EXCEPT TO THE EXTENT SUCH LIABILITY OF ANY AGENT AFFILIATE IS FOUND IN
A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED PRIMARILY FORM SUCH AGENT AFFILIATE'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

11.06 MARSHALLING; PAYMENTS SET ASIDE.

      None of any Agent, any Lender or the L/C Issuer shall be under any
obligation to marshal any assets in favor of the Borrower or any other party or
against or in payment of any or all of the Obligations. To the extent that the
Borrower makes a payment or payments to any Agent, the Lenders or the L/C Issuer
or any such Person receives payment from the proceeds of the Collateral or
exercise their rights of setoff, and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
right and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.

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11.07 ASSIGNMENTS AND PARTICIPATIONS.

      (a) Each Lender may sell, transfer, negotiate or assign to one or more
Eligible Assignees all or a portion of its rights and obligations hereunder
(including all of its rights and obligations with respect to the Term Loans, the
Revolving Loans, the Swing Line Loans and the Letters of Credit); provided,
however, that

            (i) (A) if any such assignment shall be of the assigning Lender's
Revolving Credit Outstandings and Revolving Credit Commitments, such assignment
shall cover the same percentage of such Lender's Revolving Credit Outstandings
and Revolving Credit Commitment and (B) if any such assignment shall be of the
assigning Lender's Term Loans and Term Loan Commitment (if any), such assignment
shall cover the same percentage of such Lender's Term Loans and Term Loan
Commitment (if any);

            (ii) the aggregate amount being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Assumption with
respect to such assignment) shall in no event (if less than the Assignor's
entire interest) be less than (x) in the case of the Revolving Credit Facility,
$5,000,000 or an integral multiple of $1,000,000 in excess thereof or (y) in the
case of the Term Loan Facility, $1,000,000 or an integral multiple of $1,000,000
in excess thereof, except, in any case, (A) with the consent of the Borrower
(not to be unreasonably withheld or delayed) and the applicable Administrative
Agent or (B) if such assignment is being made to a Lender or an Affiliate or
Approved Fund of such Lender;

            (iii) if such Eligible Assignee is not, prior to the date of such
assignment, a Lender or an Affiliate or Approved Fund of a Lender, such
assignment shall be subject to the prior consent of the applicable
Administrative Agent and the Borrower (which consent shall not be unreasonably
withheld or delayed); and

            (iv) any assignment of a Revolving Credit Commitment must be
approved by the Revolving Credit Facility Administrative Agent, the L/C Issuer
and the Swing Line Lender (each such consent not to be unreasonably withheld or
delayed);

provided, further, that, notwithstanding any other provision of this Section
11.07, the consent of the Borrower shall not be required (x) for any assignment
occurring when any Event of Default shall have occurred and be continuing and
(y) for any assignment by any Administrative Agent or any of their respective
Affiliates made within 30 Business Days after the Closing Date. Any such
assignment need not be ratable as among the Term Loan Facility and the Revolving
Credit Facility;

      (b) The parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording, an Assignment and
Assumption, together with any Note (if the assigning Lender's Loans are
evidenced by a Note) subject to such assignment. Upon the execution, delivery,
acceptance and recording of any Assignment and Assumption and, other than in
respect of assignments made pursuant to Section 3.07 (Substitution of Lenders)
and Section 11.01(c) (Amendments, Etc.), the receipt by the applicable
Administrative Agent from the assignee (other than an assignee that is CNAI,
Bank of America or any of their respective Affiliates) of an assignment fee in
the amount of $3,500 from and after the effective date specified in such
Assignment and Assumption (provided that in respect of multiple contemporaneous
assignments by any Lender to its Approved Funds, such assignment fee shall be in
an amount equal to $3,500 for the first such assignment to an Approved Fund of
such Lender), (i) the assignee thereunder shall become a party hereto and, to
the extent that rights and obligations under the Loan Documents have been
assigned to such assignee pursuant to such Assignment and Assumption, have the
rights and obligations of a Lender, and if such Lender were an L/C Issuer, of

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such L/C Issuer hereunder and thereunder, (ii) the Notes (if any) corresponding
to the Loans assigned thereby shall be transferred to such assignee by notation
in the Register and (iii) the assignor thereunder shall, to the extent that
rights and obligations under this Agreement have been assigned by it pursuant to
such Assignment and Assumption, relinquish its rights (except for those
surviving the payment in full of the Obligations) and be released from its
obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment (and, in the case of an
Assignment and Assumption covering all or the remaining portion of an assigning
Lender's rights and obligations under the Loan Documents, such Lender shall
cease to be a party hereto).

      (c) Each Administrative Agent shall maintain at its address referred to in
Section 11.02 (Notices, Etc.) a copy of each Assignment and Assumption delivered
to and accepted by it and shall record in the applicable Register the names and
addresses of the Lenders and the L/C Issuer, as applicable, and the principal
amount of the Loans and L/C Obligations, as applicable, owing to each such
Lender from time to time and the Commitments of each Lender. Any assignment
pursuant to this Section 11.07 shall not be effective until such assignment is
recorded in the Register.

      (d) Upon its receipt of an Assignment and Assumption executed by an
assigning Lender and an assignee, the Administrative Agent shall, if such
Assignment and Assumption has been completed, (i) accept such Assignment and
Assumption, (ii) record, or cause to be recorded, the information contained
therein in the applicable Register and (iii) give prompt notice thereof to the
Borrower. Within five Business Days after its receipt of such notice, the
Borrower, at its own expense, shall, if requested by such assignee, execute and
deliver to the applicable Administrative Agent new Notes to the order of such
assignee in an amount equal to the Commitments and Credit Extensions assumed by
such assignee pursuant to such Assignment and Assumption and, if the assigning
Lender has surrendered any Note for exchange in connection with the assignment
and has retained Commitments or Credit Extensions hereunder, new Notes to the
order of the assigning Lender in an amount equal to the Commitments and Credit
Extensions retained by it hereunder. Such new Notes shall be dated the same date
as the surrendered Notes and be in substantially the form of Exhibit E-1 (Form
of Revolving Note), Exhibit E-2 (Form of Term Loan Note) or Exhibit E-3 (Form of
Swing Line Note), as applicable.

      (e) In addition to the other assignment rights provided in this Section
11.07, each Lender may:

            (i) grant to a Special Purpose Vehicle the option to make all or any
part of any Loan that such Lender would otherwise be required to make hereunder
and the exercise of such option by any such Special Purpose Vehicle and the
making of Loans pursuant thereto shall satisfy (once and to the extent that such
Loans are made) the obligation of such Lender to make such Loans thereunder,
provided, however, that (x) nothing herein shall constitute a commitment or an
offer to commit by such a Special Purpose Vehicle to make Loans hereunder and no
such Special Purpose Vehicle shall be liable for any indemnity or other
Obligation (other than the making of Loans for which such Special Purpose
Vehicle shall have exercised an option, and then only in accordance with the
relevant option agreement) and (y) such Lender's obligations under the Loan
Documents shall remain unchanged, such Lender shall remain responsible to the
other parties for the performance of its obligations under the terms of this
Agreement and shall remain the holder of the Obligations for all purposes
hereunder, and

            (ii) assign or pledge, as collateral or otherwise, all or any
portion of its rights under this Agreement, whether now owned or hereafter
acquired (including rights to payments of principal or interest on the Loans and
Notes or any other instrument evidencing its rights as a Lender under this
Agreement), to, without notice to or consent of the applicable Administrative
Agent or the Borrower, (A) any Federal Reserve Bank (pursuant to Regulation A of
the FRB), (B) any holder of, trustee for the benefit of, or any other
representative of holders of, the holders of such Revolving Credit Lender's

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Securities and (C) any Special Purpose Vehicle to which such Revolving Credit
Lender has granted an option pursuant to clause (i) above;

provided, however, that no such assignment or grant shall release such Lender
from any of its obligations hereunder except as expressly provided in clause (i)
above and except, in the case of a subsequent foreclosure pursuant to an
assignment as collateral, if such foreclosure is made in compliance with the
other provisions of this Section 11.07 other than this clause (e) or clause (f)
below. Each party hereto acknowledges and agrees that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior debt of any such Special Purpose Vehicle, such party shall
not institute against, or join any other Person in instituting against, any
Special Purpose Vehicle that has been granted an option pursuant to this clause
(e) any bankruptcy, reorganization, insolvency or liquidation proceeding (such
agreement shall survive the payment in full of the Obligations). The terms of
the designation of, or assignment to, such Special Purpose Vehicle shall not
restrict such Lender's ability to, or grant such Special Purpose Vehicle the
right to, consent to any amendment or waiver to this Agreement or any other Loan
Document or to the departure by the Borrower from any provision of this
Agreement or any other Loan Document without the consent of such Special Purpose
Vehicle except, as long as the Agents and the Lenders, the L/C Issuer and the
other Secured Parties shall continue to, and shall be entitled to continue to,
deal solely and directly with such Lender in connection with such Lender's
obligations under this Agreement, to the extent any such consent would reduce
the principal amount of, or the rate of interest on, any Obligations, amend
clause (e) or postpone any scheduled date of payment of such principal or
interest. Each Special Purpose Vehicle shall be entitled to the benefits of
Section 3.01 (Taxes), 3.02 (Illegality) and Section 3.04(b) (Increased Cost and
Reduced Return; Capital Adequacy) as if it were such Lender; provided, however,
that anything herein to the contrary notwithstanding, no Borrower shall, at any
time, be obligated to make under Section 3.01 (Taxes), 3.02 (Illegality) or
Section 3.04(b) (Increased Cost and Reduced Return; Capital Adequacy) a to any
such Special Purpose Vehicle and any such Lender any payment in excess of the
amount the Borrower would have been obligated to pay to such Lender in respect
of such interest if such Special Purpose Vehicle had not been assigned the
rights of such Lender hereunder; and provided, further, that such Special
Purpose Vehicle shall have no direct right to enforce any of the terms of this
Agreement against the Borrower, the Agents or the other Lenders. In the case of
any Lender that is a fund that invests in bank loans, such Lender may, without
the consent of Borrower or the applicable Administrative Agent, collaterally
assign or pledge all or any portion of its rights under this Agreement,
including the Loans and Notes or any other instrument evidencing its rights as a
Lender under this Agreement, to any holder of, trustee for, or any other
representative of holders of, obligations owed or securities issued, by such
fund, as security for such obligations or securities.

      (f) Each Lender may sell participations to one or more Persons in or to
all or a portion of its rights and obligations under the Loan Documents
(including all its rights and obligations with respect to the Term Loans,
Revolving Loans, Swing Line Loans and Letters of Credit). The terms of such
participation shall not, in any event, require the participant's consent to any
amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights such Lender may
have under or in respect of the Loan Documents (including the right to enforce
the obligations of the Loan Parties), except if any such amendment, waiver or
other modification or consent would (i) reduce the amount, or postpone any date
fixed for, any amount (whether of principal, interest or fees) payable to such
participant under the Loan Documents, to which such participant would otherwise
be entitled under such participation or (ii) result in the release of all or
substantially all of the Collateral other than in accordance with Section 10.08
(Paying Agents; Collateral and Guaranty Matters). In the event of the sale of
any participation by any Lender, (w) such Lender's obligations under the Loan
Documents shall remain unchanged, (x) such Lender shall remain solely
responsible to the other parties for the performance of such obligations, (y)
such Lender shall remain the holder of such Obligations for all

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purposes of this Agreement and (z) the Borrower, the Agents and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Each
participant shall be entitled to the benefits of Section 3.01 (Taxes), Section
3.02 (Illegality) and Section 3.04(b) (Increased Cost and Reduced Return;
Capital Adequacy) as if it were a Lender; provided, however, that anything
herein to the contrary notwithstanding, the Borrower shall not, at any time, be
obligated to make under Section 3.01 (Taxes), Section 3.02 (Illegality) and
Section 3.04(b) (Increased Cost and Reduced Return; Capital Adequacy) to the
participants in the rights and obligations of any Lender (together with such
Lender) any payment in excess of the amount the Borrower would have been
obligated to pay to such Lender in respect of such interest had such
participation not been sold.

      (g) The L/C Issuer may at any time assign its rights and obligations
hereunder to any other Lender by an instrument in form and substance
satisfactory to the Borrower, the Administrative Agents, such L/C Issuer and
such Lender. If the L/C Issuer ceases to be a Lender hereunder by virtue of any
assignment made pursuant to this Section 11.07, then, as of the effective date
of such cessation, such L/C Issuer's obligations to issue Letters of Credit
pursuant to Section 2.03 (Letters of Credit) shall terminate and such L/C Issuer
shall be an L/C Issuer hereunder only with respect to outstanding Letters of
Credit issued prior to such date.

      (h) The Swing Line Lender may at any time assign its rights and
obligations hereunder to any other Lender by an instrument in form and substance
satisfactory to the Borrower, the Administrative Agents, such Swing Line Lender
and such other Lender. If the Swing Line Lender ceases to be a Lender hereunder
by virtue of any assignment made pursuant to this Section 11.07, then, as of the
effective date of such cessation, such Swing Line Lender's obligations to make
Swing Line Loans pursuant to Section 2.04 (Swing Line Loans) shall terminate and
such Swing Line Lender shall be a Swing Line Lender hereunder only with respect
to outstanding Swing Line Loans issued prior to such date.

11.08 CONFIDENTIALITY.

      Each Lender and each Agent agrees to maintain the confidentiality of the
Confidential Borrower Information, except that Confidential Borrower Information
may be disclosed (a) to its and its Affiliates' directors, officers, trustees,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Confidential Borrower Information
and instructed to keep such Confidential Borrower Information confidential), (b)
to the extent requested by any regulatory authority, (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section 11.08, to any assignee of or participant in, or
any prospective assignee of or participant in, any of its rights or obligations
under this Agreement, (g) with the written consent of the Borrower, (h) to
current or prospective assignees, participants and Special Purpose Vehicles
grantees of any option described in Section 11.07(e) (Assignments and
Participations), contractual counterparties in any Swap Contract permitted
hereunder and to their respective legal or financial advisors, in each case and
to the extent such assignees, participants, grantees or counterparties agree to
be bound by, and to cause their advisors to comply with, the provisions of this
Section 11.08 or (i) to the extent such Confidential Borrower Information (i)
becomes publicly available other than as a result of a breach of this Section
11.08 or (ii) becomes available to any Lender or Agent on a nonconfidential
basis from a source other than the Borrower. Any Person required to maintain the
confidentiality of Confidential Borrower Information as provided in this Section
11.08 shall be considered to have complied with its obligation to do so if such
Person has exercised the same degree of care to maintain the confidentiality of
such Confidential Borrower Information as such Person would accord to its own
confidential information.

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Notwithstanding anything in this Agreement or in any other Loan Document to the
contrary, the Borrowers, each Lender and each Agent (and each employee,
representative or other agent of the Borrowers) may disclose to any and all
persons, without limitation of any kind, the U.S. tax treatment and U.S. tax
structure of the Transactions and all materials of any kind (including opinions
or other tax analyses) that are provided to the Borrower relating to such U.S.
tax treatment and U.S. tax structure..

11.09 SET-OFF.

      Upon the occurrence and during the continuance of any Event of Default
each Lender and each Affiliate of a Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other Indebtedness at any time owing by such Lender or its
Affiliates to or for the credit or the account of the Borrower against any and
all of the Obligations now or hereafter existing whether or not such Lender
shall have made any demand under this Agreement or any other Loan Document and
even though such Obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender
or its Affiliates; provided, however, that the failure to give such notice shall
not affect the validity of such set-off and application. Each Lender agrees that
it shall not, without the express consent of the Required Lenders (and that, it
shall, to the extent lawfully entitled to do so, upon the request of the
Required Lenders) exercise its set-off rights under this Section 11.09 against
any deposit accounts of the Loan Parties and their Subsidiaries maintained with
such Lender or any Affiliate thereof. The rights of each Lender under this
Section 11.09 are in addition to the other rights and remedies (including other
rights of set-off) that such Lender may have.

11.10 INTEREST RATE LIMITATION.

      Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not exceed
the maximum rate of non-usurious interest permitted by applicable Law (the
"Maximum Rate"). If any Agent or any Lender shall receive interest in an amount
that exceeds the Maximum Rate, the excess interest shall be applied to the
principal of the Loans or, if it exceeds such unpaid principal, refunded to the
Borrower. In determining whether the interest contracted for, charged, or
received by any Agent or any Lender exceeds the Maximum Rate, such Person may,
to the extent permitted by applicable Law, (a) characterize any payment that is
not principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.

11.11 COUNTERPARTS.

      This Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are attached to the same document. Delivery of an executed signature page of
this Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart hereof. A set of the copies of this Agreement
signed by all parties shall be lodged with the Borrower and each Agent.

11.12 INTEGRATION.

      This Agreement, together with the other Loan Documents, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and thereof and supersedes all prior agreements,

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written or oral, on such subject matter. In the event of any conflict between
the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of any Agent or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement. Each
Loan Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.

11.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

      All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by
the Agents and each Lender, regardless of any investigation made by any Agent or
any Lender or on their behalf and notwithstanding that any Agent or any Lender
may have had notice or knowledge of any Default at the time of any Credit
Extension, and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter
of Credit shall remain outstanding.

11.14 SEVERABILITY.

      If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

11.15 TAX FORMS.

      (a) (i) Each Lender that is not a "United States person" within the
meaning of Section 7701(a)(30) of the Code (a "Foreign Lender") shall deliver to
the applicable Administrative Agent, prior to receipt of any payment subject to
withholding under the Code (or upon accepting an assignment of an interest
herein), two duly signed completed copies of (A) either (I) IRS Form W-8BEN or
any successor thereto relating to such Foreign Lender and entitling it to an
exemption from, or reduction of, withholding tax (including any exemption
pursuant to Section 881(c) of the Code) on all payments to be made to such
Person by the Borrower pursuant to this Agreement) or (II) IRS Form W-8ECI or
any successor thereto relating to all payments to be made to such Foreign Lender
by the Borrower pursuant to this Agreement or such other evidence satisfactory
to the Borrower and the applicable Administrative Agent that such Foreign Lender
is entitled to an exemption from, or reduction of, U.S. withholding tax and (B)
in the case of any Lender claiming an exemption from, or reduction of,
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", such Foreign Lender shall also provide a
certificate of such Foreign Lender is not (I) a "bank" for purposes of Section
881(c)(3)(B) of the Code, (II) a 10% shareholder (within the meaning of Section
881(c)(3)(B) of the Code) of the Borrower or any Subsidiary or (3) a controlled
foreign corporation related to the Borrower or any Subsidiary (within the
meaning of Section 881(c)(3)(C) of the Code). Thereafter and from time to time,
each such Foreign Lender shall (A) promptly submit to the applicable
Administrative Agent such additional duly completed and signed copies of one of
such forms (or such successor forms as shall be adopted from time to time by the
relevant United States taxing authorities) as may then be available under then
current United States laws and regulations to avoid, or such evidence as is
satisfactory to the Borrower and the applicable Administrative Agent of any
available exemption from or reduction of, United States withholding taxes in

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respect of all payments to be made to such Foreign Lender by the Borrower
pursuant to this Agreement, (B) promptly notify the applicable Administrative
Agent of any change in circumstances which would modify or render invalid any
claimed exemption or reduction, and (C) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and
as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws that the Borrower make any
deduction or withholding for taxes from amounts payable to such Person.

            (ii) Each Foreign Lender, to the extent it does not act or ceases to
act for its own account with respect to any portion of any sums paid or payable
to such Lender under any of the Loan Documents (for example, in the case of a
participation by such Lender), shall deliver to the applicable Administrative
Agent on the date when such Foreign Lender ceases to act for its own account
with respect to any portion of any such sums paid or payable, and at such other
times as may be necessary in the determination of the applicable Administrative
Agent (in its reasonable discretion), (A) two duly signed completed copies of
the forms or statements required to be provided by such Lender as set forth
above, to establish the portion of any such sums paid or payable with respect to
which such Lender acts for its own account that is not subject to U.S.
withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or
any successor thereto), together with any information such Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not acting for its own
account with respect to a portion of any such sums payable to such Lender.

            (iii) The Borrower shall not be required to pay any additional
amount to any Foreign Lender under Section 3.01(a) (Taxes) (A) with respect to
any Taxes required to be deducted or withheld on the basis of the information,
certificates or statements of exemption such Lender transmits with an IRS Form
W-8IMY pursuant to this Section 11.15(a) or (B) if such Lender shall have failed
to satisfy the foregoing provisions of this Section 11.15(a); provided that if
such Lender shall have satisfied the requirements of this Section 11.15(a) on
the date such Lender became a Lender or ceased to act for its own account with
respect to any payment under any of the Loan Documents, nothing in this Section
11.15(a) shall relieve the Borrower of its obligation to pay any amounts
pursuant to Section 3.01(a) (Taxes) in the event that, as a result of any change
in any applicable Law, treaty or governmental rule, regulation or order, or any
change in the interpretation, administration or application thereof, such Lender
is no longer properly entitled to deliver forms, certificates or other evidence
at a subsequent date establishing the fact that such Lender or other Person for
the account of which such Lender receives any sums payable under any of the Loan
Documents is not subject to withholding or is subject to withholding at a
reduced rate.

            (iv) Each Administrative Agent may, without reduction, withhold any
Taxes required to be deducted and withheld from any payment under any of the
Loan Documents with respect to which the Borrower is not required to pay
additional amounts under this Section 11.15(a).

      (b) Upon the request of the applicable Administrative Agent, each Lender
that is a "United States person" within the meaning of Section 7701(a)(30) of
the Code shall deliver to the applicable Administrative Agent two duly signed
completed copies of IRS Form W-9. If such Lender fails to deliver such forms,
then the applicable Administrative Agent may withhold from any interest payment
to such Lender an amount equivalent to the applicable back-up withholding tax
imposed by the Code, without reduction.

      (c) If any Governmental Authority asserts that any Administrative Agent
did not properly withhold or backup withhold, as the case may be, any tax or
other amount from payments made to or for the account of any Lender, such Lender
shall indemnify each applicable Administrative Agent therefor,

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including all penalties and interest, any taxes imposed by any jurisdiction on
the amounts payable to such Administrative Agent under this Section, and costs
and expenses (including Attorney Costs) of such Administrative Agent. The
obligation of the Lenders under this Section shall survive the termination of
the Commitments, repayment of all Obligations and the resignation of the
applicable Administrative Agent.

11.16 SHARING OF PAYMENTS, ETC.

      (a) If any Lender (directly or through an Affiliate thereof) obtains any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off (including pursuant to Section 11.09 (Set-off) or otherwise) of the
Loans owing to it, any interest thereon, fees in respect thereof or amounts due
pursuant to Section 11.04 (Attorney Costs, Expenses and Taxes) or 11.05
(Indemnification by the Borrower; Limitation of Liability) (other than payments
pursuant to Section 3.01 (Taxes), 3.02 (Illegality), 3.03 (Determination of
Rates; Inability to Determine Rates), 3.04 (Increased Cost and Reduced Return;
Capital Adequacy) or 3.05 (Funding Losses)) or otherwise receives any Collateral
or any Proceeds of Collateral (other than payments pursuant to Section 3.01
(Taxes), 3.02 (Illegality), 3.03 (Determination of Rates; Inability to Determine
Rates), 3.04 (Increased Cost and Reduced Return; Capital Adequacy) or 3.05
(Funding Losses) (in each case, whether voluntary, involuntary, through the
exercise of any right of set-off or otherwise (including pursuant to Section
11.09 (Set-off)) in excess of its Pro Rata Share of all payments of such
Obligations obtained by all the Lenders, such Lender (a "Purchasing Lender")
shall forthwith purchase from the other Lenders (each, a "Selling Lender") such
participations in their Loans or other Obligations as shall be necessary to
cause such Purchasing Lender to share the excess payment ratably with each of
them.

      (b) If all or any portion of any payment received by a Purchasing Lender
is thereafter recovered from such Purchasing Lender, such purchase from each
Selling Lender shall be rescinded and such Selling Lender shall repay to the
Purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Selling Lender's ratable share (according to the
proportion of (i) the amount of such Selling Lender's required repayment in
relation to (ii) the total amount so recovered from the Purchasing Lender) of
any interest or other amount paid or payable by the Purchasing Lender in respect
of the total amount so recovered.

      (c) The Borrower agrees that any Purchasing Lender so purchasing a
participation from a Selling Lender pursuant to this Section 11.16 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation.

11.17 GOVERNING LAW.

      This Agreement and the rights and obligations of the parties hereto shall
be governed by, and construed and interpreted in accordance with, the law of the
State of New York.

11.18 WAIVER OF RIGHT TO TRIAL BY JURY.

      EACH OF THE AGENTS, THE LENDERS, THE L/C ISSUER AND THE BORROWER
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

                                      133


11.19 SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.

      (a) Any legal action or proceeding with respect to this Agreement or any
other Loan Document may be brought in the courts of the State of New York
located in the City of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Borrower hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The parties
hereto hereby irrevocably waive any objection, including any objection to the
laying of venue or based on the grounds of forum non conveniens, that any of
them may now or hereafter have to the bringing of any such action or proceeding
in such respective jurisdictions.

      (b) Nothing contained in this Section 11.18 shall affect the right of any
Agent or any Lender to serve process in any manner permitted by law or commence
legal proceedings or otherwise proceed against the Borrower or any other Loan
Party in any other jurisdiction.

      (c) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder in Dollars into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures that Citigroup could purchase Dollars with such other currency at the
spot rate of exchange quoted by Citibank at 11:00 a.m. on the Business Day
preceding that on which final judgment is given, for the purchase of Dollars,
for delivery two Business Days thereafter.

11.20 DESIGNATED SENIOR INDEBTEDNESS.

      The parties hereto intend for this Agreement to be the "Credit Agreement"
under, and as defined in, the Existing Senior Subordinated Notes Documents and
any other Subordinated Indebtedness Documents. If for any reason this Agreement
is not deemed to be the "Credit Agreement" under, and as defined in, the
Existing Senior Subordinated Notes Documents or such other Subordinated
Indebtedness Documents, as the case may be, the Borrower hereby specifically
designates the Obligations as "Designated Senior Debt" for purposes of the
Existing Senior Subordinated Notes Documents any other Subordinated Indebtedness
Documents.

11.21 USA PATRIOT ACT NOTICE.

      The Agents and the Lenders hereby notify the Borrower that pursuant to the
requirements of the Patriot Act, each Lender is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name, address, tax identification number and other information regarding the
Borrower that will allow such Lender to identify the Borrower in accordance with
the Patriot Act. This notice is given in accordance with the requirements of the
Patriot Act and is effective as to each Lender.

11.22 SECTION TITLES.

      The section titles contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto, except when used to reference a section.
Any reference to the number of a clause, sub-clause or subsection hereof
immediately followed by a reference in parenthesis to the title of the Section
containing such clause, sub-clause or subsection is a reference to such clause,
sub-clause or subsection and not to the entire Section; provided, however, that,
in case of direct conflict between the reference to the title and the reference
to the number of such Section, the reference to the title shall govern absent
manifest error. If any reference to the number of a Section (but not to any
clause, sub-clause or subsection thereof) is

                                      134


followed immediately by a reference in parenthesis to the title of a Section,
the title reference shall govern in case of direct conflict absent manifest
error.

11.23 ENTIRE AGREEMENT.

      This Agreement, together with all of the other Loan Documents and all
certificates and documents delivered hereunder or thereunder, embodies the
entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof. In the event of any
conflict between the terms of this Agreement and any other Loan Document, the
terms of this Agreement shall govern.

                            [SIGNATURE PAGES FOLLOW]

                                      135


      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

BORROWER:

PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation

By:  /s/ Steven T. Davidson
     --------------------------
Name: Steven T. Davidson
Title: Vice President

GUARANTORS:

AERIES HEALTHCARE CORPORATION, a Delaware corporation
AERIES HEALTHCARE OF ILLINOIS, INC., an Illinois corporation
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC., a Utah corporation
BRENTWOOD ACQUISITION, INC., a Tennessee corporation
BRENTWOOD ACQUISITION - SHREVEPORT, INC., a Delaware corporation
COLLABORATIVE CARE CORPORATION, a Tennessee corporation
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION, a North Carolina corporation
FORT LAUDERDALE HOSPITAL, INC., a Florida corporation
GREAT PLAINS HOSPITAL, INC., a Missouri corporation
GULF COAST TREATMENT CENTER, INC., a Florida corporation
H. C. CORPORATION, an Alabama corporation
HAVENWYCK HOSPITAL INC., a Michigan corporation
HSA HILL CREST CORPORATION, an Alabama corporation
HSA OF OKLAHOMA, INC., an Oklahoma corporation
INFOSCRIBER CORPORATION, a Delaware corporation
LAURELWOOD CENTER, INC., a Mississippi corporation
MICHIGAN PSYCHIATRIC SERVICES, INC., a Michigan corporation
PEAK BEHAVIORAL HEALTH SERVICES, INC., a Delaware corporation
PREMIER BEHAVIORAL SOLUTIONS, INC., a Delaware corporation
PREMIER BEHAVIORAL SOLUTIONS OF ALABAMA, INC., a Delaware corporation
PSI CEDAR SPRINGS HOSPITAL, INC., a Delaware corporation
PSI COMMUNITY MENTAL HEALTH AGENCY MANAGEMENT, INC., a Tennessee corporation
PSI-EAP, INC., a Delaware corporation
PSI HOSPITALS, INC., a Delaware corporation
PSI PRIDE INSTITUTE, INC., a Minnesota corporation
PSI SUMMIT HOSPITAL, INC., a New Jersey corporation
PSYCHIATRIC MANAGEMENT RESOURCES, INC., a California corporation
PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS, INC., a Tennessee corporation
PSYCHIATRIC SOLUTIONS HOSPITALS, INC., a Delaware corporation
PSYCHIATRIC SOLUTIONS OF ALABAMA, INC. a Tennessee corporation
PSYCHIATRIC SOLUTIONS OF ARIZONA, INC., a Delaware corporation

By: /s/ Steven T. Davidson
    ---------------------------------
Name: Steven T. Davidson
Title: Vice President of each of the foregoing Guarantors

                      [SIGNATURE PAGE TO CREDIT AGREEMENT]



PSYCHIATRIC SOLUTIONS OF LEESBURG, INC., a Tennessee corporation
PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA, INC., a Tennessee corporation
PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC., a Delaware corporation
PSYCHIATRIC SOLUTIONS OF SOUTH CAROLINA, INC., a Delaware corporation
PSYCHIATRIC SOLUTIONS OF TENNESSEE, INC., a Tennessee corporation
PSYCHIATRIC SOLUTIONS OF VIRGINIA, INC., a Tennessee corporation
RAMSAY MANAGED CARE, INC., a Delaware corporation
RAMSAY TREATMENT SERVICES, INC., a Delaware corporation
RAMSAY YOUTH SERVICES OF GEORGIA, INC., a Delaware corporation
RHCI SAN ANTONIO, INC., a Delaware corporation
SOLUTIONS CENTER OF LITTLE ROCK, INC., a Tennessee corporation
SUNSTONE BEHAVIORAL HEALTH, INC., a Tennessee corporation
THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC., a Tennessee corporation
TRANSITIONAL CARE VENTURES, INC., a Delaware corporation
TRANSITIONAL CARE VENTURES (TEXAS), INC., a Delaware corporation
PSI TEXAS HOSPITALS, LLC, a Texas limited liability company
THERAPEUTIC SCHOOL SERVICES, LLC, an Oklahoma limited liability company
CANYON RIDGE HOSPITAL, INC., a California corporation
TUCSON HEALTH SYSTEMS, INC., a Delaware corporation
WELLSTONE HOLDINGS, INC., a Delaware corporation
WELLSTONE REGIONAL HOSPITAL ACQUISITION, LLC, an Indiana limited liability
company
WHISPER RIDGE OF STAUNTON, INC., a Delaware corporation
PREMIER BEHAVIORAL SOLUTIONS OF FLORIDA, INC., a Delaware corporation
PSI CROSSINGS, LLC, a Delaware limited liability company
RAMSAY YOUTH SERVICES PUERTO RICO, INC., a Puerto Rico corporation


AHS CUMBERLAND HOSPITAL, LLC, a Virginia limited liability company
ARDENT HEALTH SERVICES, INC., a Delaware corporation
BEHAVIORAL HEALTHCARE CORPORATION, a Delaware corporation
BHC ALHAMBRA HOSPITAL, INC., a Tennessee corporation
BHC BELMONT PINES HOSPITAL, INC., a Tennessee corporation
BHC CANYON RIDGE HOSPITAL, LLC, a Delaware limited liability company
BHC CEDAR CREST RTC, INC., a Texas corporation
BHC CEDAR VISTA HOSPITAL, INC., a California corporation
BHC CLINICAS DEL ESTE HOSPITAL, INC., a Tennessee corporation
BHC COLUMBUS HOSPITAL, INC., a Tennessee corporation
BHC FAIRFAX HOSPITAL, INC., a Tennessee corporation
BHC FORT LAUDERDALE HOSPITAL, INC., a Tennessee corporation
BHC FOX RUN HOSPITAL, INC., a Tennessee corporation
BHC FREMONT HOSPITAL, INC., a Tennessee corporation
BHC GULF COAST MANAGEMENT GROUP, INC., a Tennessee corporation
BHC HEALTH SERVICES OF NEVADA, INC., a Nevada corporation
BHC HERITAGE OAKS HOSPITAL, INC., a Tennessee corporation
BHC HOSPITAL HOLDINGS, INC., a Delaware corporation
BHC INTERMOUNTAIN HOSPITAL, INC., a Tennessee corporation
BHC LEBANON HOSPITAL, INC., a Tennessee corporation

By: /s/ Steven T. Davidson
    ---------------------------------
Name: Steven T. Davidson
Title: Vice President of each of the foregoing Guarantors

BHC MANAGEMENT HOLDINGS, INC., a Delaware corporation
BHC MANAGEMENT SERVICES, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF INDIANA, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF KENTUCKY, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF LOUISIANA, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF NEW MEXICO, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF PENNSYLVANIA, LLC, a Delaware limited liability
company
BHC MANAGEMENT SERVICES OF STREAMWOOD, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF TULSA, LLC, a Delaware limited liability company
BHC MILLWOOD HOSPITAL, INC., a Tennessee corporation
BHC MONTEVISTA HOSPITAL, INC., a Nevada corporation
BHC MESILLA VALLEY HOSPITAL, LLC, a Delaware limited liability company
BHC NEWCO 2, LLC, a Delaware limited liability company
BHC NEWCO 3, LLC, a Delaware limited liability company
BHC NEWCO 4, LLC, a Delaware limited liability company
BHC NEWCO 5, LLC, a Delaware limited liability company
BHC NEWCO 6, LLC, a Delaware limited liability company
BHC NEWCO 7, LLC, a Delaware limited liability company
BHC NEWCO 8, LLC a Delaware limited liability company
BHC NEWCO 9, LLC, a Delaware limited liability company
BHC NEWCO 10, LLC a Delaware limited liability company
BHC NORTHWEST PSYCHIATRIC HOSPITAL, LLC, a Delaware limited liability company
BHC OF INDIANA GENERAL PARTNERSHIP, a Tennessee general partnership
BHC OF NORTHERN INDIANA, INC., a Tennessee corporation
BHC PACIFIC GATEWAY HOSPITAL, INC., a Tennessee corporation
BHC PACIFIC SHORES HOSPITAL, INC., a California corporation
BHC PACIFIC VIEW RTC, INC., a Tennessee corporation
BHC PHYSICIAN SERVICES OF KENTUCKY, LLC, a Delaware limited liability company
BHC PINNACLE POINTE HOSPITAL, INC., a Tennessee corporation
BHC Properties, Inc., a Tennessee corporation
BHC ROSS HOSPITAL, INC., a California corporation
BHC SAN JUAN CAPESTRANO HOSPITAL, INC., a Tennessee corporation
BHC SIERRA VISTA HOSPITAL, INC., a Tennessee corporation
BHC SPIRIT OF ST. LOUIS HOSPITAL, INC., a Tennessee corporation
BHC STREAMWOOD HOSPITAL, INC., a Tennessee corporation
BHC VALLE VISTA HOSPITAL, INC., a Tennessee corporation
BHC VISTA DEL MAR HOSPITAL, INC., a Tennessee corporation
BHC WINDSOR HOSPITAL, INC., a Ohio corporation
BLOOMINGTON MEADOWS, G.P., a Delaware general partnership
COLUMBUS HOSPITAL, LLC, a Delaware limited liability company
COMMUNITY PSYCHIATRIC CENTERS OF TEXAS, INC., a Texas corporation
CPC/CLINICAS DEL ESTE, INC., a Puerto Rico corporation
INTEGRATED HEALTH CARE SYSTEMS CORP., a Puerto Rico corporation
INDIANA PSYCHIATRIC INSTITUTES, INC., a Delaware corporation
LEBANON HOSPITAL, LLC, a Delaware limited liability company
MESILLA VALLEY GENERAL PARTNERSHIP, a New Mexico general partnership
MESILLA VALLEY HOSPITAL, INC., a New Mexico corporation
MESILLA VALLEY MENTAL HEALTH ASSOCIATES, INC., a New Mexico corporation

By: /s/ Steven T. Davidson
    --------------------------------
Name: Steven T. Davidson
Title: Vice President of each of the foregoing Guarantors

                [SIGNATURE PAGE TO CREDIT AGREEMENT]

PSI VERMILION, LLC, a Louisiana limited liability company
PSI WILLOW CREST, INC., an Oklahoma corporation
PSYCHIATRIC SOLUTIONS OF MONTANA, INC., a Montana corporation
PSYCHIATRIC SOLUTIONS OF UTAH, INC., a Utah corporation
NORTHERN INDIANA HOSPITAL, LLC, a Delaware limited liability company
VALLE VISTA, LLC, a Delaware limited liability company
WILLOW SPRINGS, LLC, a Delaware limited liability company
RED ROCK SOLUTIONS, LLC, a Delaware limited liability company
PALMETTO BEHAVIORAL HEALTH SYSTEM, L.L.C., a South Carolina limited liability
company
PALMETTO LOWCOUNTRY BEHAVIORAL HEALTH, L.L.C., a South Carolina limited
liability company
PALMETTO PEEDEE BEHAVIORAL HEALTH, L.L.C., a South Carolina limited liability
company


By:      /s/ Steven T. Davidson
    ---------------------------------
Name:  Steven T. Davidson
Title: Vice President of each of the foregoing Guarantors

MILLWOOD HOSPITAL, L.P., a Texas limited partnership
NEURO INSTITUTE OF AUSTIN, L.P., a Texas limited partnership
TEXAS CYPRESS CREEK HOSPITAL, L.P., a Texas limited partnership
TEXAS LAUREL RIDGE HOSPITAL, L.P., a Texas limited partnership
TEXAS OAKS PSYCHIATRIC HOSPITAL, L.P., a Texas limited partnership
TEXAS SAN MARCOS TREATMENT CENTER, L.P., a Texas limited partnership
TEXAS WEST OAKS HOSPITAL, L.P., a Texas limited partnership

By: PSI TEXAS HOSPITALS, LLC, its general partner

    By: PSYCHIATRIC SOLUTIONS HOSPITALS, INC., its sole member

        By: /s/ Steven T. Davidson
            ---------------------------------
        Name: Steven T. Davidson
        Title: Vice President

                      [SIGNATURE PAGE TO CREDIT AGREEMENT]


BHC OF INDIANA GENERAL PARTNERSHIP, a Tennessee general partnership

          By:     BHC COLUMBUS HOSPITAL, INC.
                  BHC LEBANON HOSPITAL, INC.
                  BHC OF NORTHERN INDIANA, INC.
                  BHC VALLE VISTA HOSPITAL, INC.,  its partners

                  By:      /s/ Steven T. Davidson
                           ------------------------------------------
                  Name:    Steven T. Davidson
                           ------------------------------------------
                  Title:   Vice President
                           ------------------------------------------





BLOOMINGTON MEADOWS GENERAL PARTNERSHIP, a Delaware general partnership

          By:     BHC OF INDIANA GENERAL PARTNERSHIP, its partner

                  By:      BHC COLUMBUS HOSPITAL, INC.
                           BHC LEBANON HOSPITAL, INC.
                           BHC OF NORTHERN INDIANA, INC.
                           BHC VALLE VISTA HOSPITAL, INC., its partners

                           By:      /s/ Steven T. Davidson
                                    --------------------------
                           Name:    Steven T. Davidson
                                    --------------------------
                           Title:   Vice President
                                    --------------------------

MESILLA VALLEY GENERAL PARTNERSHIP, a New Mexico general partnership

          By:     MESILLA VALLEY HOSPITAL, INC.
                  MESILLA VALLEY MENTAL HEALTH ASSOCIATES, INC., its partners

                          By:       /s/ Steven T. Davidson
                                    --------------------------
                          Name:     Steven T. Davidson
                                    --------------------------
                          Title:    Vice President
                                    --------------------------



H.C. PARTNERSHIP, an Alabama general partnership

By: H.C. CORPORATION
    HSA HILL CREST CORPORATION, its partners

    By: /s/ Steven T. Davidson
        ------------------------------
    Name: Steven T. Davidson
    Title: Vice President




CITICORP NORTH AMERICA, INC.
as Term Loan Facility Administrative Agent and a Lender

By: /s/ Ross A. Mac Intyre
    --------------------------------
Name: Ross A. Mac Intyre
Title: Managing Director

BANK OF AMERICA, N.A.,
as Revolving Credit Facility Administrative Agent,
the Swing Line Lender, the L/C Issuer and a Lender

By: /s/ Elizabeth L. Knox
    --------------------------------
Name: Elizabeth L. Knox
Title: SVP

CITIGROUP GLOBAL MARKETS INC.,
as Arranger, Documentation Agent and Co-
Syndication Agent

By: /s/ Ross A. Mac Intyre
    --------------------------------
Name: Ross A. Mac Intyre
Title: Managing Director

Banc of America Securities LLC, as Arranger and
Co-Syndication Agent

By: /s/ Elizabeth L. Knox
    --------------------------------
Name: Elizabeth L. Knox
Title: SVP

                      [SIGNATURE PAGE TO CREDIT AGREEMENT]

EX-10.2

                                                                    Exhibit 10.2

================================================================================

                                  $150,000,000

                      SENIOR UNSECURED TERM LOAN AGREEMENT

                            DATED AS OF JULY 1, 2005

                                      AMONG

                           PSYCHIATRIC SOLUTIONS, INC.
                                AS THE BORROWER,

               THE SUBSIDIARIES OF THE BORROWER IDENTIFIED HEREIN,
                                 AS GUARANTORS,

                            THE LENDERS PARTY HERETO,

                          CITICORP NORTH AMERICA, INC.,
                            AS ADMINISTRATIVE AGENT,

                          CITIGROUP GLOBAL MARKETS INC.
                  AS SYNDICATION AGENT AND DOCUMENTATION AGENT

                                       AND

                         CITIGROUP GLOBAL MARKETS INC.,
                   AS SOLE LEAD ARRANGER AND SOLE BOOK MANAGER

================================================================================



                                TABLE OF CONTENTS



                                                                                                                PAGE
                                                                                                                ----
                                                                                                             
Article I         DEFINITIONS AND ACCOUNTING TERMS..........................................................      1

         1.01     Defined Terms.............................................................................      1

         1.02     Other Interpretive Provisions.............................................................     27

         1.03     Accounting Terms..........................................................................     28

         1.04     Rounding..................................................................................     28

         1.05     References to Agreements and Laws.........................................................     28

         1.06     Times of Day..............................................................................     28

         1.07     Incorporation of Certain Exchange Indenture Provisions....................................     28

Article II        THE COMMITMENTS AND BORROWINGS............................................................     29

         2.01     The Commitments...........................................................................     29

         2.02     Borrowings, Conversions and Continuations of Loans........................................     29

         2.03     Exchange Securities.......................................................................     30

         2.04     Permanent Financing.......................................................................     32

         2.05     Reduction and Termination of the Commitments..............................................     34

         2.06     Repayment of Loans........................................................................     34

         2.07     Optional Prepayments......................................................................     35

         2.08     Mandatory Prepayments.....................................................................     35

         2.09     Interest..................................................................................     36

         2.10     Conversion/Continuation Option............................................................     37

         2.11     Evidence of Debt..........................................................................     38

         2.12     Fees......................................................................................     39

         2.13     Payments and Computations.................................................................     39

Article III       TAXES, YIELD PROTECTION AND ILLEGALITY....................................................     41

         3.01     Taxes.....................................................................................     41

         3.02     Illegality................................................................................     42

         3.03     Determination of Rates; Inability to Determine Rates......................................     42

         3.04     Increased Cost and Reduced Return; Capital Adequacy.......................................     43

         3.05     Funding Losses............................................................................     43

         3.06     Matters Applicable to all Requests for Compensation.......................................     44

         3.07     Substitution of Lenders...................................................................     44

         3.08     Survival..................................................................................     45


                                       i


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                                   (CONTINUED)



                                                                                                                PAGE
                                                                                                                ----
                                                                                                             
Article IV        GUARANTY..................................................................................     45

         4.01     The Guaranty..............................................................................     45

         4.02     Obligations Unconditional.................................................................     45

         4.03     Reinstatement.............................................................................     46

         4.04     Certain Additional Waivers................................................................     46

         4.05     Remedies..................................................................................     47

         4.06     Rights of Contribution....................................................................     47

         4.07     Guarantee of Payment; Continuing Guarantee................................................     47

Article V         CONDITIONS PRECEDENT......................................................................     47

         5.01     Conditions Precedent to Initial Borrowing.................................................     47

         5.02     Determinations of Initial Borrowing Conditions............................................     52

         5.03     Conditions Precedent to Extended Loans....................................................     52

Article VI        REPRESENTATIONS AND WARRANTIES............................................................     52

         6.01     Existence, Qualification and Power........................................................     52

         6.02     Authorization; No Contravention...........................................................     53

         6.03     Governmental Authorization; Other Consents................................................     53

         6.04     Binding Effect............................................................................     53

         6.05     Financial Statements; No Material Adverse Effect; Solvency................................     53

         6.06     Litigation................................................................................     54

         6.07     No Default; No Burdensome Restrictions....................................................     55

         6.08     Ownership of Property; Liens..............................................................     55

         6.09     Environmental Compliance..................................................................     55

         6.10     Insurance.................................................................................     56

         6.11     Taxes.....................................................................................     56

         6.12     ERISA Compliance..........................................................................     56

         6.13     Subsidiaries..............................................................................     57

         6.14     Margin Regulations; Investment Company Act; Public Utility Holding Company Act............     57

         6.15     Disclosure................................................................................     57

         6.16     Compliance with Laws......................................................................     58

         6.17     Intellectual Property; Licenses; Etc......................................................     59

         6.18     Broker's Fees.............................................................................     59


                                       ii


                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                PAGE
                                                                                                                ----
                                                                                                             
         6.19     Use of Proceeds...........................................................................     59

         6.20     Labor Matters.............................................................................     59

         6.21     Business Locations........................................................................     59

         6.22     Subordination.............................................................................     60

         6.23     Related Documents.........................................................................     60

         6.24     Fraud and Abuse...........................................................................     61

         6.25     Licensing and Accreditation...............................................................     61

         6.26     Reimbursement from Medical Reimbursement Programs.........................................     61

         6.27     Medicare and Medicaid Notices and Filings Related to Health Care Business.................     62

Article VII       AFFIRMATIVE COVENANTS.....................................................................     62

         7.01     Financial Statements......................................................................     62

         7.02     Certificates; Other Information...........................................................     63

         7.03     Notices...................................................................................     64

         7.04     Payment of Obligations....................................................................     65

         7.05     Preservation of Existence, Etc............................................................     65

         7.06     Maintenance of Properties.................................................................     65

         7.07     Maintenance of Insurance..................................................................     66

         7.08     Compliance with Laws......................................................................     66

         7.09     Books and Records.........................................................................     66

         7.10     Access; Inspection Rights.................................................................     66

         7.11     Use of Proceeds...........................................................................     67

         7.12     Additional Subsidiaries and Guarantees....................................................     67

         7.13     ERISA Compliance..........................................................................     68

         7.14     Environmental Compliance..................................................................     68

         7.15     Payment or Performance of Obligations.....................................................     68

Article VIII      NEGATIVE COVENANTS........................................................................     69

         8.01     Liens.....................................................................................     69

         8.02     Investments...............................................................................     70

         8.03     Indebtedness..............................................................................     72

         8.04     Fundamental Changes.......................................................................     73

         8.05     Dispositions..............................................................................     73


                                      iii


                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                PAGE
                                                                                                                ----
                                                                                                             
         8.06     Restricted Payments.......................................................................     74

         8.07     Change in Nature of Business..............................................................     74

         8.08     Transactions with Affiliates and Insiders.................................................     74

         8.09     Burdensome Agreements.....................................................................     74

         8.10     Use of Proceeds...........................................................................     75

         8.11     Intentionally Deleted.....................................................................     75

         8.12     PORTAL-Eligible Securities................................................................     75

         8.13     Prepayment of Other Indebtedness; Modification of Debt Agreements.........................     75

         8.14     Organization Documents; Fiscal Year; Legal Name, State of Formation and Form of Entity....     75

         8.15     Ownership of Subsidiaries.................................................................     76

         8.16     Sale and Leaseback Transactions; Operating Leases.........................................     76

         8.17     Modification of Related Documents.........................................................     76

         8.18     No Speculative Transactions...............................................................     76

         8.19     Compliance with ERISA.....................................................................     77

         8.20     Environmental.............................................................................     77

         8.21     Additional Senior Debt....................................................................     77

Article IX        EVENTS OF DEFAULT AND REMEDIES............................................................     77

         9.01     Events of Default.........................................................................     77

         9.02     Remedies Upon Event of Default............................................................     80

Article X         AGENTS....................................................................................     81

         10.01    Authorization and Action..................................................................     81

         10.02    Administrative Agent's Reliance, Etc......................................................     81

         10.03    Posting of Approved Electronic Communications.............................................     82

         10.04    The Administrative Agent Individually.....................................................     83

         10.05    Lender Credit Decision....................................................................     83

         10.06    Indemnification...........................................................................     83

         10.07    Successor Administrative Agent............................................................     83

         10.08    Guaranty Matters..........................................................................     84

         10.09    Arranger; Administrative Agent............................................................     84

Article XI        MISCELLANEOUS.............................................................................     84

         11.01    Amendments, Etc...........................................................................     84


                                       iv


                                TABLE OF CONTENTS
                                   (CONTINUED)



                                                                                                                PAGE
                                                                                                                ----
                                                                                                             
         11.02    Notices, Etc..............................................................................     86

         11.03    No Waiver; Cumulative Remedies............................................................     88

         11.04    Attorney Costs, Expenses and Taxes........................................................     88

         11.05    Indemnification by the Borrower; Limitation of Liability..................................     89

         11.06    Marshalling; Payments Set Aside...........................................................     91

         11.07    Assignments and Participations............................................................     91

         11.08    Confidentiality...........................................................................     93

         11.09    Set-off...................................................................................     94

         11.10    Interest Rate Limitation..................................................................     94

         11.11    Counterparts..............................................................................     95

         11.12    Integration...............................................................................     95

         11.13    Survival of Representations and Warranties................................................     95

         11.14    Severability..............................................................................     95

         11.15    Tax Forms.................................................................................     96

         11.16    Sharing of Payments, Etc..................................................................     97

         11.17    Governing Law.............................................................................     98

         11.18    Waiver of Right to Trial by Jury..........................................................     98

         11.19    Submission to Jurisdiction; Service of Process............................................     98

         11.20    USA Patriot Act Notice....................................................................     98

         11.21    Section Titles............................................................................     98

         11.22    Entire Agreement..........................................................................     99


                                       v


               
SCHEDULES
     I            Commitments
     1.01         Disclosed Acquisitions
     6.13         Ownership of Borrower; Subsidiaries
     6.17         IP Rights
     6.21(a)      Locations of Real Property
     6.21(b)      Locations of Tangible Personal Property
     6.21(c)      Locations of Chief Executive Office
     6.21(e)      Changes in Legal Name, State of Formation and Structure
     8.01         Existing Liens
     8.02         Existing Investments
     8.03         Existing Indebtedness
     11.02        Lending Offices and Addresses for Notices

EXHIBITS

     A            Form of Notice of Borrowing
     B            Form of Notice of Conversion or Continuation
     C-1          Form of Initial Loan Note
     C-2          Form of Extended Loan Note
     D            Form of Compliance Certificate
     E            Form of Assignment and Assumption
     F            Form of Joinder Agreement
     G            Form of Opinion of Counsel to the Loan Parties
     H            Summary of Terms of Exchange Securities



                                       vi


                      SENIOR UNSECURED TERM LOAN AGREEMENT

      This SENIOR UNSECURED TERM LOAN AGREEMENT is entered into as of July 1,
2005, among PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation (the
"Borrower"), the Guarantors (as defined below), the Lenders (as defined below)
and CITICORP NORTH AMERICA, INC. ("CNAI"), as administrative agent for the
Lenders (in such capacity, the "Administrative Agent") and as syndication agent
and documentation agent for the Lenders.

      WHEREAS, the Borrower has requested that the Lenders make available for
the purposes specified in this Agreement, a senior unsecured term loan facility;
and

      WHEREAS, the Lenders are willing to make available to the Borrower such
senior unsecured term loan facility upon the terms and subject to the conditions
set forth herein;

      NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

1.01     DEFINED TERMS.

      As used in this Agreement, the following terms shall have the meanings set
forth below:

      "Account" has the meaning given such term in the UCC.

      "Acquisition," by any Person, means the acquisition by such Person, in a
single transaction or in a series of related transactions, of all or any
substantial portion of the Property of another Person or at least a majority of
the Voting Stock of another Person, in each case whether or not involving a
merger or consolidation with such other Person and whether for cash, property,
services, assumption of Indebtedness, securities or otherwise.

      "Administrative Agent" has the meaning specified in the introductory
paragraph to this Agreement.

      "Administrative Agent's Office" means the Administrative Agent's address
set forth in Schedule 11.02 (Lending Offices and Addresses for Notices) or such
other address as the Administrative Agent may from time to time notify the
Borrower and the Lenders.

      "Affected Lender" has the meaning specified in Section 3.07(a)
(Substitution of Lenders).

      "Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "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 power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 5% or more of
the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.



      "Agent-Related Persons" means the Administrative Agent, together with its
Affiliates (including, in the case of CNAI, CGMI and Citibank), and the
officers, directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.

      "Agreement" means this Senior Unsecured Loan Agreement, as it may be
further amended, restated, extended, supplemented or otherwise modified from
time to time.

      "AHS" means Ardent Health Services, Inc., a Delaware corporation which,
following the Reverse Spin-Off, will own only the Capital Stock of BHC and,
indirectly, BHC's Subsidiaries which, together with BHC, constitute, immediately
prior to the consummation of the Ardent Acquisition, the behavioral healthcare
business of Ardent LLC.

      "AHS Indenture" means the Indenture dated as of August 19, 2003, as
amended through the Funding Date (including the amendments contemplated by the
AHS Tender Offer), among AHS, certain of its Subsidiaries, as guarantors, and
AHS Trustee, governing the AHS Notes.

      "AHS Notes" means AHS's 10% senior subordinated notes due 2013.

      "AHS Tender Offer" means the (i) cash tender offer to purchase all of the
AHS Notes on or prior to the Funding Date and (ii) the solicitation of the
consent of the holders of the AHS Notes regarding amendments to the AHS
Indenture, each in form and substance satisfactory to the Administrative Agent.

      "AHS Trustee" means U.S. Bank Trust National Association, in its capacity
as trustee for the holders of the AHS Notes.

      "AHS Untendered Notes" means any AHS Notes outstanding on the Funding Date
after the consummation of the AHS Tender Offer.

      "Applicable Margin" means, at any date of determination, (a) in the case
of Initial Loans, a rate equal to the sum of (i)(A) in respect of Eurodollar
Rate Loans, 6.00% per annum and (B) in respect of Base Rate Loans, 5.00% per
annum and (ii) the product of (A) 0.50% per annum and (B) the number of
successive full three-month periods commencing on the Funding Date which have
ended on or before such date of determination and (b) in the case of Extended
Loans, (i) the Extended Loan Initial Rate plus (ii) the product of (A) 0.50% per
annum and (B) the number of successive full three-month periods commencing on
the Initial Maturity Date which have ended on or before such date of
determination.

      "Approved Electronic Communications" means each notice, demand,
communication, information, document and other material that any Loan Party is
obligated to, or otherwise chooses to, provide to the Administrative Agent
pursuant to any Loan Document or the transactions contemplated therein,
including (a) any Joinder Agreement and any other written Contractual Obligation
delivered or required to be delivered in respect of any Loan Document or the
transactions contemplated therein and (b) any financial statement, financial and
other report, notice, request, certificate and other information material;
provided, however, that, "Approved Electronic Communication" shall exclude (x)
any Notice of Borrowing, Notice of Conversion or Continuation and any other
notice, demand, communication, information, document and other material relating
to a request for a new, or a conversion of an existing, Borrowing, (ii) any
notice pursuant to Section 2.07 (Optional Prepayments) and Section 2.08
(Mandatory Prepayments) and any other notice relating to the payment of any
principal or other amount due under any Loan Document prior to the scheduled
date therefor, (iii) all notices of any Default or Event of Default and (iv) any
notice, demand, communication, information, document and other material required
to be delivered to satisfy any of the conditions set forth in Article V
(Conditions Precedent) or any other condition to any Borrowing or other
extension of credit hereunder or any condition precedent to the

                                       2


effectiveness of this Agreement.

      "Approved Electronic Platform" has the meaning specified in Section 10.03
(Posting of Approved Electronic Communications).

      "Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

      "Ardent Acquired Business" means AHS, BHC and BHC's Subsidiaries which,
together with BHC, constitute, immediately prior to the consummation of the
Ardent Acquisition, the behavioral healthcare business of Ardent LLC.

      "Ardent Acquisition" means the purchase by the Borrower of all of the
outstanding Capital Stock of AHS pursuant to the terms of the Ardent Acquisition
Agreement.

      "Ardent Acquisition Agreement" means that certain Stock Purchase
Agreement, dated as of March 10, 2005, by and among Ardent LLC, as seller, AHS
and the Borrower, as purchaser, as the same may be amended, supplemented or
otherwise modified in accordance with the terms of this Agreement.

      "Ardent LLC" means Ardent Health Services LLC, a Delaware limited
liability company.

      "Arranger" means CGMI, in its capacity as sole lead arranger and sole
book-running manager with respect to the Senior Unsecured Facility.

      "Assignment and Assumption" means an Assignment and Assumption
substantially in the form of Exhibit E (Form of Assignment and Assumption).

      "Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel.

      "Attributable Indebtedness" means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
(b) in respect of any Synthetic Lease, the capitalized amount of the remaining
lease payments under the relevant lease that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a capital lease, (c) in respect of any Securitization
Transaction of any Person, the outstanding principal amount of such financing,
after taking into account reserve accounts and making appropriate adjustments,
determined by the Administrative Agent in its reasonable judgment, and (d) in
the case of any Sale and Leaseback Transaction, the present value (discounted in
accordance with GAAP at the debt rate implied in the applicable lease) of the
obligations of the lessee for rental payments during the term of such lease).

      "Audited Financial Statements" means (a) in the case of the Borrower and
its Subsidiaries (immediately prior to giving effect to the Ardent Acquisition),
the audited consolidated balance sheet of the Borrower and such Subsidiaries for
the fiscal year ended December 31, 2004 and (b) in the case of AHS and its
Subsidiaries (immediately prior to giving effect to the Ardent Acquisition, the
audited consolidated balance sheet of AHS and such Subsidiaries (other than any
of its Subsidiaries that were transferred to Ardent LLC in connection with the
Reverse Spin-Off), for the fiscal year ended December 31, 2004, in each case,
together with the related consolidated statements of income or operations,
shareholders' equity and cash flows of the Borrower and its Subsidiaries for
such fiscal year, including the notes thereto.

                                       3


      "Base Rate" means, for any period, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate per annum shall be equal at
all times to the highest of the following:

            (a) the rate of interest announced publicly by Citibank in New York,
      New York, from time to time, as Citibank's base rate;

            (b) the sum (adjusted to the nearest 0.25% or, if there is no
      nearest 0.25%, to the next higher 0.25%) of (i) 0.50% per annum, (ii) the
      rate per annum obtained by dividing (A) the latest three-week moving
      average of secondary market morning offering rates in the United States
      for three-month certificates of deposit of major United States money
      market banks, such three-week moving average being determined weekly on
      each Monday (or, if any such day is not a Business Day, on the next
      succeeding Business Day) for the three-week period ending on the previous
      Friday by Citibank on the basis of such rates reported by certificate of
      deposit dealers to and published by the Federal Reserve Bank of New York
      or, if such publication shall be suspended or terminated, on the basis of
      quotations for such rates received by Citibank from three New York
      certificate of deposit dealers of recognized standing selected by
      Citibank, by (B) a percentage equal to 100% minus the average of the daily
      percentages specified during such three-week period by the Federal Reserve
      Board for determining the maximum reserve requirement (including any
      emergency, supplemental or other marginal reserve requirement) for
      Citibank in respect of liabilities consisting of or including (among other
      liabilities) three-month U.S. dollar nonpersonal time deposits in the
      United States and (iii) the average during such three-week period of the
      maximum annual assessment rates estimated by Citibank for determining the
      then current annual assessment payable by Citibank to the Federal Deposit
      Insurance Corporation (or any successor) for insuring Dollar deposits in
      the United States; and

            (c) 0.50% per annum plus the Federal Funds Rate.

      "Base Rate Loan" means a Loan that bears interest based on the Base Rate.

      "BHC" means Behavioral Healthcare Corporation, a Delaware corporation.

      "Borrower" has the meaning specified in the introductory paragraph hereto.

      "Borrowing" means a borrowing consisting of Loans made on the same day by
the Lenders ratably according to their respective Loan Commitments.

      "Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, the State of New York and, if such day relates to any Eurodollar Rate
Loan, means any such day on which dealings in Dollar deposits are conducted by
and between banks in the London interbank eurodollar market.

      "Businesses" means, at any time, a collective reference to the businesses
operated by the Borrower and its Subsidiaries at such time.

      "Capital Lease" means, with respect to any Person, any lease of, or other
arrangement conveying the right to use, property by such Person as lessee that
would be accounted for as a capital lease on a balance sheet of such Person
prepared in conformity with GAAP.

      "Capital Stock" means (i) in the case of a corporation, capital stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether

                                       4


general or limited), (iv) in the case of a limited liability company, membership
interests and (v) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

      "Cash Equivalents" means, as at any date,

            (a) securities issued or directly and fully guaranteed or insured by
      the United States or any agency or instrumentality thereof (provided that
      the full faith and credit of the United States is pledged in support
      thereof) having maturities of not more than twelve months from the date of
      acquisition;

            (b) Dollar denominated time deposits and certificates of deposit of
      (i) any Lender, (ii) any domestic commercial bank of recognized standing
      having capital and surplus in excess of $500,000,000 or (iii) any bank
      whose short-term commercial paper rating from S&P is at least A-1 or the
      equivalent thereof or from Moody's is at least P-1 or the equivalent
      thereof (any such bank being an "Approved Institution"), in each case with
      maturities of not more than 270 days from the date of acquisition;

            (c) commercial paper and variable or fixed rate notes issued by any
      Approved Institution (or by the parent company thereof) or any variable
      rate notes issued by, or guaranteed by, any domestic corporation rated A-1
      (or the equivalent thereof) or better by S&P or P-1 (or the equivalent
      thereof) or better by Moody's and maturing within six months of the date
      of acquisition;

            (d) repurchase agreements entered into by any Person with a bank or
      trust company (including any of the Lenders) or recognized securities
      dealer having capital and surplus in excess of $500,000,000 for direct
      obligations issued by or fully guaranteed by the United States in which
      such Person shall have a perfected first priority security interest
      (subject to no other Liens) and having, on the date of purchase thereof, a
      fair market value of at least 100% of the amount of the repurchase
      obligations;

            (e) debt obligations issued by any domestic corporation or any
      domestic government instrumentality, in each case rated A-1 (or the
      equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
      better by Moody's and maturing within six months of the date of
      acquisition; and

            (f) Investments, classified in accordance with GAAP as current
      assets, in money market investment programs registered under the
      Investment Company Act of 1940 which are administered by reputable
      financial institutions having capital of at least $500,000,000 and the
      portfolios of which are limited to Investments of the character described
      in the foregoing clauses (a) through (e).

      "CGMI" has the meaning specified in the introductory paragraph to this
Agreement.

      "Change of Control" means an event or series of events by which:

            (a) any "person" or "group" (as such terms are used in Sections
      13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any
      employee benefit plan of such person or its subsidiaries, and any person
      or entity acting in its capacity as trustee, agent or other fiduciary or
      administrator of any such plan) becomes the "beneficial owner" (as defined
      in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except
      that a person or group shall be deemed

                                       5


      to have "beneficial ownership" of all Capital Stock that such person or
      group has the right to acquire (such right, an "option right"), whether
      such right is exercisable immediately or only after the passage of time),
      directly or indirectly, of twenty-five percent (25%) of the Capital Stock
      of the Borrower entitled to vote for members of the board of directors or
      equivalent governing body of the Borrower on a fully diluted basis (and
      taking into account all such securities that such person or group has the
      right to acquire pursuant to any option right); or

            (b) during any period of 12 consecutive months, a majority of the
      members of the board of directors or other equivalent governing body of
      the Borrower cease to be composed of individuals (i) who were members of
      that board or equivalent governing body on the first day of such period,
      (ii) whose election or nomination to that board or equivalent governing
      body was approved by individuals referred to in clause (i) above
      constituting at the time of such election or nomination at least a
      majority of that board or equivalent governing body or (iii) whose
      election or nomination to that board or other equivalent governing body
      was approved by individuals referred to in clauses (i) and (ii) above
      constituting at the time of such election or nomination at least a
      majority of that board or equivalent governing body (excluding, in the
      case of both clause (ii) and clause (iii), any individual whose initial
      nomination for, or assumption of office as, a member of that board or
      equivalent governing body occurs as a result of an actual or threatened
      solicitation of proxies or consents for the election or removal of one or
      more directors by any person or group other than a solicitation for the
      election of one or more directors by or on behalf of the board of
      directors); or

            (c) a "Change of Control" (or any comparable term) occurs under, and
      as defined in, any of the Existing Senior Subordinated Notes Documents or
      the Senior Secured Credit Agreement.

      "Citibank" means Citibank, N.A.

      "Citigroup" means CNAI and/or any of its affiliates as CNAI shall
determine to be appropriate to provide the services contemplated herein,
including CGMI and Citibank.

      "CMS" means the Centers for Medicare and Medicaid Services of HHS and any
successor thereof and any predecessor thereof, including the United States
Health Care Financing Administration.

      "CNAI" has the meaning specified in the introductory paragraph to this
Agreement.

      "Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans to the Borrower in the aggregate principal amount
outstanding not to exceed the amount set forth opposite such Lender's name on
Schedule I (Commitments) under the caption "Commitment" as amended to reflect
each Assignment and Assumption executed by such Lender and as such amount may be
reduced pursuant to this Agreement.

      "Compliance Certificate" means a certificate substantially in the form of
Exhibit D (Form of Compliance Certificate).

      "Confidential Borrower Information" means all information received from
the Loan Parties and their agents, relating to the Loan Parties or their
business, other than any such information that is, or subsequently becomes,
available to any Lender or the Administrative Agent on a non-confidential basis
prior to disclosure by the Loan Parties.

      "Consolidated Funded Indebtedness" means Funded Indebtedness of the
Borrower and its

                                       6


Subsidiaries on a consolidated basis determined in accordance with GAAP.

      "Contract Provider" means any Person or any employee, agent or
subcontractor of such Person who provides professional health care services
under or pursuant to any contract with the Borrower or any Subsidiary.

      "Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.

      "Control" has the meaning specified in the definition of "Affiliate."

      "Conversion Date" means the date on which the Initial Loans have been
converted to Extended Loans pursuant to Section 2.06(b) (Extended Loans).

      "Customary Permitted Liens" means Permitted Liens of the type described in
clauses (c), (d), (e), (f), (g) and (k) of Section 8.01 (Liens).

      "Debt Issuance" means the incurrence of Indebtedness of the type specified
in clause (a) of the definition of "Funded Indebtedness" by the Borrower or any
of its Subsidiaries, other than the Senior Secured Credit Facility and other
Indebtedness permitted under Section 8.03 (Indebtedness).

      "Debtor Relief Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.

      "Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.

      "Default Rate" means an interest rate equal to:

      (a) in the case of Base Rate Loans, the Base Rate plus the Applicable
Margin for such Loans plus 2% per annum;

      (b) in the case of Eurodollar Rate Loans, (x) prior to the expiration of
the then applicable Interest Period for such Loans, the Eurodollar Rate plus the
Applicable Margin for such Loans plus 2% per annum and (y) thereafter, the Base
Rate plus the Applicable Margin for Base Rate Loans plus 2% per annum; and

      (c) for all other Obligations, the Base Rate plus the Applicable Margin
for Base Rate Loans plus 2% per annum.

      "Defaulting Lender" has the meaning specified in Section 2.02 (Borrowings,
Conversions and Continuations of Loans).

      "Demand Failure Date" has the meaning specified in Section 2.09
(Interest).

      "Disposition" or "Dispose" means the sale, transfer, license, lease or
other disposition (including any Sale and Leaseback Transaction) of any Property
by the Borrower or any Subsidiary (including the Capital Stock of any
Subsidiary), including any sale, assignment, transfer or other disposal, with or

                                       7


without recourse, of any notes or accounts receivable or any rights and claims
associated therewith, but excluding (a) the sale, lease, license, transfer or
other disposition of inventory in the ordinary course of business of the
Borrower and its Subsidiaries, (b) the sale, lease, license, transfer or other
disposition of machinery and equipment no longer used or useful in the conduct
of business of the Borrower and its Subsidiaries, (c) any sale, lease, license,
transfer or other disposition of Property by the Borrower or any Subsidiary to
any Loan Party, (d) any Involuntary Disposition by the Borrower or any
Subsidiary and (e) any sale, lease, license, transfer or other disposition of
Property by any Foreign Subsidiary to another Foreign Subsidiary.

      "Disposition/Involuntary Disposition Deferred Amount" means, with respect
to any Reinvestment Event arising from a Disposition or Involuntary Disposition,
the aggregate Net Cash Proceeds received by any Loan Party in connection
therewith that are not initially applied to prepay the Loans pursuant to Section
2.08 (Mandatory Prepayments) as a result of the delivery of a Reinvestment
Notice.

      "Dollar" and "$" mean lawful money of the United States.

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

      "Earn-Out Obligations" means, with respect to any Acquisition, all
deferred purchase price obligations (including earn-out payment obligations and
other contingent payment obligations) incurred by the Borrower or any of its
Subsidiaries pursuant to the documentation for such Acquisition (other than any
portion of such obligations payable in Capital Stock of the Borrower). For
purposes of Section 8.03 (Indebtedness), the amount of any "Earn-Out Obligation"
shall be the liability in respect thereof as recorded on the balance sheet of
the Borrower and its Subsidiaries in accordance with GAAP.

      "Eligible Assignee" means (a) a Lender or any Affiliate or Approved Fund
of such Lender, (b) a bank, savings and loan association, savings bank, finance
company, insurance company or any other financial institution or fund, in each
case reasonably acceptable to the Administrative Agent and regularly engaged in
making, purchasing or investing in loans and having a net worth, determined in
accordance with GAAP, in excess of $250,000,000 or, to the extent net worth is
less than such amount, a bank, savings and loan association, savings bank,
finance company, insurance company, other financial institution or fund,
reasonably acceptable to the Administrative Agent and, unless an Event of
Default has occurred and is continuing, the Borrower (such approval not to be
unreasonably withheld or delayed) or (c) any other Person (other than a natural
person) approved by (i) the Administrative Agent and (ii) unless an Event of
Default has occurred and is continuing, the Borrower (such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the foregoing,
"Eligible Assignee" shall not include the Borrower or any of the Borrower's
Affiliates or Subsidiaries.

      "Engagement Letter" means that certain Amended and Restated Side Letter,
dated as of June 30, 2005, addressed to the Borrower from CGMI.

      "Environmental Laws" means any and all federal, state, local, foreign and
other applicable statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses, agreements
or governmental restrictions or other legal requirements (a) related to Releases
or threatened Releases of any Hazardous Materials into the environment
(including soil, surface water, groundwater or air), (b) governing the use,
treatment, storage, disposal, transport or handling of Hazardous Materials or
(c) related to the protection of the environment, natural resources or human
health or safety (as it relates to environmental protection). Such
"Environmental Laws" include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C. Section
1801 et

                                       8


seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
U.S.C. Section 136 et seq.); the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Section 6901 et seq.); the Toxic Substance Control Act, as
amended (15 U.S.C. Section 2601 et seq.); the Clean Air Act, as amended (42
U.S.C. Section 7401 et seq.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. Section 1251 et seq.); the Occupational Safety and Health
Act, as amended (29 U.S.C. Section 651 et seq.); the Safe Drinking Water Act, as
amended (42 U.S.C. Section 300f et seq.); and each of their state and local
counterparts or equivalents and any transfer of ownership notification or
approval statute, including the Industrial Site Recovery Act (N.J. Stat. Ann.
Section 13:1K-6 et seq.).

      "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the Release or threatened Release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

      "Equity Issuance" means any issuance by the Borrower or any Subsidiary to
any Person of shares of its Capital Stock, other than (a) any issuance of shares
of its Capital Stock pursuant to the exercise of options or warrants, (b) any
issuance of shares of its Capital Stock pursuant to the conversion of any debt
securities to equity or the conversion of any class equity securities to any
other class of equity securities and (c) the Funding Date Equity Issuance.

      "Equity Issuance Deferred Amount" means, with respect to any Reinvestment
Event arising from an Equity Issuance to finance a proposed Permitted
Acquisition, an amount equal to 50% of the aggregate Net Cash Proceeds received
by any Loan Party in connection therewith that are not initially applied to
prepay the Loans pursuant to Section 2.08(a) (Mandatory Prepayments) as a result
of the delivery of a Reinvestment Notice.

      "ERISA" means the Employee Retirement Income Security Act of 1974.

      "ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o)
of the Internal Revenue Code for purposes of provisions relating to Section 412
of the Internal Revenue Code).

      "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.

      "Eurodollar Base Rate" means, with respect to any Interest Period for any
Eurodollar Rate Loan, the rate determined by the Administrative Agent to be the
offered rate for deposits in Dollars for the

                                       9


applicable Interest Period appearing on the Dow Jones Markets Telerate Page 3750
as of 11:00 a.m., London time, on the second full Business Day next preceding
the first day of each Interest Period. In the event that such rate does not
appear on the Dow Jones Markets Telerate Page 3750 (or otherwise on the Dow
Jones Markets screen), the Eurodollar Base Rate for the purposes of this
definition shall be determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may be selected by the
Administrative Agent or, in the absence of such availability, the Eurodollar
Base Rate shall be the rate of interest determined by the Administrative Agent
to be the rate per annum at which deposits in Dollars are offered by the
principal office of Citibank in London to major banks in the London interbank
market at 11:00 a.m. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to the Eurodollar Rate
Loan of Citibank for a period equal to such Interest Period.

      "Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent to
be equal to the quotient obtained by dividing (a) the Eurodollar Base Rate for
such Eurodollar Rate Loan for such Interest Period by (b) one minus the
Eurodollar Reserve Percentage for such Eurodollar Rate Loan for such Interest
Period.

      "Eurodollar Rate Loan" means a Loan that bears interest at a rate based on
the Eurodollar Rate.

      "Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to five
decimal places) in effect on such day, whether or not applicable to any Lender,
under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.

      "Event of Default" has the meaning specified in Section 9.01 (Events of
Default).

      "Exchange Indenture" means an indenture, in form and substance
satisfactory to the Administrative Agent, governing the Exchange Securities if
and when executed and delivered by the Borrower and the Trustee thereunder, as
amended, waived, supplemented or otherwise modified from time to time.

      "Exchange Notice" has the meaning specified in Section 2.03(a)(ii).

      "Exchange Securities" has the meaning specified in Section 2.03(a)(i).

      "Exchange Securities Documents" means the Exchange Securities (and
registered securities issued in exchange therefore pursuant to the terms of the
Registration Rights Agreement), the Exchange Indenture, the Registration Rights
Agreement and each certificate, agreement or document executed by a Loan Party
and delivered to the Administrative Agent or any holder or prospective holder of
Exchange Notes in connection with or pursuant to any of the foregoing.

      "Excluded Subsidiaries" means, collectively, (i) PSI Surety, (ii) each HUD
Financing Subsidiary and (iii) each Immaterial Subsidiary.

      "Exclusion Event" means any event or events resulting in the exclusion of
the Borrower or any Subsidiary or any of the Facilities from participation in
any Medical Reimbursement Program.

      "Existing Administrative Agent" means Bank of America, in its capacity as
Administrative Agent

                                       10


under the Existing Credit Agreement.

      "Existing Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of December 21, 2004, among the Borrower, the Subsidiaries
of the Borrower party thereto as guarantors, the lenders party thereto and the
Existing Administrative Agent.

      "Existing Senior Subordinated Notes" means the Borrower's existing 10 5/8%
Senior Subordinated Notes due 2013.

      "Existing Senior Subordinated Notes Documents" means (a) the Existing
Senior Subordinated Notes Indenture, (b) the Existing Senior Subordinated Notes,
(c) any guaranty agreement given by any Subsidiary in respect of the Existing
Senior Subordinated Notes and (d) all other documents, agreements and
instruments relating to the Existing Senior Subordinated Notes.

      "Existing Senior Subordinated Notes Indenture" means the Indenture dated
as of June 30, 2003 between the Borrower, the Subsidiaries party thereto as
guarantors and Wachovia Bank, National Association, as trustee, governing the
terms of the Existing Senior Subordinated Notes.

      "Extended Loan Initial Rate" shall be determined on the Initial Maturity
Date and shall equal the greatest of (a) the rate per annum applicable to the
Initial Loans on the day immediately preceding the Initial Maturity Date plus
0.50% per annum, (b) the Treasury Rate on the Initial Maturity Date plus 6.00%
per annum and (c) the Citigroup Global Markets Single B High Yield Index Rate on
the Initial Maturity Date plus 3.00% per annum.

      "Extended Loan Note" means a promissory note of the Borrower payable to
the order of any Lender in an amount equal to the principal amount of the
Extended Loan owing to such Lender.

      "Extended Loans" has the meaning specified in Section 2.06 (Extended
Loans).

      "Facilities" means, at any time, a collective reference to the facilities
and Real Properties owned, leased, managed or operated by the Borrower or any
Subsidiary.

      "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

      "Fee Letter" means the amended and restated letter agreement dated as of
June 30, 2005 between the Borrower and the Arranger, for the benefit of the
Arranger and the Administrative Agent.

      "Final Maturity Date" means the tenth anniversary of the Funding Date.

      "Fixed Assets" means, as of any date of determination, plant, property and
equipment of the Borrower and its Subsidiaries on a consolidated basis on such
day as determined in accordance with GAAP.

      "Fixed Rate Exchange Securities" means Exchange Securities that bear
interest at a fixed rate per annum pursuant to the Exchange Indenture.

                                       11


      "Floating Rate Exchange Securities" means Exchange Securities other than
Fixed Rate Exchange Securities.

      "Foreign Lender" has the meaning specified in Section 11.15(a)(i) (Tax
Forms).

      "Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.

      "FRB" means the Board of Governors of the Federal Reserve System of the
United States.

      "Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

      "Funded Indebtedness" means, as to any Person at a particular time,
without duplication, all of the following, whether or not included as
indebtedness or liabilities in accordance with GAAP:

            (a) all obligations for borrowed money, whether current or long-term
      (including the Obligations) and all obligations of such Person evidenced
      by bonds, debentures, notes, loan agreements or other similar instruments;

            (b) all purchase money Indebtedness;

            (c) the principal portion of all obligations under conditional sale
      or other title retention agreements relating to Property purchased by such
      Person (other than customary reservations or retentions of title under
      agreements with suppliers entered into in the ordinary course of
      business);

            (d) the maximum amount available to be drawn under letters of credit
      (including standby and commercial), bankers' acceptances, bank guaranties,
      surety bonds and similar instruments;

            (e) all obligations in respect of the deferred purchase price of
      Property or services (other than trade accounts payable in the ordinary
      course of business);

            (f) Attributable Indebtedness in respect of Capital Leases,
      Synthetic Leases, Sale and Leaseback Transactions and Securitization
      Transactions;

            (g) all preferred stock or other equity interests providing for
      mandatory redemptions, sinking fund or like payments prior to the Final
      Maturity Date ("Redeemable Stock"); provided that Redeemable Stock shall
      not include any preferred or other equity interest subject to mandatory
      redemption if (i) such mandatory redemption may be satisfied by delivering
      common stock or some other equity interest not subject to mandatory
      redemption or (ii) such mandatory redemption is triggered solely by reason
      of a "change of control" and is not required to be paid until after the
      Obligations are paid in full;

            (h) all Funded Indebtedness of others to the extent secured by (or
      for which the holder of such Funded Indebtedness has an existing right,
      contingent or otherwise, to be secured by) any Lien on, or payable out of
      the proceeds of production from, Property owned or acquired by such
      Person, whether or not the obligations secured thereby have been assumed;

            (i) all Guarantees with respect to Funded Indebtedness of the types
      specified in

                                       12


      clauses (a) through (h) above of another Person; and

            (j) all Funded Indebtedness of the types referred to in clauses (a)
      through (i) above of any partnership or joint venture (other than a joint
      venture that is itself a corporation or limited liability company) in
      which such Person is a general partner or joint venturer, unless such
      Funded Indebtedness is expressly made non-recourse to such Person.

      "Funding Date" means the date of the funding of the Initial Loans.

      "Funding Date Equity Issuance" means the issuance by the Borrower to
Ardent LLC a number of shares of the Borrower's common stock in an amount
sufficient to equal an aggregate sale price of $60,000,000, such sale price to
be determined based upon the average of the volume-weighted average sales price
of the Company's common stock over a 20 day trading day period ending two
trading days prior to the Funding Date (the "Company Stock Price"); provided,
that (i) in no event shall the maximum Company Stock Price exceed $45.86 per
share and (ii) in no event shall the minimum Company Stock Price be less than
$33.90 per share.

      "GAAP" means generally accepted accounting principles in the United States
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, consistently applied
and as in effect from time to time.

      "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

      "Governmental Reimbursement Program Cost" means, with respect to any
Person, the sum of:

            (a) all amounts (including punitive and other similar amounts)
      agreed to be paid or payable (i) in settlement of claims or (ii) as a
      result of a final, non-appealable judgment, award or similar order, in
      each case, relating to participation in Medical Reimbursement Programs;

            (b) all final, non-appealable fines, penalties, forfeitures or other
      amounts rendered pursuant to criminal indictments or other criminal
      proceedings relating to participation in Medical Reimbursement Programs;
      and

            (c) the amount of final, non-appealable recovery, damages, awards,
      penalties, forfeitures or similar amounts rendered in any litigation,
      suit, arbitration, investigation, review or other legal or administrative
      proceeding of any kind relating to participation in Medical Reimbursement
      Programs.

      "Guarantee" means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such

                                       13


Indebtedness or other obligation, or (iv) entered into for the purpose of
assuring in any other manner the obligee in respect of such Indebtedness or
other obligation of the payment or performance thereof or to protect such
obligee against loss in respect thereof (in whole or in part), or (b) any Lien
on any assets of such Person securing any Indebtedness or other obligation of
any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person. The amount of any Guarantee shall be deemed to be an
amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the guaranteeing Person in good faith. The term
"Guarantee" as a verb has a corresponding meaning.

      "Guarantors" means each Subsidiary of the Borrower identified as a
"Guarantor" on the signature pages hereto and each other Person that delivers a
Joinder Agreement or otherwise becomes a party to this Agreement as a Guarantor
pursuant to Section 7.12 (Additional Subsidiaries and Guarantees), together with
their successors and permitted assigns.

      "Guaranty" means the Guaranty made by the Guarantors in favor of the
Administrative Agent and the Lenders pursuant to Article IV (Guaranty).

      "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic materials, substances or wastes, all
contaminants or pollutants and all other substances or wastes of any nature
regulated pursuant to any Environmental Law, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes.

      "HHS" means the United States Department of Health and Human Services and
any successor thereof.

      "HIPAA" means the Health Insurance Portability and Accountability Act of
1996, Pub. L. 104-191, Aug. 21, 1996, 110 Stat. 1936.

      "HUD Financing" means Indebtedness of HUD Financing Subsidiaries that is
insured by the Federal Housing Administration, an organizational unit of the
United States Department of Housing and Urban Development.

      "HUD Financing Subsidiaries" means, collectively, (i) each of Holly Hill
Real Estate, LLC, a North Carolina limited liability company, PSI Cedar Springs
Hospital Real Estate, Inc., a Colorado corporation, Psychiatric Solutions of
Oklahoma Real Estate, Inc., an Oklahoma corporation, Riveredge Real Estate,
Inc., an Illinois corporation, Cypress Creek Real Estate, L.P., a Texas limited
partnership, Neuro Rehab Real Estate, L.P., a Texas limited partnership, Texas
Laurel Ridge Hospital Real Estate, L.P., a Texas limited partnership, Texas Oaks
Psychiatric Hospital Real Estate, L.P., a Texas limited partnership, Texas San
Marcos Treatment Center Real Estate, L.P., a Texas limited partnership, and West
Oaks Real Estate, L.P., a Texas limited partnership and (ii) each other
Subsidiary of the Borrower that enters into a HUD Financing that is expressly
permitted to be incurred pursuant to Section 8.03 (Indebtedness); provided,
however, that in each case, each such Subsidiary shall be deemed to be a HUD
Subsidiary only for so long as the documents governing the applicable HUD
Financing prohibit such Subsidiary from guaranteeing Indebtedness of the
Borrower:

      "Immaterial Subsidiary" means any Subsidiary that, as of any date of
determination, is without material operations and has total assets with an
aggregate fair market value of less than $10,000.

      "Indebtedness" means, as to any Person at a particular time, without
duplication, all of the

                                       14


following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

            (a) all Funded Indebtedness;

            (b) the Swap Termination Value of any Swap Contract;

            (c) all Guarantees with respect to outstanding Indebtedness of the
      types specified in clauses (a) and (b) above of any other Person; and

            (d) all Indebtedness of the types referred to in clauses (a) through
      (c) above of any partnership or joint venture (other than a joint venture
      that is itself a corporation or limited liability company) in which such
      Person is a general partner or joint venturer unless such Indebtedness is
      expressly made non-recourse to such Person.

      "Indemnified Matters" has the meaning set forth in Section 11.05
(Indemnification by the Borrower; Limitation of Liability).

      "Indemnitee" has the meaning set forth in Section 11.05 (Indemnification
by the Borrower; Limitation of Liability).

      "Initial Loan Note" means a promissory note of the Borrower payable to the
order of any Lender in an amount equal to the principal amount of the Initial
Loan owing to such Lender.

      "Initial Loans" has the meaning specified in Section 2.01 (The
Commitments).

      "Initial Maturity Date" means the first anniversary of the Funding Date or
such earlier date on which the Obligations otherwise become due and payable
pursuant to Section 9.02 (Remedies Upon Event of Default).

      "Interest Period" means (a) in the case of any Initial Loan that is a
Eurodollar Rate Loan, (i) initially, the period commencing on the date such
Eurodollar Rate Loan is made or on the date of conversion of a Base Rate Loan to
such Eurodollar Rate Loan and ending (except as otherwise provided in Section
2.10(b) (Conversion/Continuation Option)) three months thereafter and (ii)
thereafter, if the Borrower has selected in its Notice of Conversion or
Continuation to continue such Loan as a Eurodollar Rate Loan, in whole or in
part, a period commencing on the last day of the immediately preceding Interest
Period therefor and ending three months thereafter and (b) in the case of any
Extended Loan that is a Eurodollar Rate Loan, (i) initially, the period
commencing on the Conversion Date and ending three months thereafter and (ii)
thereafter, additional three-month periods commencing on the last day of the
immediately preceding Interest Period; provided that:

            (i) any Interest Period that would otherwise end on a day that is
      not a Business Day shall be extended to the next succeeding Business Day
      unless such Business Day falls in another calendar month, in which case
      such Interest Period shall end on the next preceding Business Day;

            (ii) any Interest Period that begins on the last Business Day of a
      calendar month (or on a day for which there is no numerically
      corresponding day in the calendar month at the end of such Interest
      Period) shall end on the last Business Day of the calendar month at the
      end of such Interest Period;

            (iii) no Interest Period shall extend beyond the applicable Maturity
      Date; and

                                       15


            (iv) for any Extended Loan that has been converted to a Base Rate
      Loan pursuant to Section 2.11 (Conversion/Continuation Option) and is
      thereafter converted to a Eurodollar Rate Loan, the Administrative Agent
      shall determine in its reasonable discretion the date upon which the
      Interest Period for such Extended Loans shall re-commence.

      "Internal Revenue Code" means the Internal Revenue Code of 1986.

      "Investment" means, as to any Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or other
acquisition of Capital Stock of another Person, (b) a loan, advance or capital
contribution to, Guarantee or assumption of debt of, or purchase or other
acquisition of any other debt or equity participation or interest in, another
Person, including any partnership or joint venture interest in such other Person
or (c) an Acquisition. For purposes of determining covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.

      "Involuntary Disposition" means any loss of, damage to or destruction of,
or any condemnation or other taking for public use of, any Property of the
Borrower or any Subsidiary.

      "IP Rights" has the meaning set forth in Section 6.17 (Intellectual
Property; Licenses; Etc.).

      "IRS" means the United States Internal Revenue Service or any Governmental
Authority succeeding to any of its principal functions.

      "Joinder Agreement" means a joinder agreement substantially in the form of
Exhibit F (Form of Joinder Agreement) executed and delivered by a Domestic
Subsidiary in accordance with the provisions of Section 7.12 (Additional
Subsidiaries and Guarantees).

      "Land" of any Person means all of those plots, pieces or parcels of land
now owned, leased or hereafter acquired or leased or purported to be owned,
leased or hereafter acquired or leased (including, in respect of the Loan
Parties, as reflected in the most recent financial statements required to be
delivered pursuant to Section 7.01(a) or (b) (Financial Statements)) by such
Person.

      "Laws" means, collectively, all common law and all international, foreign,
federal, state and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.

      "Lender" means each Lender and each other financial institution or other
entity (a) identified as a "Lender" on the signature pages hereto and its
successors and assigns or (b) from time to time becomes a party hereto by
execution of an Assignment and Assumption.

      "Lending Office" means, as to any Lender, the office of such Lender
specified as its "Lending Office" opposite its name on Schedule 11.02 (Lending
Offices and Addresses for Notices) or on the Assignment and Assumption by which
it became a Lender or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.

      "Lien" means any mortgage, pledge, hypothecation, collateral assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title

                                       16


retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing).

      "Loans" means the Initial Loans or the Extended Loans, as the context may
require.

      "Loan Documents" means this Agreement, each Note, each Joinder Agreement,
each Request for Borrowing, each Compliance Certificate, the Engagement Letter,
the Fee Letter and each other document, instrument or agreement from time to
time executed by the Borrower or any Subsidiary or any Responsible Officer of
any thereof and delivered in connection with this Agreement.

      "Loan Parties" means, collectively, the Borrower and each Guarantor.

      "Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, (a) the business, assets, operations, properties,
condition (financial or otherwise) or liabilities (contingent or otherwise) of
the Borrower and its Subsidiaries taken as a whole; (b) the ability of the
Borrower or the Guarantors, taken as a whole, to perform their respective
obligations under the Loan Documents and the Exchange Securities Documents; (c)
the legality, validity, binding effect or enforceability against any Loan Party
of any Loan Document or any Exchange Securities Document to which it is a party;
or (d) the material rights and remedies of the Administrative Agent or the
Lenders under the Loan Documents and the Exchange Securities Documents.

      "Maturity Date" means (a) in the case of Initial Loans, the Initial Loan
Maturity Date and (b) in the case of Extended Loans, the Final Maturity Date.

      "Medicaid" means that certain means-tested entitlement program under Title
XIX of the Social Security Act, which provides federal grants to states for
medical assistance based on specific eligibility criteria, as set forth at
Section 1396, et seq. of Title 42 of the United Sates Code and any statute
succeeding thereto.

      "Medicaid Provider Agreement" means an agreement entered into between a
state agency or other such entity administering the Medicaid program and a
health care provider or supplier under which the health care provider or
supplier agrees to provide items and services for Medicaid patients in
accordance with the terms of the agreement and Medicaid Regulations.

      "Medicaid Regulations" means, collectively, (a) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting the medical assistance program established by Title XIX of the Social
Security Act and any statutes succeeding thereto; (b) all applicable provisions
of all federal rules, regulations, manuals and orders of all Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in clause (a) above and all federal administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law promulgated
pursuant to or in connection with the statutes described in clause (a) above;
(c) all state statutes and plans for medical assistance enacted in connection
with the statutes and provisions described in clauses (a) and (b) above; and (d)
all applicable provisions of all rules, regulations, manuals and orders of all
Governmental Authorities promulgated pursuant to or in connection with the
statutes described in clause (c) above and all state administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of Law promulgated pursuant to or in connection with the statutes
described in clause (b) above, in each case as may be amended, supplemented or
otherwise modified from time to time.

      "Medical Reimbursement Programs" means a collective reference to the
Medicare, Medicaid and TRICARE programs and any other health care program
operated by or financed in whole or in part by any

                                       17


foreign or domestic federal, state or local government and any other
non-government funded third party payor programs.

      "Medicare" means that government-sponsored entitlement program under Title
XVIII of the Social Security Act, which provides for a health insurance system
for eligible elderly and disabled individuals, as set forth at Section 1395, et
seq. of Title 42 of the United States Code and any statute succeeding thereto.

      "Medicare Provider Agreement" means an agreement entered into between CMS
or other such entity administering the Medicare program on behalf of CMS, and a
health care provider or supplier under which the health care provider or
supplier agrees to provide items and services for Medicare patients in
accordance with the terms of the agreement and Medicare Regulations.

      "Medicare Regulations" means, collectively, all federal statutes (whether
set forth in Title XVIII of the Social Security Act or elsewhere) affecting the
health insurance program for the aged and disabled established by Title XVIII of
the Social Security Act and any statutes succeeding thereto; together with all
applicable provisions of all rules, regulations, manuals and orders and
administrative, reimbursement and other guidelines having the force of law of
all Governmental Authorities (including CMS, the OIG, HHS, or any Person
succeeding to the functions of any of the foregoing) promulgated pursuant to or
in connection with any of the foregoing having the force of Law, as each may be
amended, supplemented or otherwise modified from time to time.

      "Moody's" means Moody's Investors Service, Inc. and any successor thereto.

      "Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

      "Net Cash Proceeds" means the aggregate proceeds consisting of cash or
Cash Equivalents received by the Borrower or any of its Subsidiaries after the
Funding Date from any:

      (a) Disposition or Involuntary Disposition, in each case, net of (i) the
reasonable cash costs (including legal, accounting and investment banking fees,
and sales commissions) of such Disposition or Involuntary Disposition, as the
case may be, (ii) taxes paid or reasonably estimated to be payable as a result
thereof and (iii) any amount required to be paid or prepaid on Indebtedness
(other than the Obligations and the "Obligations" under and as defined in the
Senior Secured Credit Agreement) secured by the Property subject to such
Disposition or Involuntary Disposition, as the case may be; provided, however,
that evidence of each of clauses (i), (ii) and (iii) above is provided to the
Administrative Agent in form and substance satisfactory to the Administrative
Agent; and provided, further, that "Net Cash Proceeds" shall include any cash or
Cash Equivalents received upon the Disposition of any non-cash consideration
received by the Borrower or any Subsidiary in any Disposition or Involuntary
Disposition; or

      (b) (i) Equity Issuance or (ii) any Debt Issuance, in each case, net of
brokers' and advisors' fees and other costs (including legal, accounting and
investment banking fees, and sales commissions) incurred in connection with such
transaction; provided, however, that in the case of this clause (b), evidence of
such costs is provided to the Administrative Agent in form and substance
satisfactory to the Administrative Agent.

                                       18


      "New Senior Subordinated Notes" means the Borrower's senior subordinated
notes which are intended to be issued following the Closing Date (i) to
refinance in full the Loans and other Obligations outstanding under this
Agreement and (ii) to the extent that there are available proceeds, to redeem or
purchase Existing Senior Subordinated Notes.

      "New Senior Subordinated Notes Documents" means (a) the New Senior
Subordinated Notes Indenture, (b) the New Senior Subordinated Notes, (c) each
supplemental indenture or other agreement pursuant to which any Subsidiary of
the Borrower Guarantees the Indebtedness in respect of the New Senior
Subordinated Notes and (d) all other documents, agreements and instruments
relating to the New Senior Subordinated Notes, in each case, in form and
substance satisfactory to the Administrative Agent.

      "New Senior Subordinated Notes Indenture" means the Indenture, in form and
substance acceptable to the Administrative Agent, to be entered into between the
Borrower, the Subsidiaries party thereto as guarantors and a financial
institution acceptable to CGMI as trustee, governing the terms of the New Senior
Subordinated Notes.

      "Non-Consenting Lender" has the meaning specified in Section 11.01(c)
(Amendments, Etc.).

      "Note" means any Initial Loan Note or Extended Loan Note, as the context
may require.

      "Notice of Borrowing" has the meaning specified in Section 2.02(a)
(Borrowings, Conversions and Continuations of Loans).

      "Notice of Conversion or Continuation" has the meaning specified in
Section 2.10 (Conversion/Continuation Option).

      "Obligations" means all advances to, and debts, liabilities, obligations,
covenants and duties of, the Borrower and/or any Loan Party arising under this
Agreement or any other Loan Document or otherwise with respect to any Loan,
whether direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against the
Borrower and/or any other Loan Party or any Affiliate thereof of any proceeding
under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.

      "Offering Document" has the meaning specified in Section 5.01(l).

      "OIG" means the Office of Inspector General of HHS and any successor
thereof.

      "Organization Documents" means, (a) (i) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(ii) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (iii) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity and (b) with respect to any Person, (i) to the
extent not covered by the preceding clause (a), any document setting forth the
manner of election and duties of the directors or managing members of such
Person (if any) and (ii) any document setting forth the manner of designation,
amount or relative rights, limitations and preferences of any class or series of
such Person's Capital Stock.

                                       19


      "Outstanding Amount" means on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowings and prepayments
or repayments of any Loans occurring on such date.

      "PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.

      "Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

      "Permanent Financing" means one or more public or private offerings of
Refinancing Securities to any Persons other than the Borrower or any of its
Subsidiaries.

      "Permitted Acquisition" means (a) the Ardent Acquisition, (b) certain
acquisitions previously disclosed to the Administrative Agent and set forth on
Schedule 1.01 (Disclosed Acquisitions) and (c) at any time on or after the
Initial Maturity Date, any other Investment consisting of an Acquisition by the
Borrower or any Subsidiary, subject in the case of this clause (c) to the
satisfaction of the following conditions:

      (i) the Property acquired (or the Property of the Person acquired) in such
Acquisition shall be located in the United States and shall be used or useful in
the same or a similar line of business as the Borrower and its Subsidiaries were
engaged in on the Funding Date (or any reasonable extensions or expansions
thereof);

      (ii) the Administrative Agent shall have received all items in respect of
the Capital Stock or Property acquired in such Acquisition required to be
delivered by (and within the time periods specified by) the terms of Section
7.12 (Additional Subsidiaries and Guarantees);

      (iii) in the case of an Acquisition of the Capital Stock of another
Person, the board of directors (or other comparable governing body) of such
other Person shall have duly approved such Acquisition;

      (iv) no additional Indebtedness shall be incurred, assumed or otherwise be
reflected on a consolidated balance sheet of the Borrower and the acquired
Person after giving effect to the proposed Acquisition, except for (A) Loans
made hereunder and (B) Indebtedness that is permitted under Section 8.03
(Indebtedness);

      (v) except as may otherwise be agreed by the Administrative Agent, on or
prior to the date of any proposed Acquisition following the Closing Date for
which Total Consideration to be paid by the Borrower or any Subsidiary exceeds
$50,000,000 in any Fiscal Year (either individually or when aggregated with the
Total Consideration paid during such Fiscal Year for all such Acquisitions
following the Funding Date), the Borrower shall have delivered to the
Administrative Agent, in form and substance satisfactory to the Administrative
Agent, (A) an updated business plan and updated financial projections of the
Borrower and its Subsidiaries, prepared by the Borrower in good faith, after
giving effect to the proposed Acquisition on a pro forma basis for the next four
fiscal quarters ending after the consummation of such Acquisition and (B) such
other financial information, financial analysis, documentation or other
information relating to such proposed Acquisition as any Administrative Agent or
any Lender shall reasonably request;

                                       20


      (vi) on or prior to the date of such proposed Acquisition, the
Administrative Agent shall have received, in form and substance reasonably
satisfactory to the Administrative Agent, copies of the acquisition agreement,
related Contractual Obligations and instruments and all opinions, certificates,
lien search results and other documents reasonably requested by the
Administrative Agent;

      (vii) (A) no Default or Event of Default shall have occurred and be
continuing and (B) the representations and warranties made by the Loan Parties
in this Agreement and each other Loan Document shall be true and correct in all
material respects at and as if made as of the date of such Acquisition (after
giving effect thereto) except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date;

      (viii) if such Acquisition involves the purchase of an interest in a
partnership between the Borrower (or a Subsidiary of the Borrower) as a general
partner and entities unaffiliated with the Borrower or such Subsidiary as the
other partners, such transaction shall be effected by having such equity
interest acquired by a corporate holding company directly or indirectly
wholly-owned by the Borrower that shall be newly formed for the sole purpose of
effecting such Acquisition; and

      (ix) the Total Consideration paid by the Borrower or any Subsidiary for
any such Acquisition shall not exceed (i) $50,000,000 individually for any such
Acquisition (whether such Acquisition occurs in a single transaction or in a
series of related transactions) or (ii) $150,000,000 in the aggregate for all
such Acquisitions during any fiscal year of the Borrower and its Subsidiaries.

      "Permitted Investments" means, at any time, Investments by the Borrower
and its Subsidiaries permitted to exist at such time pursuant to the terms of
Section 8.02 (Investments).

      "Permitted Liens" means, at any time, Liens in respect of Property of the
Borrower and its Subsidiaries permitted to exist at such time pursuant to the
terms of Section 8.01 (Liens).

      "Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

      "Physician Support Obligation" means a loan to or on behalf of, or a
guarantee of indebtedness of a Qualified Physician made or given by the Borrower
or any of its Subsidiaries, (a) in the ordinary course of its business and (b)
pursuant to a written agreement having a term not to exceed five years.

      "Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Internal Revenue Code or Title IV of
ERISA, any ERISA Affiliate.

      "Pro Rata Share" means or (other than in the expression "equally and
ratably") "ratably" means, with respect to any Lender, the percentage obtained
by dividing (i) the Commitment of such Lender by (ii) the aggregate Commitments
of all Lenders (or, at any time after the Funding Date, the percentage obtained
by dividing the principal amount of such Lender's Loans by the aggregate Loans
of all Lenders).

      "Proceeds" has the meaning given to such term in the UCC.

      "Projections" means those financial projections dated as of the Funding
Date, covering the fiscal years ending in 2005 through 2012 inclusive (and
prepared on a quarterly basis through the end of fiscal year 2006), to be
delivered to the Administrative Agent and the Lenders by the Borrower.

                                       21


      "Property" means any interest of any kind in any property or asset,
whether real, personal or mixed, or tangible or intangible.

      "Proposed Change" has the meaning specified in Section 11.01(c)
(Amendments, Etc.).

      "PSI Surety" means PSI Surety, Inc., a Montana corporation.

      "Purchasing Lender" has the meaning specified in Section 11.16 (Sharing of
Payments, Etc.).

      "Qualified Physicians" means one or more physicians or health care
professionals providing service to patients in a health care facility owned,
leased, operated or managed by the Borrower or any of its Subsidiaries.

      "Real Property" of any Person means the Land of such Person, together with
the right, title and interest of such Person, if any, in and to the streets, the
Land lying in the bed of any streets, roads or avenues, opened or proposed, in
front of, the air space and development rights pertaining to the Land and the
right to use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including all alley, vault, drainage, mineral, water, oil
and gas rights, together with all of the buildings and other improvements now or
hereafter erected on the Land and any fixtures appurtenant thereto.

      "Redeemable Stock" has the meaning specified in the definition of clause
(g) of the definition of "Funded Indebtedness".

      "Refinancing Securities" means one or more series of senior subordinated
debt securities (including the New Senior Subordinated Notes) or other debt
securities (other than the Exchange Securities) issued, in settlement, in whole
or in part, of the Initial Loans, any Extended Loans and any Floating Rate
Exchange Securities (but not any Fixed Rate Exchange Securities) pursuant to
Section 2.5 (Reduction and Termination of the Commitments).

      "Register" has the meaning set forth in Section 2.11 (Evidence of Debt).

      "Registration Rights Agreement" means, a registration rights agreement in
customary form for high-yield debt securities and which is in form and substance
satisfactory to the Administrative Agent.

      "Reinvestment Deferred Amount" means, as the context requires, the
Disposition/Involuntary Disposition Deferred Amount or the Equity Issuance
Deferred Amount.

      "Reinvestment Event" means any Equity Issuance in connection with a
proposed Permitted Acquisition, Disposition or Involuntary Disposition in
respect of which the Borrower has delivered a Reinvestment Notice.

      "Reinvestment Notice" means a written notice executed by a Responsible
Officer of the Borrower stating that no Default or Event of Default has occurred
and is continuing and (i) in the case of any Disposition or Involuntary
Disposition, that the Borrower (directly or indirectly through one of its
Subsidiaries) intends and expects to use all or a specified portion of the Net
Cash Proceeds of such Disposition or Involuntary Disposition to acquire
replacement assets useful in its or one of its Subsidiaries' businesses or, in
the case of an Involuntary Disposition, to effect repairs or (ii) in the case of
any such Equity Issuance, that the Borrower (directly or indirectly through one
of its Subsidiaries) intends

                                       22


and expects to use all or a specified portion of the Net Cash Proceeds of such
Equity Issuance to finance all or a portion of a Permitted Acquisition.

      "Reinvestment Prepayment Amount" means, with respect to any Net Cash
Proceeds of any Reinvestment Event, the Reinvestment Deferred Amount relating
thereto less any amount expended or required to be expended pursuant to a
Contractual Obligation entered into prior to the relevant Reinvestment
Prepayment Date (i) in the case of any Disposition or Involuntary Disposition,
to acquire replacement assets useful in the business of the Borrower or any of
its Subsidiaries, or in the case of an Involuntary Disposition, to effect
repairs or replacements or (ii) in the case of any Equity Issuance, to
consummate the applicable Permitted Acquisition.

      "Reinvestment Prepayment Date" means, with respect to any Net Cash
Proceeds of any Reinvestment Event, (i) in the case of any Disposition or
Involuntary Disposition constituting a Reinvestment Event, the earlier of (a)
the date occurring 365 days after such Reinvestment Event and (b) the date that
is five Business Days after the date on which the Borrower shall have notified
the Administrative Agent of the Borrower's determination not to acquire
replacement assets useful in the Borrower's or a Subsidiary's business (or, in
the case of an Involuntary Disposition, not to effect repairs) with all or any
portion of the relevant Reinvestment Deferred Amount and (ii) in the case of any
Equity Issuance constituting a Reinvestment Event, the earlier of (a) the date
occurring 180 days after such Reinvestment Event and (b) the date that is five
Business Days after the date on which the Borrower shall have notified the
Administrative Agent of the Borrower's determination not to consummate the
applicable Permitted Acquisition.

      "Related Documents" means the Ardent Acquisition Agreement, the Senior
Secured Credit Agreement, the Existing Senior Subordinated Notes Indenture and
each other document and instrument executed with respect to either thereof.

      "Release" means, with respect to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration, in each case, of any Hazardous Material into the indoor or outdoor
environment or into or out of any property owned, leased or operated by such
Person, including the movement of Hazardous Materials through or in the air,
soil, surface water, ground water or property.

      "Remedial Action" means all actions required to (a) clean up, remove,
treat or in any other way address any Hazardous Material in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release so that Hazardous Material does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.

      "Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the thirty-day notice period has been waived.

      "Required Lenders" means, collectively, the Lenders having more than 50%
of the aggregate outstanding amount of the Commitments or, after the Funding
Date, more than fifty percent (50%) of the principal amount of all Loans then
outstanding. A Defaulting Lender shall not be included for purposes of making a
determination of Required Lenders.

      "Responsible Officer" means the chief executive officer, president, chief
financial officer, or treasurer of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be

                                       23


conclusively presumed to have acted on behalf of such Loan Party.

      "Restricted Payment" means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Capital Stock of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Capital Stock or of any option, warrant or other right to acquire any
such Capital Stock.

      "Reverse Spin-Off" means the reverse spin-off transaction between AHS and
Ardent LLC contemplated by the Ardent Acquisition Agreement to occur prior to
the Funding Date pursuant to which AHS shall have transferred to Ardent LLC the
Capital Stock of its subsidiaries and certain other assets and liabilities that
do not constitute part of the Ardent Acquired Business.

      "S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and any successor thereto.

      "Sale and Leaseback Transaction" means, with respect to the Borrower or
any Subsidiary, any arrangement, directly or indirectly, with any Person whereby
the Borrower or such Subsidiary shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred.

      "Sarbanes-Oxley Act" means the United States Sarbanes-Oxley Act of 2002.

      "SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

      "Securities Act" means the Securities Act of 1933.

      "Securities Demand Offering" has the meaning specified in Section 2.04
(Permanent Financing).

      "Securitization Transaction" means any financing transaction or series of
financing transactions (including factoring arrangements) pursuant to which the
Borrower or any Subsidiary may sell, convey or otherwise transfer, or grant a
security interest in, accounts, payments, receivables, rights to future lease
payments or residuals or similar rights to payment to a special purpose
subsidiary or affiliate of any Person.

      "Selling Lender" has the meaning specified in Section 11.16 (Sharing of
Payments, Etc.).

      "Senior Secured Credit Agreement" means the Credit Agreement, dated as of
the date of this Agreement, among the Borrower, the Subsidiaries party thereto
as guarantors, the financial institutions from time to time party thereto as
lenders, the financial institutions from time to time party thereto as letter of
credit issuers, CNAI, as term loan facility administrative agent, Bank of
America, N.A. as revolving credit facility administrative agent and collateral
agent, and the other agents party thereto.

      "Senior Secured Credit Facilities" means the senior secured term loan and
revolving credit facilities provided to the Borrower pursuant to the Senior
Secured Credit Agreement.

      "Senior Secured Credit Documents" means the Senior Secured Credit
Agreement, each Guarantee in respect thereof and all other documents executed
and delivered with respect to the Senior Secured Credit Facilities.

                                       24


      "Senior Secured Loans" means the "Loans" under and as defined in the
Senior Secured Credit Agreement.

      "Senior Unsecured Facility" means the Commitments and the provisions
herein related to the Loans.

      "Social Security Act" means the Social Security Act of 1965 as set forth
in Title 42 of the United States Code, as amended, and any successor statute
thereto, as interpreted by the rules and regulations issued thereunder, in each
case as in effect from time to time.

      "Solvent" means, with respect to any Person as of any date of
determination, that, as of such date, (a) the value of the assets of such Person
(both at fair value and present fair saleable value) is greater than the total
amount of liabilities (including contingent and unliquidated liabilities) of
such Person, (b) such Person is able to pay all liabilities of such Person as
such liabilities mature and (c) such Person does not have unreasonably small
capital. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities shall be computed at the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.

      "Special Purpose Vehicle" means any special purpose funding vehicle
identified as such in writing by any Lender to the Administrative Agent.

      "Subordinated Indebtedness" means the Existing Senior Subordinated Notes
and any other Indebtedness of the Borrower or any Subsidiary which by its terms
is subordinated to the Obligations in a manner and to an extent acceptable to
the Administrative Agent.

      "Subordinated Indebtedness Documents" means the Existing Senior
Subordinated Notes Documents and all other documents, agreements and instruments
governing any Subordinated Indebtedness.

      "Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of Capital Stock having ordinary voting power for the election of
directors or other governing body (other than Capital Stock having such power
only by reason of the happening of a contingency) are at the time beneficially
owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise specified, all references herein to a "Subsidiary" or to
"Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower.

      "Substitute Institution" has the meaning specified in Section 3.07(a)
(Substitution of Lenders).

      "Substitution Notice" has the meaning specified in Section 3.07(a)
(Substitution of Lenders).

      "Swap Contract" means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and

                                       25


conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.

      "Swap Termination Value" means, in respect of any Swap Contract, after
taking into account the effect of any legally enforceable netting agreement
relating to such Swap Contract, (a) for any date on or after the date such Swap
Contract has been closed out and a termination value is determined in accordance
therewith, such termination value, and (b) for any date prior to the date
referenced in clause (a), the amount determined as the market-to-market value
for such Swap Contract, as determined based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such Swap
Contract (which may include a Lender or any Affiliate of a Lender).

      "Synthetic Lease" means any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing arrangement
whereby the arrangement is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease or does not otherwise appear on
a balance sheet under GAAP.

      "Threshold Amount" means $5,000,000.

      "Total Cap" means (a) if the Senior Unsecured Facility is rated at least
B1 (stable)/B+ (stable) or better, 10% per annum or (b) in all other cases, 11%
per annum.

      "Total Consideration" means, with respect to any Acquisition, all cash and
non-cash consideration, including the amount of Indebtedness assumed, the amount
reasonably anticipated to be payable in connection with any deferred purchase
price obligation (including any earn-out obligation) as determined by the
Borrower in good faith at the time of the consummation of such Acquisition, and
the value of any Capital Stock of the Borrower issued to the seller.

      "Transactions" means, collectively, the transactions contemplated in
connection with the Reverse Spin-Off, the amendment and restatement of the
Existing Credit Agreement pursuant to this Agreement, the borrowing of the
Senior Bridge Loans and the execution, delivery and performance by the Loan
Parties of the Senior Bridge Credit Agreement, (following the Funding Date) the
refinancing in full of the Senior Bridge Facility from the issuance and sale of
the New Senior Subordinated Notes (or other Subordinated Indebtedness permitted
by Section 8.13(c) (Prepayment of Other Indebtedness; Modification of Debt
Agreements), the AHS Tender Offer, the Funding Date Equity Issuance, the initial
Borrowing of the Loans and other Borrowings under this Agreement, the Ardent
Acquisition and the payment of related fees and expenses.

      "Treasury Rate" means (i) the rate borne by direct treasury obligations of
the United States maturing on the tenth anniversary of the Funding Date and (ii)
if there are no such obligations, the rate determined by linear interpolation
between the rates borne by the two direct treasury obligations of the United
States maturing closest to, but straddling, the tenth anniversary of the Funding
Date, in each case as published by the FRB.

      "TRICARE" means the United States Department of Defense health care
program for service families (including TRICARE Prime, TRICARE Extra and TRICARE
Standard), and any successor or predecessor thereof.

      "Type" means, with respect to any Loan, its character as a Base Rate Loan
or a Eurodollar Rate Loan.

                                       26


      "UCC" means the Uniform Commercial Code as from time to time in effect in
the State of New York.

      "Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Internal Revenue Code
for the applicable plan year.

      "United States" and "U.S." mean the United States of America.

      "Voting Stock" means, with respect to any Person, Capital Stock issued by
such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.

      "Wholly Owned Subsidiary" means any Person 100% of whose Capital Stock is
at the time owned by the Borrower directly or indirectly through other Persons
100% of whose Capital Stock is at the time owned, directly or indirectly, by the
Borrower.

1.02 OTHER INTERPRETIVE PROVISIONS.

      With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:

            (a) The meanings of defined terms are equally applicable to the
      singular and plural forms of the defined terms.

            (b)   (i) The words "herein," "hereto," "hereof" and "hereunder" and
      words of similar import when used in any Loan Document shall refer to such
      Loan Document as a whole and not to any particular provision thereof.

                  (ii) Article, Section, Exhibit and Schedule references are to
            the Loan Document in which such reference appears.

                  (iii) The term "including" is by way of example and not
            limitation.

                  (iv) The term "documents" includes any and all instruments,
            documents, agreements, certificates, notices, reports, financial
            statements and other writings, however evidenced, whether in
            physical or electronic form.

            (c) In the computation of periods of time from a specified date to a
      later specified date, the word "from" means "from and including;" the
      words "to" and "until" each mean "to but excluding;" and the word
      "through" means "to and including."

            (d) Section headings herein and in the other Loan Documents are
      included for convenience of reference only and shall not affect the
      interpretation of this Agreement or any other Loan Document.

            (e) Upon the appointment of any successor Administrative Agent
      pursuant to Section 10.07 (Successor Administrative Agent), references to
      CNAI in Section 10.4 (The Administrative Agent Individually) and to
      Citibank in the definition of Base Rate and the definition of Eurodollar

                                       27


      Rate shall be deemed to refer to the financial institution then acting as
      the Administrative Agent or one of its Affiliates or other Person as it
      may so designate.

1.03 ACCOUNTING TERMS.

      (a) Except as otherwise specifically prescribed herein, all accounting
terms not specifically or completely defined herein shall be construed in
conformity with, and all financial data (including financial ratios and other
financial calculations) required to be submitted pursuant to this Agreement
shall be prepared in conformity with, GAAP applied on a consistent basis, as in
effect from time to time, applied in a manner consistent with that used in
preparing the most recent audited financial statements of the Borrower and its
Subsidiaries delivered pursuant to Section 7.01(a) (Financial Statements);
provided, however, that calculations of Attributable Indebtedness under any
Synthetic Lease or the implied interest component of any Synthetic Lease shall
be made by the Borrower in accordance with accepted financial practice and
consistent with the terms of such Synthetic Lease.

      (b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent, the
Lenders and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided, however, that,
until so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

1.04 ROUNDING.

      Any financial ratios required to be maintained by the Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of places
by which such ratio is expressed herein and rounding the result up or down to
the nearest number (with a rounding-up if there is no nearest number).

1.05 REFERENCES TO AGREEMENTS AND LAWS.

      Unless otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents and Exchange Securities
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by this Agreement or any other Loan Document; (b) references to any Law shall
include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such Law; and (c) references to any
statute shall be to such statute as amended or modified from time to time and to
any successor legislation thereto, in each case as in effect at the time any
such reference is operative.

1.06 TIMES OF DAY.

      Unless otherwise specified, all references herein to times of day shall be
references to Eastern time (daylight or standard, as applicable).

                                       28


1.07 INCORPORATION OF CERTAIN EXCHANGE INDENTURE PROVISIONS

      To the extent that any provision of the Exchange Indenture is deemed
incorporated by reference in any provision of this Agreement, such provision of
the Exchange Indenture shall be deemed modified mutatis mutandis to the extent
necessary to give effect to such provision of this Agreement, including each
reference in any such provision of the Exchange Indenture to (a) the "Company"
being deemed to refer to the Borrower, (b) the "Notes" being deemed to refer to
the Loans, (c) the "Trustee" being deemed to refer to the Administrative Agent,
(d) the "Holders" being deemed to refer to the Lenders and (e) the "Exchange
Indenture" being deemed to refer to this Agreement and the other Loan Documents,
in each case as the context may require.

                                   ARTICLE II

                         THE COMMITMENTS AND BORROWINGS

2.01 THE COMMITMENTS.

      (a) On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make a loan (each an "Initial Loan")
in Dollars to the Borrower on the Funding Date, in an amount not to exceed such
Lender's Commitment. Amounts of Loans prepaid may not be reborrowed.

2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

      (a) The Borrowing of the Initial Loans shall be made on the Funding Date
upon receipt of a Notice of Borrowing given by the Borrower to the
Administrative Agent not later than 11:00 a.m. one Business Day prior to the
Funding Date. Each such notice shall be in substantially the form of Exhibit A
(Form of Notice of Borrowing) (a "Notice of Borrowing"), specifying, (A) the
date of such proposed Borrowing (which shall be the Funding Date), (B) the
aggregate amount of such proposed Borrowing, (C) whether any portion of the
proposed Borrowing will be of Base Rate Loans or Eurodollar Rate Loans and (D)
for each Eurodollar Rate Loan, the initial Interest Period or Periods thereof.
Loans shall be made as Base Rate Loans unless, subject to Sections 3.02
(Illegality), 3.03 (Determination of Rates; Inability to Determine Rates), 3.04
(Increased Cost and Reduced Return; Capital Adequacy) or 3.05 (Funding Losses),
the Notice of Borrowing specifies that all or a portion thereof shall be
Eurodollar Rate Loans.

      (b) In the case of any Borrowings, the Administrative Agent shall give to
each Lender prompt notice of the Administrative Agent's receipt of a Notice of
Borrowing and, if Eurodollar Rate Loans are properly requested in such Notice of
Borrowing, the applicable interest rate determined pursuant to Section 3.03
(Determination of Interest Rates; Inability to Determine Rates). Each Lender
shall, before 11:00 a.m. on the date of the proposed Borrowing, make available
to the Administrative Agent at the Administrative Agent's Office, in immediately
available funds, such Lender's Pro Rata Share of such proposed Borrowing. Upon
fulfillment (or due waiver in accordance with Section 11.01 (Amendments, Etc.))
on the Funding Date of the applicable conditions set forth in Section 5.01
(Conditions Precedent to Initial Borrowings) and Section 5.02 (Conditions
Precedent to Each Borrowing), and after the Administrative Agent's receipt of
such funds, the Administrative Agent shall make such funds available to the
Borrower.

      (c) Unless the Administrative Agent shall have received notice from any
applicable Lender prior to the date of any proposed Borrowing that such Lender
will not make available to the Administrative Agent such Lender's Pro Rata Share
of such Borrowing (or any portion thereof), the Administrative Agent may assume
that such Lender has made such Pro Rata Share available to the

                                       29


Administrative Agent on the date of such Borrowing in accordance with this
Section 2.02 and the Administrative Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If and to
the extent that such Lender shall not have so made such Pro Rata Share available
to the Administrative Agent, such Lender and the Borrower severally agree to
repay to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate for the first Business Day and
thereafter at the interest rate applicable at the time to the Loans comprising
such Borrowing. If such Lender shall repay to the Administrative Agent such
corresponding amount, such corresponding amount so repaid shall constitute such
Lender's Loan as part of such Borrowing for purposes of this Agreement. If the
Borrower shall repay to the Administrative Agent such corresponding amount, such
payment shall not relieve such Lender of any obligation it may have hereunder to
the Borrower.

      (d) The failure of any Lender to make on the date specified any Loan or
any payment required by it (such Lender being a "Defaulting Lender") shall not
relieve any other Lender of its obligations to make such Loan or payment on such
date but no such other Lender shall be responsible for the failure of any
Defaulting Lender to make a Loan or payment required under this Agreement.

2.03 EXCHANGE SECURITIES

      (a) Issuance of Exchange Securities.

                  (i) On the terms and subject to the conditions set forth in
            this Agreement, each Lender may elect to receive, at any time on or
            after the Conversion Date or the Demand Failure Date, senior
            unsecured exchange securities ("Exchange Securities") in exchange
            for all or part of its Loans then outstanding, in a principal amount
            equal to 100% of the aggregate principal amount of such Loans and
            such Loans shall be treated as having been repaid as a consequence
            of such exchange and the Exchange Securities issued at such time
            shall be new loans made at such time; provided, however, that the
            aggregate principal amount of Loans exchanged for Exchange
            Securities shall be in a minimum amount of $1,000,000 or an integral
            multiple of $1,000,000 in excess thereof.

                  (ii) Each such election shall be made by giving the
            Administrative Agent at least five (5) days' prior written notice
            (such notice, together with the certificate referred to in clause
            (iii) below, an "Exchange Notice") specifying (A) the aggregate
            principal amount of the Loans being exchanged, (B) whether such
            Exchange Securities are Floating Rate Exchange Securities or Fixed
            Rate Exchange Securities, (C) the principal amount of the Exchange
            Securities to be issued (subject to the terms of the Exchange
            Indenture), (D) the proposed date for such issuance and exchange,
            (E) the names of the proposed registered holders for such Exchange
            Securities, (F) the principal amount of any Loans owing to such
            Lender and expected to remain outstanding after such exchange, and
            (G) whether new Notes shall be requested for any such Loans, and
            attaching for cancellation any existing Note with respect to the
            Loans to be repaid pursuant to such exchange.

                  (iii) The Exchange Notice shall be accompanied by a
            certification from the Lender delivering such Exchange Notice in
            form and substance satisfactory to the Administrative Agent. The
            exchange of Loans for Exchange Securities shall only be permitted in
            accordance with this Section 2.03.

                                       30


                  (iv) Notwithstanding any other provision of this Agreement or
            the Exchange Indenture, it is expressly agreed and acknowledged that
            (A) each exchange of a Loan for Exchange Securities shall operate as
            a novation of the Indebtedness represented by such Loan, (B) no
            Indebtedness represented by Exchange Securities shall be deemed to
            be an extension or continuation of any Loan and (C) the Indebtedness
            represented by such Loan shall be a novation, and settled and
            extinguished by the new Indebtedness represented by such Exchange
            Securities.

                  (v) Not later than the date which is 60 days prior to the
            Initial Maturity Date, the Borrower and the Arranger shall prepare
            and negotiate (in good faith) a form of Exchange Indenture which
            once approved by the Borrower and the Arranger, shall govern the
            terms of the Exchange Securities. The Exchange Indenture shall
            contain terms and conditions consistent with those set forth in
            Exhibit H and such other terms and conditions which are reasonably
            acceptable to the Borrower and the Arranger. It is a condition
            precedent to the issuance of any Exchange Securities in exchange for
            Loans that the Exchange Indenture in form and substance acceptable
            to the Arranger shall have been entered into by the Borrower and the
            Trustee thereunder.

      (b) Terms of Exchange Securities. All Exchange Securities shall be issued
by the Borrower and shall be guaranteed by the Guarantors on terms substantially
the same as the Guaranty. The Exchange Securities (other than Fixed Rate
Exchange Securities) shall bear interest at the rate then applicable on the date
of exchange to the Extended Loans for which they were exchanged, to accrue on
the principal amount of such Exchange Securities and be payable on terms
substantially similar to the terms applicable to such Loans and shall mature on
the Final Maturity Date, subject to and in accordance with the provisions of the
Exchange Indenture; provided, however, that the Lenders shall have the right,
with respect to Floating Rate Exchange Securities, to convert all or any portion
of such Floating Rate Exchange Securities to Fixed Rate Exchange Securities
bearing a fixed rate of interest not higher than the rate of interest applicable
to such Floating Rate Exchange Securities at the time of delivery of the
conversion request notice pursuant to the Exchange Indenture and otherwise on
the terms and conditions set forth in the Exchange Indenture. Following the
issuance of Exchange Securities, all terms thereof shall be governed by the
Exchange Indenture and not by this Agreement.

      (c) Procedure for Issuance. The Administrative Agent shall promptly notify
each Lender of its receipt of an Exchange Notice and of the options selected
therein. Each Exchange Notice shall be irrevocable. Not later than five (5)
Business Days after delivery of an Exchange Notice, (i) the Borrower shall issue
and deliver to the Administrative Agent the Exchange Securities requested
pursuant to such Exchange Notice (and, upon receipt thereof by the
Administrative Agent, the Administrative Agent shall deliver such Exchange
Securities to the applicable Lender), (ii) if Extended Loans are expected to
remain outstanding after such exchange, the Borrower shall deliver to the
Administrative Agent, to the extent requested in such Exchange Notice, a
replacement Note (and, upon receipt thereof by the Administrative Agent, the
Administrative Agent shall deliver any such replacement Note to the applicable
Lender), (iii) the Borrower shall pay to Administrative Agent for the account of
the applicable Lender all accrued and unpaid interest and other amounts then due
hereunder (including amounts referred to in Sections 3.02 (Illegality), 3.03
(Determination of Rates; Inability to Determine Rates), 3.04 (Increased Cost and
Reduced Return; Capital Adequacy) or 3.05 (Funding Losses)) with respect to the
Loans or portion thereof so exchanged and (iv) the Borrower shall take such
further actions as may be required by the trustee to effect the issuance of the
Exchange Securities in accordance with the terms hereof and under the Exchange
Indenture. Upon the issuance of each Exchange Notice and payment of the
applicable amounts referred to in clause (iii), any Loan or portion thereof
exchanged for such Exchange Securities shall be settled and treated as repaid
for the purposes of this Agreement.

                                       31


2.04 PERMANENT FINANCING

      (a) The Borrower hereby agrees that, upon receipt of written notice by the
Arranger (a "Securities Demand"), at any time and from time to time on or after
the Funding Date with respect to an offering and sale of the Refinancing
Securities for the purposes of refinancing the Loans and any Floating Rate
Exchange Securities (in whole or in part) (the "Securities Demand Offering"),
the Borrower shall take the actions described in clause (c) below and such other
actions reasonably deemed necessary by the Arranger to issue the Refinancing
Securities contemplated by each such Securities Demand. Each Securities Demand
shall set forth (i) the principal amount of the Refinancing Securities and (ii)
the other terms of the Refinancing Securities, including interest rate, yield,
maturity, security, covenants, change of control provisions and redemption dates
and prices, in accordance with clause (b) below. Notwithstanding any other
provision of this Agreement, it is expressly agreed and acknowledged that (i)
the issuance of Refinancing Securities shall operate as a novation of the
Indebtedness represented by the Loans and any Floating Rate Exchange Securities
refinanced thereby, (ii) no Indebtedness represented by any Refinancing
Securities shall be deemed to be an extension or continuation of any Loan and
any Floating Rate Exchange Securities, and (iii) the Indebtedness represented by
such refinanced Loans and any Floating Rate Exchange Securities shall be
novated, settled and extinguished by the new Indebtedness represented by such
Refinancing Securities.

      (b) The Refinancing Securities shall be issued on the following terms:

            (i) the Refinancing Securities shall be issued by the Borrower (or
such Subsidiary of the Borrower as the Arranger shall specify) through a
registered public offering, a private placement for resale pursuant to Rule 144A
or a Regulation S offering under the Securities Act and/or a private placement
under exemptions from the prospectus requirement, as determined by the Arranger
in its discretion after consultation with the Borrower;

            (ii) the Refinancing Securities shall have a maturity date which is
not earlier than the date which is one year after the scheduled final maturity
of the Senior Secured Credit Facilities;

            (iii) the Refinancing Securities shall have such terms, including
registration rights (in the event of a private placement under Rule 144A
offering or Regulation S offering of the Refinancing Securities), covenants,
events of default, subordination provisions, interest rate, yield and redemption
prices and dates and conditions as are customary for similar financings as
determined by the Arranger in its sole discretion after consultation with the
Borrower;

            (iv) without the Borrower's consent (not to be unreasonably
withheld, delayed or conditioned), the weighted average interest rate or yield
to maturity per annum on all such Refinancing Securities shall not exceed the
Total Cap; provided, that such interest rate or yield to maturity per annum
shall not be less than 8.5% per annum; and

            (v) all other arrangements with respect to the Refinancing
Securities shall be reasonably satisfactory in all material respects to the
Arranger in the light of the prevailing market conditions and the financial
condition and prospects of the Borrower and its Subsidiaries at the time of such
issuance and sale.

                                       32


      (c) In connection which each Securities Demand each Loan Party will, and
will cause each of its Subsidiaries to, cooperate with the Arranger in
connection with, and use its best efforts to effectuate, a Permanent Financing,
and shall do the following:

            (i) in connection with any private offerings or private placements
with or without registration rights (including offers and sales pursuant to Rule
144A and Regulation S), prepare offering memoranda relating to the offer and
sale of Refinancing Securities, such offering memoranda containing (A) such
disclosures as would have been included in a registration statement filed under
the Securities Act or as may be required by applicable laws, rules, regulations
or other requirements except as otherwise agreed by the Borrower and the
Arranger, (B) such disclosures as may be appropriate or customary for such
offering memoranda and (C) such disclosures as reasonably requested by the
Arranger;

            (ii) in connection with any private offerings or private placements
with registration rights (including offers and sales pursuant to Rule 144A and
Regulation S under the Securities Act), execute and deliver registration rights
agreements, in form and substance containing such customary terms and reasonably
satisfactory to the Arranger;

            (iii) in connection with any public offerings (including offerings
pursuant to a "shelf" registration statement), prepare prospectuses (and
preparing and filing the related registration statements) relating to the offer
and sale of Refinancing Securities in connection with the Permanent Financing,
such prospectuses containing (A) such disclosures as may be required by the
Securities Act and other applicable laws, rules, regulations or other
requirements except as otherwise agreed by the Borrower and the Arranger, (B)
such disclosures as may be appropriate or customary for such documents and (C)
such disclosures as reasonably requested by the Arranger;

            (iv) providing resolutions of the applicable Board of Directors
approving any issuances and sales of the Refinancing Securities in connection
with the Permanent Financing, the related purchase agreements or underwriting
agreements and the transactions contemplated thereby, including the indenture
and notes with respect thereto and all documents evidencing other necessary
corporate action with respect to the issuances and sales of the Refinancing
Securities in connection with a Permanent Financing, together with copies of the
Organization Documents of each Loan Party and appropriate officer and secretary
certificates in connection therewith;

            (v) execute and deliver all necessary purchase agreements or
underwriting agreements and indentures, in form and substance reasonably
satisfactory to the Arranger and, in the case of any indenture, complying with
the Trust Indenture Act, containing in all cases customary covenants,
representations and warranties, indemnities and other provisions and providing
for in all cases the delivery of customary legal opinions (including "10b-5
letters" in the case of offerings registered with the SEC or offerings under
Rule 144A of the Securities Act), officers' and other certificates and
accountants' comfort letters;

            (vi) if any "qualified independent underwriter" (as defined in the
related regulations) is required by the National Association of Securities
Dealers, Inc. in connection with any offer or sale of the Refinancing
Securities, pay an underwriting fee (in a customary and reasonable amount for
transactions of this type and amount) and agree to indemnify such underwriter on
customary terms, which underwriter shall be a firm selected by the Arranger and
reasonably agreed upon by the Borrower;

            (vii) assist the Arranger and any other placement agent or
underwriters in their selling efforts, including providing the Arranger with all
information reasonably deemed necessary by the Arranger in connection with the
offer and sale of the Refinancing Securities issued and sold in order to
consummate the Permanent Financing, including information and projections
prepared by the Borrower

                                       33


and its Subsidiaries or on its behalf relating to offering and sales of such
Refinancing Securities, including making available representatives of the
Borrower and its Subsidiaries and, if appropriate, using its best efforts to
make available representatives of any other issuer of such Refinancing
Securities;

            (viii) assist the Arranger and any other placement agents or
underwriters in connection with the marketing of any Refinancing Securities to
be offered publicly or placed privately which marketing efforts may be
accomplished by a variety of means, including supplementing and updating any
offering materials to be used in the marketing of the Refinancing Securities and
the use of road show presentations (including "one-on-one" meetings) involving
senior management of the Borrower and its Subsidiaries and using its best
efforts to involve senior management of any issuers of the Refinancing
Securities in any such road show presentations on the one hand and the proposed
purchasers of the Refinancing Securities on the other hand, in each case in
order to consummate the Permanent Financing;

            (ix) pay all fees and expenses of the Arranger and any other
placement agents or underwriters set forth in the Engagement Letter, and other
customary fees and expenses relating to any offerings and sales of Refinancing
Securities; and

            (x) providing such other cooperation and assistance as is
customarily provided by issuers in connection with such private placements or
public sales of their securities, and taking such further actions and preparing,
executing, delivering and filing, or causing to be prepared, executed, delivered
and filed, any agreements, instruments, documents, opinions of counsel and
certificates necessary or appropriate to effectuate the Permanent Financing.

      Nothing in this Section 2.04 shall prevent or the limit the ability of the
Borrower or its Subsidiaries from repaying or refinancing the Loans and Exchange
Securities in any other manner not otherwise prohibited by this Agreement, any
other Loan Document or any Exchange Securities Document.

2.05 REDUCTION AND TERMINATION OF THE COMMITMENTS

      The Borrower may, prior to the Funding Date, upon at least three Business
Days' prior notice to the Administrative Agent, terminate in whole or reduce in
part ratably the unused portions of the Commitments of the Lenders; provided,
however, that each partial reduction shall be in an aggregate amount of not less
than $5,000,000 or an integral multiple of $1,000,000 in excess thereof. The
amount of any Commitment that is not borrowed on the Funding Date shall
thereafter be terminated. In addition, all outstanding Commitments shall
terminate on the Funding Date immediately following the funding of the Initial
Loans.

2.06 REPAYMENT OF LOANS

      (a) Initial Loans. The Borrower promises, subject to the provisions of
Section 2.06(b) below, to repay the entire unpaid principal amount of the
Initial Loans on the Initial Maturity Date (or earlier, if otherwise required by
the terms hereof).

      (b) Extended Loans. If, on the Initial Maturity Date, (i) the Initial
Loans have not been repaid in full or exchanged in full for Exchange Securities
pursuant to Section 2.04 (Exchange Securities) and (ii) each of the conditions
precedent set forth in Section 5.03 (Conditions Precedent to Extended Loans)
have been satisfied, then the Initial Loans of each Lender then outstanding
shall be deemed converted on the Initial Maturity Date into Loans ("Extended
Loans") of such Lender, having the same principal amount as such outstanding
Initial Loans. The Borrower promises to repay the entire principal amount of all
Extended Loans on the Final Maturity Date (or earlier, if required by the terms
hereof).

                                       34


2.07 OPTIONAL PREPAYMENTS.

      (a) The Borrower may, upon at least two (2) business days' prior notice to
the Administrative Agent stating the proposed date and aggregate principal
amount of the prepayment, prepay the outstanding principal amount of the Loans,
in whole or in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid; provided, however, that if any
prepayment of any Eurodollar Rate Loan is made by the Borrower other than on the
last day of an Interest Period for such Loan, the Borrower shall also pay any
amounts owing pursuant to Section 3.05 (Funding Losses); and provided, further,
that each partial prepayment shall be in an aggregate amount not less than
$5,000,000 or integral multiples of $1,000,000 in excess thereof. Upon the
giving of such notice of prepayment, the principal amount of the Loans specified
to be prepaid shall become due and payable on the date specified for such
prepayment.

      (b) The Borrower shall not (i) voluntarily prepay the principal amount of
any Loan other than as provided in this Section 2.07 or (ii) voluntarily prepay
the principal amount of any Loan to the extent that such prepayment is not
permitted by the Senior Secured Credit Agreement (so long as the Senior Secured
Credit Agreement is in effect, but without permitting any modification to the
terms thereof after the date of this Agreement which further restricts the
ability of the Borrower to repay or prepay the Loans).

2.08 MANDATORY PREPAYMENTS.

      (a) Upon receipt by the Borrower or any of its Subsidiaries of Net Cash
Proceeds arising from any Disposition, Involuntary Disposition, Debt Issuance or
Equity Issuance or (ii) without duplication, Extraordinary Receipts, in each
case, the Borrower shall immediately prepay without notice the Loans in an
amount equal to 100% of such Net Cash Proceeds;

provided, however, that:

                  (A) in the case of any Net Cash Proceeds arising from any (I)
            Disposition or (II) Involuntary Disposition, (X) if the Borrower
            shall have delivered a Reinvestment Notice with respect to such Net
            Cash Proceeds, no prepayment shall be required under this Section
            2.08(a) with respect to the Net Cash Proceeds of such Reinvestment
            Event until the applicable Reinvestment Prepayment Date and (Y) on
            the applicable Reinvestment Prepayment Date, the Borrower shall
            prepay the Loans in an amount equal to the Reinvestment Prepayment
            Amount applicable to such Reinvestment Event, if any, on the
            Reinvestment Prepayment Date with respect to such Reinvestment
            Event, which mandatory prepayment shall be applied in accordance
            with clause (c) below;

                  (B) the Borrower shall not be required to make a prepayment
            pursuant to this Section 2.08(a) with the Net Cash Proceeds arising
            from the Disposition or Involuntary Disposition of any Property that
            is subject to (I) a HUD Financing or (II) other Indebtedness that is
            secured by a Lien on such Property, in each case to the extent that
            the Borrower or the applicable Subsidiary is required pursuant to
            the documentation governing such HUD Financing or other Indebtedness
            to apply such Net Cash Proceeds to prepay such HUD Financing or
            other Indebtedness; and

                  (C) nothing in this Section 2.08 shall be construed to permit
            (or be a consent to) the issuance or incurrence of any Indebtedness
            or Equity Securities, the Disposition of any Property or the
            Involuntary Disposition of any Property that is not, in any such
            case, otherwise permitted by this Agreement.

                                       35


      (b) Notwithstanding anything in this Section 2.08 to the contrary, the
amount of Net Cash Proceeds arising from any Disposition, Involuntary
Disposition or Extraordinary Receipts that the Borrower is required to apply in
prepayment of the Loans pursuant to this Section 2.08 shall be deemed reduced by
the amount thereof that the Borrower is required to apply in mandatory
prepayment of the Senior Secured Credit Facilities pursuant to the terms of the
Senior Secured Credit Agreement.

      (c) Notwithstanding anything in this Section 2.08 to the contrary, if, on
the date that any applicable amount of Net Cash Proceeds are required to be
applied in mandatory prepayment of the Loans pursuant this Section 2.08, any
Exchange Securities have been issued and are outstanding, such amount of Net
Cash Proceeds shall be applied as follows: (x) if Floating Rate Exchange
Securities are then outstanding but no Fixed Rate Exchange Securities are then
outstanding, the Loans shall be prepaid and (to the extent required by the
Exchange Indenture) the Floating Rate Exchange Securities shall be redeemed (at
par plus accrued and unpaid interest), on a pro rata basis; and (y) if any Fixed
Rate Exchange Securities are then outstanding: (A) the Borrower shall
immediately notify the Administrative Agent of the receipt of applicable Net
Cash Proceeds and the amount thereof which is required to be applied, on a pro
rata basis, in mandatory prepayment of the Loans, in mandatory redemption of any
Floating Rate Exchange Securities (at par plus accrued and unpaid interest) and
in making mandatory offers to purchase any Fixed Rate Exchange Securities (at
par plus accrued and unpaid interest plus any applicable premium), (B) not later
than five Business Days following the date of such notice to the Administrative
Agent, the Borrower shall notify the Administrative Agent of the respective pro
rata allocated amounts of the Loans, any Floating Rate Exchange Securities and
any Fixed Rate Exchange Securities which are required to be purchased pursuant
to accepted offers to purchase made as provided in clause (A) above, and (C) not
later than five Business Days following the date of the notice delivered
pursuant to clause (B) above, the Loans shall be prepaid in the applicable pro
rata allocated amount thereof referred to in clause (B) above. Notwithstanding
anything in this clause (c) to the contrary, on or prior to the date such offer
to purchase is required to be made pursuant to this clause (c), any holder of
Fixed Rate Exchange Securities may refuse to accept such offer by a written
notice to the Administrative Agent delivered no later than 5:00 p.m. (New York
time) two Business Days after receipt of notice from the Administrative Agent
that such offer to purchase is to be made and any Net Cash Proceeds not accepted
by holders of the Fixed Rate Exchange Securities shall be applied to repay any
additional outstanding Loans and Floating Rate Exchange Securities on a pro rata
basis.

      (d) Change of Control. If a Change of Control shall occur, the Borrower
shall within five Business Days after the occurrence thereof prepay in full the
outstanding amount of Loans. Notwithstanding anything in this Section 2.08(d) to
the contrary, on or prior to the date such mandatory prepayment is otherwise
required to be made pursuant to this Section 2.08(d), any Lender may waive its
right to receive its Ratable Portion of such mandatory prepayment allocable to
such Lender's Loans by a written notice to the Administrative Agent delivered no
later than 5:00 p.m. (New York time) two Business Days after receipt of notice
from the Administrative Agent that such mandatory prepayment is to be made. If
any Lender does not so notify the Administrative Agent within such two Business
Day period, such Lender will be deemed to have elected to receive 100% of its
Ratable Portion of the mandatory prepayment.

2.09 INTEREST.

      (a) Rate of Interest. All Loans and the outstanding amount of all other
Obligations shall bear interest on the unpaid principal amount thereof from the
date such Loans are made and, in the case of such other Obligations, from the
date such other Obligations are due and payable until, in all cases, paid in
full, except as otherwise provided in clause (c) below, as follows:

                                       36


            (i) if a Base Rate Loan or such other Obligation, at a rate per
annum equal to the sum of (A) the Base Rate as in effect from time to time and
(B) the Applicable Margin in effect from time to time; and

            (ii) if a Eurodollar Rate Loan, at a rate per annum equal to the sum
of (A) the Eurodollar Rate determined for the applicable Interest Period and (B)
the Applicable Margin in effect from time to time during such Interest Period;

      provided, however, (x) that the interest rate in effect at any time shall
not exceed the Total Cap and shall not be less than 8.50% per annum, and (y)
that in the event that Refinancing Securities are not issued in accordance with
a Securities Demand delivered to the Borrower pursuant to Section 2.04
(Permanent Financing) within ten (10) days following the date of such Securities
Demand (the "Demand Failure Date"), then, at any time thereafter the rate of
interest applicable to all Loans shall immediately increase to the Total Cap.

      (b) Interest Payments. Interest accrued on (i) each Base Rate Loan shall
be payable in arrears (A) on the first Business Day of each calendar quarter,
commencing on the first such day following the making of such Base Rate Loan,
(B) upon the payment or prepayment thereof in full or in part, (C) on the
Initial Maturity Date if such Base Rate Loan is an Initial Loan and (D) if not
previously paid in full, at maturity (whether by acceleration or otherwise) of
such Base Rate Loan, (ii) each Eurodollar Rate Loan shall be payable in arrears
(A) on the last day of each Interest Period applicable to such Loan and, if such
Interest Period has a duration of more than three months, on each date during
such Interest Period occurring every three months from the first day of such
Interest Period, (B) upon the payment or prepayment thereof in full or in part,
(C) on the Initial Maturity Date if such Eurodollar Rate Loan is an Initial Loan
and (D) if not previously paid in full, at maturity (whether by acceleration or
otherwise) of such Eurodollar Rate Loan and (iii) the amount of all other
Obligations shall be payable on demand from and after the time such Obligation
becomes due and payable (whether by acceleration or otherwise).

      (c) Default Interest. Notwithstanding the rates of interest specified in
clause (a) above or elsewhere herein, effective immediately upon the occurrence
of an Event of Default and for as long thereafter as such Event of Default shall
be continuing, the principal balance of all Loans and the amount of all other
Obligations then due and payable shall bear interest at the Default Rate
applicable to such Loans or other Obligations from time to time. Such interest
shall be payable on the date that would otherwise be applicable to such interest
pursuant to clause (b) above or otherwise on demand.

2.10 CONVERSION/CONTINUATION OPTION.

      (a) At any time prior to the Conversion Date, the Borrower may elect (i)
on any Business Day to convert Base Rate Loans or any portion thereof to
Eurodollar Rate Loans and (ii) at the end of any applicable Interest Period, to
convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans or to
continue such Eurodollar Rate Loans or any portion thereof for an additional
Interest Period; provided, however, that the aggregate amount of the Eurodollar
Loans for each Interest Period must be in the amount of at least $1,000,000 or
an integral multiple of $1,000,000 in excess thereof. Each conversion or
continuation shall be allocated among the Loans of each Lender in accordance
with such Lender's Pro Rata Share. Each such election shall be in substantially
the form of Exhibit B (Form of Notice of Conversion or Continuation) (a "Notice
of Conversion or Continuation") and shall be made by giving the Administrative
Agent at least three Business Days' prior written notice specifying (A) the
amount and Type of Loan being converted or continued, (B) in the case of a
conversion to or a continuation of Eurodollar Rate Loans, the applicable
Interest Period and (C) in the case of a conversion, the date of such
conversion.

                                       37


      (b) The Administrative Agent shall promptly notify each applicable Lender
of its receipt of a Notice of Conversion or Continuation and of the options
selected therein. Notwithstanding the foregoing, (i) no conversion in whole or
in part of Base Rate Loans to Eurodollar Rate Loans having Interest Periods
which are longer than one week shall be permitted at any time prior to the date
that is thirty days after the Funding Date and (ii) no conversion in whole or in
part of Base Rate Loans to Eurodollar Rate Loans and no continuation in whole or
in part of Eurodollar Rate Loans upon the expiration of any applicable Interest
Period shall be permitted at any time at which (A) a Default or an Event of
Default shall have occurred and be continuing or (B) the continuation of, or
conversion into, a Eurodollar Rate Loan would violate any provision of Sections
3.02 (Illegality), 3.03 (Determination of Rates; Inability to Determine Rates),
3.04 (Increased Cost and Reduced Return; Capital Adequacy) or 3.05 (Funding
Losses). If, within the time period required under the terms of this Section
2.10, the Administrative Agent does not receive a Notice of Conversion or
Continuation from the Borrower containing a permitted election to continue any
Eurodollar Rate Loans for an additional Interest Period or to convert any such
Loans, then, upon the expiration of the applicable Interest Period, such Loans
shall be automatically converted to Base Rate Loans, Each Notice of Conversion
or Continuation shall be irrevocable.

      (c) All Initial Loans that become Extended Loans shall be automatically
converted to, or continued as Eurodollar Rate Loans on the Conversion Date and,
subject to Sections 3.02 (Illegality), 3.03 (Determination of Rates; Inability
to Determine Rates), 3.04 (Increased Cost and Reduced Return; Capital Adequacy)
and 3.05 (Funding Losses), shall be continued as Eurodollar Rate Loans on each
three-month anniversary thereof without the need for the Borrower to submit a
Notice of Conversion or Continuation.

2.11 EVIDENCE OF DEBT.

      (a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing Indebtedness of the Borrower to such Lender
resulting from each Loan or other Borrowing of such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time under this Agreement.

      (b) (i) The Administrative Agent, acting as agent of the Borrower solely
for this purpose, shall establish and maintain at its address referred to in
Section 11.02 (Notices, Etc.) a record of ownership (the "Register") in which
the Administrative Agent agrees to register by book entry the Administrative
Agent's and each Lender's interest in each Loan and in the right to receive any
payments hereunder and any assignment of any such interest or rights. In
addition, the Administrative Agent, acting as agent of the Borrower solely for
this purpose and for tax purposes, shall establish and maintain accounts in the
Register in accordance with its usual practice in which it shall record (I) the
names and addresses of the Lenders, (II) the Commitments of each Lender from
time to time, (III) the amount of each Loan made and, if a Eurodollar Rate Loan,
the Interest Period applicable thereto, (IV) the amount of any principal or
interest due and payable, and paid, by the Borrower to, or for the account of,
each Lender hereunder and (V) the amount of any sum received by the Loan
Administrative Agent hereunder from the Borrower, whether such sum constitutes
principal or interest (and the type of Loan to which it applies), fees, expenses
or other amounts due under the Loan Documents and each Lender's share thereof,
if applicable.

          (ii) Notwithstanding anything to the contrary contained in this
Agreement, the Loans (including the Notes evidencing such Loans) are registered
obligations and the right, title, and interest of the Lenders and their
assignees in and to such Loans shall be transferable only upon notation of such
transfer in the Register. A Note shall only evidence the Lender's or a
registered assignee's right, title and interest in and to the related Loan, and
in no event is any such Note to be considered a bearer instrument or obligation.
This Section 2.11(b) and Section 11.07 (Assignments and Participations) shall be
construed

                                       38


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 and any related
regulations (or any successor provisions of the Code or such regulations).

      (c) The entries made in the Register and in the accounts therein
maintained pursuant to clauses (a) and (b) above shall, to the extent permitted
by applicable Law, be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrower to repay the Loans and
other Obligations in accordance with their terms. In addition, the Loan Parties,
the Administrative Agent 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 inspection by the Borrower, the Administrative Agent, or such
Lender at any reasonable time and from time to time upon reasonable prior
notice.

      (d) Notwithstanding any other provision of the Agreement, in the event
that any Lender requests that the Borrower execute and deliver a promissory note
or notes payable to such Lender in order to evidence the Indebtedness owing to
such Lender by the Borrower hereunder, the Borrower shall promptly execute and
deliver a Note or Notes to such Lender evidencing any Loans of such Lender,
substantially in the forms of Exhibit C-1 (Form of Initial Loan Note) or Exhibit
C-2 (Form of Extended Loan Note), respectively.

2.12 FEES.

      The Borrower has agreed to pay to the Administrative Agent and the
Arranger additional fees, the amount and dates of payment of which are embodied
in the Fee Letter and the Engagement Letter.

2.13 PAYMENTS AND COMPUTATIONS.

      (a) The Borrower shall make each payment hereunder (including fees and
expenses) not later than 2:00 p.m. on the day when due, in Dollars to the
Administrative Agent at its address referred to in Section 11.02 (Notices, Etc.)
in immediately available funds without set-off or counterclaim. The
Administrative Agent shall promptly thereafter cause to be distributed
immediately available funds relating to the payment of principal, interest or
fees to the applicable Lenders, in accordance with the application of payments
set forth in clause (f) or (g) below, as applicable, for the account of their
respective Lending Offices; provided, however, that amounts payable pursuant to
Sections 3.02 (Illegality), 3.03 (Determination of Rates; Inability to Determine
Rates), 3.04 (Increased Cost and Reduced Return; Capital Adequacy) or 3.05
(Funding Losses) shall be paid only to the affected Lender or Lenders. Payments
received by the Administrative Agent after 2:00 p.m. shall be deemed to be
received on the next Business Day.

      (b) All computations of interest and of fees shall be made by the
Administrative Agent on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest and fees are payable. Each
determination by the Administrative Agent of a rate of interest hereunder shall
be conclusive and binding for all purposes, absent manifest error.

      (c) Each payment by the Borrower of any Loan and each reimbursement of
various costs, expenses or other Obligations shall be made in Dollars.

                                       39


      (d) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest or fees, as the case may
be; provided, however, that if such extension would cause payment of interest on
or principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the immediately preceding Business Day. All
repayments of any Loans shall be applied as follows: first, to repay such Loans
outstanding as Base Rate Loans and then, to repay such Loans outstanding as
Eurodollar Rate Loans, with those Eurodollar Rate Loans having earlier expiring
Eurodollar Interest Periods being repaid prior to those having later expiring
Eurodollar Interest Periods.

      (e) Unless the Administrative Agent shall have received notice from the
Borrower or the Lenders prior to the date on which any payment is due hereunder
that the Borrower will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each applicable Lender on such due date
an amount equal to the amount then due such Lender. If and to the extent that
the Borrower shall not have made such payment in full to the Administrative
Agent, each applicable Lender shall repay to the Administrative Agent forthwith
on demand such amount distributed to such Lender together with interest thereon
(at the Federal Funds Rate for the first Business Day and thereafter, at the
rate applicable to Base Rate Loans) for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Administrative Agent.

      (f) Except for payments and other amounts received by the Administrative
Agent and applied in accordance with the provisions of clause (g) below (or
required to be applied in accordance with Section 2.08(c) (Mandatory
Prepayments)), all payments and any other amounts received by the Administrative
Agent from or for the benefit of the Borrower shall be applied as follows:
first, to pay all Obligations then due and payable and second, as the Borrower
so designates. Payments in respect of the Loans received by the Administrative
Agent shall be distributed to each Lender in accordance with such Lender's Pro
Rata Share of the Loans; and all payments of fees and all other payments in
respect of any other Obligation shall be allocated among such of the Lenders in
proportion to their respective Pro Rata Shares.

      (g) The Borrower hereby irrevocably waives the right to direct the
application of any and all payments in respect of the Obligations after the
occurrence and during the continuance of an Event of Default and shall apply all
payments in respect of the Obligations in the following order:

            (i) first, to pay Obligations in respect of any fees then due to the
Arranger, the Administrative Agent and/or the Lenders;

            (ii) second, to pay interest then due and payable in respect of the
Loans;

            (iii) third, to pay or prepay principal amounts on the Loans,
ratably to the aggregate principal amount of such Loans; and

            (iv) fourth, to the ratable payment of all other Obligations;

provided, however, that if sufficient funds are not available to fund all
payments to be made in respect of any Obligation described in any of clauses
(i), (ii), (iii) and (iv), above, the available funds being applied with respect
to any such Obligation (unless otherwise specified in such clause) shall be
allocated to the payment of such Obligation ratably, based on the proportion of
the Arranger's, the Administrative Agent's and each Lender's interest in the
aggregate outstanding Obligations described in such clauses.

                                       40


The order of priority set forth in clauses (i), (ii), (iii) and (iv) above may
at any time and from time to time be changed by the agreement of the Required
Lenders without necessity of notice to or consent of or approval by the Borrower
or by any other Person that is not a Lender. The order of priority set forth in
clause (i) above may be changed only with the prior written consent of the
Administrative Agent in addition to that of the Required Lenders.

                                  ARTICLE III

                     TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 TAXES.

      (a) Subject to Section 11.15 (Tax Forms), any and all payments by any Loan
Party to or for the account of the Administrative Agent or any Lender under any
Loan Document and any Exchange Securities Document shall be made free and clear
of and without deduction for any and all present or future taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and all liabilities with respect thereto, excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its
overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which the Administrative Agent or such Lender, as the case may be, is
organized or maintains a lending office (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and liabilities being hereinafter referred to as "Taxes"). If any Loan Party
shall be required by any Laws to deduct any Taxes from or in respect of any sum
payable under any Loan Document or any Exchange Securities Document to the
Administrative Agent or any Lender, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.01), each of the
Administrative Agent and such Lender receives an amount equal to the sum it
would have received had no such deductions been made, (ii) such Loan Party shall
make such deductions, (iii) such Loan Party shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable Laws, and (iv) within thirty days after the date of such payment,
such Loan Party shall furnish to the Administrative Agent (which shall forward
the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof or if no receipt is available, other evidence of
payment reasonably satisfactory to the Administrative Agent.

      (b) In addition, the Borrower agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").

      (c) If the Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document or any
Exchange Securities Document to the Administrative Agent or any Lender, the
Borrower shall also pay to the Administrative Agent or to such Lender, as the
case may be, at the time interest is paid, such additional amount that the
Administrative Agent or such Lender specifies is necessary to preserve the
after-tax yield (after factoring in all taxes, including taxes imposed on or
measured by net income) that the Administrative Agent or such Lender would have
received if such Taxes or Other Taxes had not been deducted or paid.

      (d) The Borrower agrees to indemnify the Administrative Agent and each
Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 3.01) paid by the Administrative Agent and such

                                       41


Lender, (ii) amounts payable under Section 3.01(c) and (iii) any liability
(including additions to tax, penalties, interest and expenses) arising therefrom
or with respect thereto, in each case whether or not such Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. Payment under this clause (d) shall be made within thirty days after
the date the Lender or the Administrative Agent makes a demand therefor.

      (e) If any Loan Party is required to pay any amount to any Lender or the
Administrative Agent pursuant to this Section 3.01, then such Lender or the
Administrative Agent, as the case may be, shall use reasonable efforts
(consistent with legal and regulatory restrictions) to change the jurisdiction
of its Lending Office so as to eliminate any such additional payment which may
thereafter accrue, if such change in the reasonable judgment of such Lender is
not otherwise disadvantageous to such Lender.

3.02 ILLEGALITY.

      If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans as it
would otherwise be obligated hereunder to make, maintain or fund, or materially
restricts the authority of such Lender to purchase or sell, or to take deposits
of, Dollars in the applicable Eurodollar interbank market, or to determine or
charge interest rates based upon the Eurodollar Rate, then, on notice thereof by
such Lender to the Borrower through the Administrative Agent, any obligation of
such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate
Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted. Each
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

3.03 DETERMINATION OF RATES; INABILITY TO DETERMINE RATES.

      (a) The Eurodollar Rate for each Interest Period for Eurodollar Rate Loans
shall be determined by the Administrative Agent pursuant to the procedures set
forth in the definition of "Eurodollar Rate." Such determination shall be
presumed to be correct absent manifest error and shall be binding on the
Borrower.

      (b) If any Administrative Agent or the Required Lenders determine in
connection with any request for a Eurodollar Rate Loan or a conversion to or
continuation of a Eurodollar Rate Loan that (a) deposits in Dollars are not
being offered to banks in the London interbank market for the applicable amount
and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable
means do not exist for determining the Eurodollar Base Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan or (c) the
Eurodollar Base Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
the Lenders of funding such Loan, the Administrative Agent (or, if the Required
Lenders make such determination, following notice thereof) will promptly notify
the Borrower and all Lenders thereof. Thereafter, the obligation of the Lenders
to make or maintain Eurodollar Rate Loans shall be suspended until the
Administrative Agent revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to

                                       42


have converted such request into a request for a Borrowing of Base Rate Loans in
the amount specified therein.

3.04  INCREASED COST AND REDUCED RETURN; CAPITAL ADEQUACY.

      (a) If any Lender determines that as a result of the introduction of or
any change in or in the interpretation of any Law, or such Lender's compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding, maintaining or purchasing participations in Eurodollar
Rate Loans, or a reduction in the amount received or receivable by such Lender
in connection with any of the foregoing (excluding for purposes of this clause
(a) any such increased costs or reduction in amount resulting from (i) Taxes or
Other Taxes (as to which Section 3.01 (Taxes) shall govern), (ii) changes in the
basis of taxation of overall net income or overall gross income by the United
States or any foreign jurisdiction or any political subdivision of either
thereof under the Laws of which such Lender is organized or has its Lending
Office, and (iii) reserve requirements utilized, as to Eurodollar Rate Loans, in
the determination of the Eurodollar Rate), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such increased cost or reduction.

      (b) If any Lender determines that the introduction of any Law regarding
capital adequacy or any change therein or in the interpretation thereof, or
compliance by such Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of such Lender's obligations hereunder
(taking into consideration its policies with respect to capital adequacy and
such Lender's desired return on capital), then from time to time upon demand of
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate
such Lender for such reduction.

3.05  FUNDING LOSSES.

      Upon demand of any Lender (with a copy to the Administrative Agent) from
time to time, the Borrower shall promptly compensate such Lender for and hold
such Lender harmless from any loss, cost or expense incurred by it as a result
of:

            (a) any continuation, conversion, payment or prepayment of any Loan
      other than a Base Rate Loan on a day other than the last day of the
      Interest Period for such Loan (whether voluntary, mandatory, automatic, by
      reason of acceleration, or otherwise);

            (b) any failure by the Borrower (for a reason other than the failure
      of such Lender to make a Loan) to prepay, borrow, continue or convert any
      Loan other than a Base Rate Loan on the date or in the amount notified by
      the Borrower; or

            (c) any assignment of a Eurodollar Rate Loan on a day other than the
      last day of the Interest Period therefor as a result of a request by the
      Borrower pursuant to Section 3.07 (Substitution of Lenders);

      including any loss of anticipated profits and any loss or expense arising
      from the liquidation or reemployment of funds obtained by it to maintain
      such Loan or from fees payable to terminate the deposits from which such
      funds were obtained. The Borrower shall also pay any customary
      administrative fees charged by such Lender in connection with the
      foregoing.

      For purposes of calculating amounts payable by the Borrower to the Lenders
under this Section

                                       43


3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made
by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for
such Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan was in fact so funded.

3.06  MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION.

      A certificate of the Administrative Agent or any Lender claiming
compensation under this Article III and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, the Administrative Agent or such
Lender may use any reasonable averaging and attribution methods.

3.07  SUBSTITUTION OF LENDERS.

      (a) In the event that:

          (i) (A) the Borrower is required to make any payment pursuant to
Section 3.01 (Taxes) that is attributable to a particular Lender, (B) it becomes
illegal for any Lender to continue to fund or make any Eurodollar Rate Loan and
such Lender notifies the Borrower pursuant to Section 3.02 (Illegality), (C) any
Lender makes a claim under Section 3.04 (Increased Costs and Reduced Return;
Capital Adequacy) or (D) any Lender becomes a Defaulting Lender,

          (ii) in the case of clause (i)(C) above, as a consequence of increased
costs in respect of which such claim is made, the effective rate of interest
payable to such Lender under this Agreement with respect to its Loans exceeds
the effective average annual rate of interest payable to the Required Lenders
under this Agreement, and

          (iii) in the case of clause (i)(A), (B) and (C) above, Lenders holding
at least 75% of the Commitments are not subject to such increased costs or
illegality, payment or proceedings (any such Lender, an "Affected Lender"),

      the Borrower may substitute any Lender and, if reasonably acceptable to
the Administrative Agent, any other Eligible Assignee (a "Substitute
Institution") for such Affected Lender hereunder, after delivery of a written
notice (a "Substitution Notice") within a reasonable time (in any case not to
exceed ninety (90) days) following the occurrence of any of the events described
in clause (i)(A), (B), (C) or (D) above by the Borrower to the Administrative
Agent and the Affected Lender that the Borrower intends to make such
substitution; provided, however, that, in the case of any Affected Lender, if
more than one such Lender claims increased costs, illegality or right to payment
arising from the same act or condition and such claims are received by the
Borrower within 30 days of each other, then the Borrower may substitute all, but
not (except to the extent the Borrower has already substituted one of such
Affected Lenders before the Borrower's receipt of the other Affected Lenders'
claim) less than all, such Lenders making such claims.

      (b) If the Substitution Notice was properly issued under this Section
3.07, the Affected Lender shall sell, and the Substitute Institution shall
purchase, all rights and claims of such Affected Lender under the Loan Documents
and the Substitute Institution shall assume, and the Affected Lender shall be
relieved of, all other prior unperformed obligations of the Affected Lender
under the Loan Documents (other than in respect of any damages in respect of any
such unperformed obligations; provided, that in no event shall such Affected
Lender be liable for any exemplary or punitive damages to the extent permitted
by applicable Law). Such purchase and sale (and the corresponding assignment of
all rights and claims under this Agreement) shall be effective on (and not
earlier than) the later of (i) the

                                       44


receipt by the Affected Lender of its Pro Rata Share of the Loans, together with
any other Obligations owing to it, (ii) the receipt by the Administrative Agent
of an agreement in form and substance reasonably satisfactory to it and the
Borrower whereby the Substitute Institution shall agree to be bound by the terms
of this Agreement and (iii) the payment in full to the Affected Lender in cash
of all fees, unreimbursed costs and expenses and indemnities accrued and unpaid
through such effective date. Upon the effectiveness of such sale, purchase and
assumption, the Substitute Institution shall become a "Lender" hereunder for all
purposes of this Agreement having a Commitment, in the amount of such Affected
Lender's Commitment assumed by it and such Commitment of the Affected Lender
shall be terminated; provided, however, that all indemnities under the Loan
Documents shall continue in favor of such Affected Lender in accordance with the
terms of this Agreement.

      (c) Each Lender agrees that, if it becomes an Affected Lender and its
rights and claims are assigned hereunder to a Substitute Institution pursuant to
this Section 3.07, it shall execute and deliver to the Administrative Agent an
Assignment and Assumption to evidence such assignment, together with any Note
(if such Loans are evidenced by a Note) evidencing the Loans subject to such
Assignment and Assumption; provided, however, that the failure of any Affected
Lender to execute an Assignment and Assumption shall not render such assignment
invalid.

3.08  SURVIVAL.

      All of the Borrower's obligations under this Article III shall survive
termination of the Commitments and repayment of all Obligations.

                                   ARTICLE IV

                                    GUARANTY

4.01  THE GUARANTY.

      (a) Each of the Guarantors hereby jointly and severally guarantees to each
Lender, and the Administrative Agent as hereinafter provided, as primary obligor
and not as surety, the prompt payment of the Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) strictly in accordance with the
terms thereof. The Guarantors hereby further agree that if any of the
Obligations are not paid in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise), the Guarantors will, jointly and severally, promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Obligations, the same will be
promptly paid in full when due (whether at extended maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
in accordance with the terms of such extension or renewal.

      (b) Notwithstanding any provision to the contrary contained herein or in
any other of the Loan Documents, the obligations of each Guarantor under this
Agreement and the other Loan Documents shall be limited to an aggregate amount
equal to the largest amount that would not render such obligations subject to
avoidance under the Debtor Relief Laws or any comparable provisions of any
applicable state Law.

4.02  OBLIGATIONS UNCONDITIONAL.

      The obligations of the Guarantors under Section 4.01 (The Guaranty) are
joint and several, absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of

                                       45


any of the Loan Documents or any other agreement or instrument referred to
therein, or any substitution, release, impairment or exchange of any other
guarantee of or security for any of the Obligations, and, to the fullest extent
permitted by applicable Law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.02 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor for amounts paid under this Article IV until
such time as the Obligations have been paid in full. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent permitted
by law, the occurrence of any one or more of the following shall not alter or
impair the liability of any Guarantor hereunder, which shall remain absolute and
unconditional as described above:

            (a) at any time or from time to time, without notice to any
      Guarantor, the time for any performance of or compliance with any of the
      Obligations shall be extended, or such performance or compliance shall be
      waived;

            (b) any of the acts mentioned in any of the provisions of any of the
      Loan Documents or any other agreement or instrument referred to in the
      Loan Documents shall be done or omitted;

            (c) the maturity of any of the Obligations shall be accelerated, or
      any of the Obligations shall be modified, supplemented or amended in any
      respect, or any right under any of the Loan Documents or any other
      agreement or instrument referred to in the Loan Documents shall be waived
      or any other guarantee of any of the Obligations or any security therefor
      shall be released, impaired or exchanged in whole or in part or otherwise
      dealt with; or

            (d) any of the Obligations shall be determined to be void or
      voidable (including for the benefit of any creditor of any Guarantor) or
      shall be subordinated to the claims of any Person (including any creditor
      of any Guarantor).

      With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Administrative Agent or any Lender
exhaust any right, power or remedy or proceed against any Person under any of
the Loan Documents or any other agreement or instrument referred to in the Loan
Documents, or against any other Person under any other guarantee of, or security
for, any of the Obligations.

4.03  REINSTATEMENT.

      The obligations of the Guarantors under this Article IV shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Obligations is rescinded or must be
otherwise restored by any holder of any of the Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, and each
Guarantor agrees that it will indemnify the Administrative Agent and each Lender
on demand for all reasonable costs and expenses (including Attorney Costs)
incurred by the Administrative Agent or such Lender in connection with such
rescission or restoration, including any such reasonable costs and expenses
incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar Law.

4.04  CERTAIN ADDITIONAL WAIVERS.

      Each Guarantor agrees that such Guarantor shall have no right of recourse
to security for the

                                       46


Obligations, except through the exercise of rights of subrogation pursuant to
Section 4.02 (Obligations Unconditional) and through the exercise of rights of
contribution pursuant to Section 4.06 (Rights of Contribution).

4.05  REMEDIES.

      The Guarantors agree that, to the fullest extent permitted by Law, as
between the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, the Obligations may be declared to be forthwith due
and payable as provided in Section 9.02 (Remedies Upon Event of Default) (and
shall be deemed to have become automatically due and payable in the
circumstances provided in such Section 9.02) for purposes of Section 4.01 (The
Guaranty) notwithstanding any stay, injunction or other prohibition preventing
such declaration (or preventing the Obligations from becoming automatically due
and payable) as against any other Person and that, in the event of such
declaration (or the Obligations being deemed to have become automatically due
and payable), the Obligations (whether or not due and payable by any other
Person) shall forthwith become due and payable by the Guarantors for purposes of
Section 4.01 (The Guaranty).

4.06  RIGHTS OF CONTRIBUTION.

      The Guarantors agree among themselves that, in connection with payments
made hereunder, each Guarantor shall have contribution rights against the other
Guarantors as permitted under applicable Law. Such contribution rights shall be
subordinate and subject in right of payment to the Obligations of such
Guarantors under the Loan Documents and no Guarantor shall exercise such rights
of contribution until all Obligations under this Agreement have been paid in
full and the Commitments have terminated.

4.07  GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.

      The guarantee in this Article IV is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Obligations
whenever arising.

                                   ARTICLE V

                              CONDITIONS PRECEDENT

5.01  CONDITIONS PRECEDENT TO INITIAL BORROWING.

      The obligation of each Lender on the Funding Date to make any Loan is
subject to the satisfaction or due waiver in accordance with Section 11.01
(Amendments; Etc.) of each of the following conditions precedent:

      (a) Certain Documents. The Administrative Agent shall have received on or
prior to the Funding Date each of the following, each dated as of the Funding
Date unless otherwise indicated or agreed to by the Administrative Agent, in
form and substance reasonably satisfactory to the Administrative Agent:

            (i) this Agreement, duly executed and delivered by the Borrower and,
for the account of each Lender requesting the same, an Initial Loan Note or
Initial Loan Notes of the Borrower conforming to the requirements set forth
herein;

            (ii) a favorable opinion of Waller Landsen Dortch & Davis, counsel
to the Loan Parties, in substantially the form of Exhibit I (Form of Opinion of
Counsel for the Loan Parties), in form

                                       47


and substance satisfactory to the Administrative Agent, and in the case of all
legal opinions delivered pursuant to this Agreement, addressed to the
Administrative Agent and the Lenders and addressing such other matters as any
Lender through the Administrative Agent may reasonably request;

            (iii) a copy of each Related Document certified as being complete
and correct by a Responsible Officer of the Borrower;

            (iv) a copy of the articles or certificate of incorporation (or
equivalent Organization Document) of each Loan Party, certified as of a recent
date by the Secretary of State of the state of organization of such Loan Party,
together with certificates of such official attesting to the good standing of
each such Loan Party in such State as of a recent date;

            (v) certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying (A) the names and true signatures of each officer of such
Loan Party that has been authorized to execute and deliver any Loan Document or
any other document required hereunder to be executed and delivered by or on
behalf of such Loan Party, (B) the by-laws (or equivalent Organization Document)
of such Loan Party as in effect on the date of such certification, (C) the
resolutions of such Loan Party's Board of Directors (or equivalent governing
body) approving and authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party and (D) that there
have been no changes in the certificate of incorporation (or equivalent
Organization Document) of such Loan Party from the certificate of incorporation
(or equivalent Organization Document) delivered pursuant to clause (iv) above;

            (vi) a certificate of the chief financial officer of the Borrower
stating in reasonable detail that the Borrower is Solvent after giving effect to
the initial Borrowing, the application of the proceeds thereof in accordance
with Section 6.19 (Use of Proceeds) and the payment of all estimated Attorney
Costs, and accounting and other fees related hereto and to the other Loan
Documents and the transactions contemplated hereby and thereby;

            (vii) a certificate of a Responsible Officer of the Borrower to the
effect that (A) the conditions set forth in Section 5.01(i) below have been
satisfied and (B) there shall be no action, investigation or proceeding (whether
an individual proceeding or a series of related proceedings) or development in
any action, investigation or proceeding (whether an individual proceeding or a
series of related proceedings) that has had or could reasonably be expected to
have a Material Adverse Effect or have a material adverse effect on the ability
of the parties to consummate the Transactions, the funding of the initial
Borrowing under this Agreement or any of the other Transactions;

            (viii) a certificate of a Responsible Officer of the Borrower
specifying all information necessary for the Administrative Agent and the
Lenders to issue wire transfer instructions on behalf of each of the Loan
Parties for the initial Borrowing to be made under this Agreement, including
sources and application of funds, disbursement authorizations, in form
reasonably acceptable to the Administrative Agent;

            (ix) evidence reasonably satisfactory to the Administrative Agent
that the insurance coverage required by Section 7.07 (Maintenance of Insurance)
is in full force and effect; and

            (x) such other certificates, documents, agreements and information
(including information with respect to Environmental Liabilities) respecting any
Loan Party as any Lender through any Administrative Agent may reasonably
request.

                                       48


      (b) Fees and Expenses Paid. There shall have been paid to the
Administrative Agent or the Arranger, for the account of the Administrative
Agent, the Arranger and the Lenders, as applicable, all fees and expenses
(including Attorney Costs) due and payable on or before the Funding Date
(including all such fees described in each Fee Letter); provided, further that
any such fees payable on the Funding Date pursuant to the Fee Letter shall be
paid by the Borrower as provided in such Fee Letter.

      (c) Consummation of Transactions; Etc.

            (i) the Administrative Agent shall have received a certificate, in
form and substance reasonably satisfactory to them, from a Responsible Officer
of the Borrower, for the benefit of the Administrative Agent and the Lenders,
certifying that each of the Transactions (other than the initial Borrowing and
the initial borrowing under the Senior Secured Credit Facilities) has been
consummated or shall be consummated simultaneously with the making of the
initial Borrowings under this Agreement in accordance with the terms hereof, the
Ardent Acquisition Agreements and the Related Documents with respect thereto,
the Senior Secured Credit Agreement, the documentation governing the AHS Tender
Offer and all other related documentation (without any waiver, amendment or
modification of any material provision thereof, except with the prior written
consent of the Administrative Agent);

            (ii) the Administrative Agent shall be satisfied with (A) any
material amendments to the Ardent Acquisition Agreement and the schedules
thereto and any Related Document related thereto and (B) any material change to
the structure of the Ardent Acquisition or any of the other Transactions (other
than the initial Borrowing) from that previously disclosed to the Administrative
Agent;

            (iii) the Administrative Agent shall have received, in form an
substance reasonably satisfactory to them, a certificate from a Responsible
Officer of the Borrower that the Ardent Acquired Business shall have no
Indebtedness for borrowed money outstanding on the Funding Date (other than (x)
in the event that any AHS Notes remain outstanding following the consummation of
the AHS Tender Offer, Indebtedness in respect of the AHS Untendered Notes;
provided, that cash in an amount sufficient to redeem (within 35 days of the
Funding Date, or if the AHS Trustee requires 15 days prior notice pursuant to
the terms of the AHS Indenture, within 45 days of the Funding Date) such
outstanding Indebtedness in full (including principal, accrued and unpaid
interest and any applicable premium) shall have been deposited in an escrow
account pursuant to escrow arrangements satisfactory to the Arranger and (y)
Indebtedness of the Ardent Acquired Business that is permitted pursuant to
Section 8.03 (Indebtedness));

            (iv) the Funding Date Equity Issuance shall have been made on terms
and conditions reasonably satisfactory to the Arranger and the Lenders; and

            (v) the Borrower shall have received not less than $325,000,000 in
gross cash proceeds from the loans under the Senior Secured Credit Facilities
pursuant to the Senior Secured Credit Agreement, which shall be in form and
substance satisfactory to the Administrative Agent.

      (d) Financial Statements of the Borrower. The Lenders shall have received
(a) audited consolidated and consolidating balance sheets and related statements
of income, stockholders' equity and cash flows of the Borrower and its
Subsidiaries (other than the Ardent Acquired Business), for the fiscal years
2002, 2003 and 2004, prepared in accordance with generally accepted accounting
principles in the United States and prepared in accordance with Regulation S-X
under the Securities Act and (b) to the extent available, unaudited consolidated
and consolidating balance sheets and related statements of income, stockholders'
equity and cash flows of the Borrower and its Subsidiaries (other than the
Ardent Acquired Business) for each completed fiscal quarter since the date of
such audited financial statements (and, to the extent available, for each
completed month since the last such quarter) and in the case of

                                       49


clauses (a) and (b), which audited and unaudited financial statements (x) shall
be in form and scope satisfactory to the Lenders and (y) shall not be materially
inconsistent with the financial statements previously provided to the Lenders.

      (e) Financial Statements of the Ardent Acquired Business. The Lenders
shall have received (a) audited consolidated and consolidating balance sheets
and related statements of income, stockholders' equity and cash flows of the
Ardent Acquired Business for the fiscal years 2002, 2003 and 2004, prepared in
accordance with generally accepted accounting principles in the United States
and prepared in accordance with Regulation S-X under the Securities Act and (b)
to the extent available, unaudited consolidated and consolidating balance sheets
and related statements of income, stockholders' equity and cash flows of the
Ardent Acquired Business, in each case, for each completed fiscal quarter since
the date of such audited financial statements (and, to the extent available, for
each completed month since the last such quarter) and in the case of clauses (a)
and (b), which audited and unaudited financial statements (x) shall be in form
and scope satisfactory to the Lenders and (y) shall not be materially
inconsistent with the financial statements previously provided to the Lenders.

      (f) Pro Forma Financial Statements; Projections.

            (i) The Lenders shall have received a pro forma consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the
Funding Date, after giving effect to the Transactions, together with a
certificate of the chief financial officer of the Borrower to the effect that
such financial statements accurately present the pro forma financial position of
the Borrower and its Subsidiaries on a basis consistent with pro forma financial
statements set forth in a registration statement filed with the SEC, and the
Lenders shall be satisfied that such balance sheets are not materially
inconsistent with the forecasts previously provided to the Lenders.

            (ii) The Borrower shall have delivered the Projections, prepared on
a quarterly basis through the end of 2006, which projections shall be
satisfactory to the Administrative Agent.

      (g) Maximum Consolidated Total Leverage Ratio. The Administrative Agent
shall have received reasonably satisfactory evidence (including a certificate of
the chief financial officer of the Borrower accompanied by satisfactory
supporting schedules and other data) that the Consolidated Total Leverage Ratio
(as defined in the Senior Secured Credit Agreement), on a pro forma basis after
giving effect to the Transactions, is less than or equal to 6.25 to 1.

      (h) Request for Borrowing. (i) The Administrative Agent shall have
received a duly executed Notice of Borrowing.

      (i) Representations and Warranties; No Defaults. The following statements
shall be true on the Funding Date, both before and after giving effect to the
Loans and the application of the proceeds therefrom:

            (i) the representations and warranties set forth in Article VI
(Representations and Warranties) and in the other Loan Documents shall be true
and correct on and as of the Funding Date; and

            (ii) no Default or Event of Default shall have occurred and be
continuing.

      (j) No Legal Impediments. The making of the Loans on the Funding Date does
not violate any Law in any material respect on the date of or immediately
following such Loan and is not enjoined, temporarily, preliminarily or
permanently.

                                       50


      (k) Permitted Incurrence. The Borrower shall have delivered to the
Administrative Agent a certificate signed by a Responsible Officer of the
Borrower that:

            (i) certifies that after giving effect to the Borrowing of the
Loans, all of the Obligations shall constitute "Senior Debt" under the Existing
Senior Subordinated Notes Documents;

            (ii) identifies the provision of Section 4.09 of the Existing Senior
Subordinated Notes Indenture under which the Borrowing of the Loans shall have
been incurred (it being understood that the Borrower shall designate clause (1)
of the definition of "Permitted Debt" in Section 4.09 of the Existing Senior
Subordinated Notes Indenture to the extent the Borrower has availability under
such clause); and

            (iii) contains reasonably detailed calculations demonstrating that
such Borrowing may be incurred under such provision of Section 4.09 of the
Existing Senior Subordinated Notes Indenture.

      (l) Offering Document.

            (i) the Borrower shall have delivered to the Arranger a complete
printed preliminary offering memorandum or preliminary private placement
memorandum (the "Offering Document") which at such time and at all times prior
to the issuance and sale of the New Senior Subordinated Notes or other
applicable Refinancing Securities, as the case may be, (A) is suitable for use
in a customary "high-yield road show" relating to the New Senior Subordinated
Notes or such other Refinancing Securities; (B) contains (I) all financial
statements and other data required (or deemed reasonably necessary by the
Arranger) to be included therein, including (x) all audited financial statements
of the Borrower, and to the extent appropriate (as determined by the Arranger),
AHS and its Subsidiaries, (y) all unaudited financial statements (which shall
have been reviewed by the independent accountants for the Borrower as provided
in Statement on Auditing Standards No. 100) and (z) all appropriate pro forma
financial statements, in each case prepared in accordance with GAAP and prepared
in accordance with Regulation S-X under the Securities Act; and (III) all other
data (including selected financial data) that the SEC would require in a
registered offering of the New Senior Subordinated Notes or such other
Refinancing Securities or that would be necessary for the Arranger to receive
customary "comfort" (including "negative assurance" comfort) from independent
accountants in connection with the offering of the New Senior Subordinated Notes
or such other Refinancing Securities, as applicable; (IV) is in form and
substance reasonably satisfactory to the Arranger; (V) is complete and correct
in all material respects; and (VI) does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances under
which such statements are made;

            (ii) the Arranger shall have been afforded a reasonable period of
time following its receipt of the Offering Document (which time period shall
recommence if and when the Borrower revises or updates the Offering Document so
as to meet the requirements of this condition or to comply with any applicable
legal requirements) to seek to place the New Senior Subordinated Notes or other
Refinancing Securities, as the case may be, with qualified purchasers thereof;
and

            (iii) the New Senior Subordinated Notes or other Refinancing
Securities, as the case may be, shall have been rated by both Moody's and S&P
prior to the Funding Date and the Arranger shall have received confirmation
thereof.

      (m) Additional Matters. The Administrative Agent shall have received such
additional documents, information and materials as any Lender, through the
Administrative Agent, may reasonably request.

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5.02  DETERMINATIONS OF INITIAL BORROWING CONDITIONS.

      For purposes of determining compliance with the conditions specified in
Section 5.01 (Conditions Precedent to Initial Borrowing), each Lender shall be
deemed to have consented to, approved, accepted or be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to the Lenders unless an officer of the
Administrative Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from such Lender prior to the initial
Borrowing hereunder specifying its objection thereto and such Lender shall not
have made available to the Administrative Agent such Lender's Pro Rata Share of
such Borrowing.

5.03  CONDITIONS PRECEDENT TO EXTENDED LOANS

      (a) The obligation of each Lender to convert, on the Initial Maturity
Date, the then outstanding principal amount of Initial Loans into Extended Loans
pursuant Section 2.06 (Extended Loans) is subject to the following condition
precedent being satisfied as of the Initial Maturity Date:

            (i) none of the Borrower or any of its Subsidiaries shall be subject
to bankruptcy or other insolvency proceedings;

            (ii) there shall not be existing a default in the payment when due
at final maturity of any Indebtedness of the Borrower or any of its
Subsidiaries, nor shall the maturity of any such Indebtedness have been
accelerated; and

            (iii) no other Default or Event of Default shall have occurred and
be continuing on such date or would result from converting Initial Loans to
Extended Loans on the Initial Maturity Date.

      (b) Notwithstanding any provision of Section 2.06 (Extended Loans), this
Section 5.03, Section 9.01 (Events of Default) or any of Part B of any of
Articles VII (Affirmative Covenants) or VIII (Negative Covenants), the
conversion of Initial Loans into Extended Loans shall not operate as a waiver of
any Default or Event of Default which has occurred and is continuing on the
Initial Maturity Date, each of which shall be deemed to continue following the
Initial Maturity Date until cured or expressly waived in accordance with the
provisions of this Agreement.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

      To induce the Lenders and the Administrative Agent to enter into this
Agreement, the Borrower and each other Loan Party represents and warrants to the
Lenders and the Administrative Agent, on and as of the Funding Date and after
giving effect to the Ardent Acquisition and the making of the initial Borrowing
on the Funding Date, that:

6.01  EXISTENCE, QUALIFICATION AND POWER.

      Each Loan Party (a) is a corporation, partnership or limited liability
company duly organized or formed, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation or organization, (b) has all
requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own its assets and carry on its
business as now or currently proposed to be conducted and (ii) execute, deliver
and perform its obligations under the Loan Documents to which it is a party, and
(c) is duly qualified and is licensed and in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business

                                       52


requires such qualification or license; except in each case referred to in
clause (b)(i) or (c), to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.

6.02  AUTHORIZATION; NO CONTRAVENTION.

      The execution, delivery and performance by each Loan Party of each Loan
Document and each Exchange Securities Document to which such Loan Party is
party, have been duly authorized by all necessary corporate or other
organizational action, and do not (a) contravene or violate the terms of such
Loan Party's Organization Documents; (b) conflict with or result in any breach
or contravention of, or the creation of any Lien under, (i) any Related Document
or other Contractual Obligation to which such Loan Party is a party or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Loan Party or the Property of such Loan Party is subject;
(c) violate any Law (including Regulation U or Regulation X issued by the FRB);
or (d) result in a limitation on any licenses, permits or other approvals
applicable to the business, operations or properties of such Loan Party or
adversely affect the ability of such Loan Party to participate in any Medical
Reimbursement Programs.

6.03  GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS.

      No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Loan Party of this Agreement, any other Loan
Document or any Exchange Securities Document other than those that have already
been obtained and are in full force and effect.

6.04  BINDING EFFECT.

      Each Loan Document and each Exchange Securities Document will have been
upon execution and delivery thereof pursuant to this Agreement, duly authorized,
executed and delivered by each Loan Party that is party thereto. Each Loan
Document and each Exchange Securities Document, will be, when delivered pursuant
to this Agreement, the legal, valid and binding obligation of each Loan Party
that is party thereto, enforceable against each such Loan Party in accordance
with its terms, except as enforceability may be limited by applicable Debtor
Relief Laws or by equitable principles relating to enforceability.

      When issued, executed and authenticated pursuant to the Exchange Indenture
and delivered to and paid for by the Lenders as contemplated by the Exchange
Indenture, the Exchange Securities and the related guaranties (and registered
securities issued in exchange therefore pursuant to the terms of the
Registration Rights Agreement) will have been duly executed, authenticated,
issued and delivered and will constitute the legal, valid and binding
obligations of the Borrower and each of the guarantors, enforceable in
accordance with their terms and entitled to the benefits provided by the
indenture, except as enforceability may be limited by applicable Debtor Relief
Laws or by equitable principles relating to enforceability.

6.05  FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT; SOLVENCY.

      (a) The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein;

                                       53


and (iii) show all material Indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, commitments and Indebtedness.

      (b) From the date of the Audited Financial Statements to and including the
Funding Date, there has been no Disposition by the Borrower or any Subsidiary,
or any Involuntary Disposition, of any material part of the business or Property
of the Borrower and its Subsidiaries, taken as a whole, and no purchase or other
Acquisition by any of them of any business or Property (including any Capital
Stock of any other Person) material in relation to the consolidated financial
condition of the Borrower and its Subsidiaries, taken as a whole, in each case,
which is not reflected in the foregoing financial statements or in the notes
thereto and has not otherwise been disclosed in writing to the Arranger and the
Lenders on or prior to the Funding Date.

      (c) The Projections have been prepared by the Borrower in light of the
past operations of its business, and reflect projections for the seven year
period beginning on the Funding Date. The Projections are based upon estimates
and assumptions stated therein, all of which the Borrower believes to be
reasonable and fair in light of current conditions and current facts known to
the Borrower and, as of the Funding Date, reflect the Borrower's good faith and
reasonable estimates of the future financial performance of the Borrower and its
Subsidiaries and of the other information projected therein for the periods set
forth therein (it being understood that the Projections are not a guaranty of
future performance and that actual results during the periods covered by the
Projections may differ from the projected results therein and that such
differences may be material).

      (d) The financial statements delivered pursuant to Section 7.01(a) and (b)
(Financial Statements) have been prepared in accordance with GAAP (except as may
otherwise be permitted under Section 7.01(a) and (b) (Financial Statements)) and
present fairly (on the basis disclosed in the footnotes to such financial
statements) in all material respects the consolidated financial condition,
results of operations and cash flows of the Borrower and its Subsidiaries as of
the dates thereof and for the periods covered thereby.

      (e) Since December 31, 2004, there has been no event or circumstance that
has had or could reasonably be expected to have a Material Adverse Effect.

      (f) Both before and after giving effect to (a) the Borrowing of the Loans
on the Funding Date, (b) the disbursement of the proceeds of such Loans pursuant
to the instructions of the Borrower, (c) the Ardent Acquisition and the
consummation of the other Transactions and (d) the payment and accrual of all
transaction costs in connection with the foregoing, each Loan Party is Solvent.

6.06  LITIGATION.

      There are no actions, suits, investigations, litigation, criminal
prosecutions, civil investigative demands, imposition of criminal or civil fines
or penalties, proceedings, claims or disputes pending or, to the knowledge of
the Loan Parties, threatened or contemplated, at Law, in equity, in arbitration
or before any Governmental Authority, by or against the Borrower or any of its
Subsidiaries or against any of their respective Properties or revenues that (a)
purport to affect or pertain to this Agreement, any other Loan Document or any
Exchange Securities Document, or (b) if determined adversely, could reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.

6.07  NO DEFAULT; NO BURDENSOME RESTRICTIONS.

      (a) Neither the Borrower nor any Subsidiary is in default under or with
respect to any Contractual Obligation that could reasonably be expected to have
a Material Adverse Effect.

                                       54


      (b) No Default has occurred and is continuing.

      (c) Neither the Borrower nor any Subsidiary (i) is a party to any
Contractual Obligation the compliance with one or more of which would have, in
the aggregate, a Material Adverse Effect or the performance of which by any such
Person, either unconditionally or upon the happening of an event, would result
in the creation of a Lien (other than a Permitted Lien) on the assets or
Properties of any such Person or (ii) is subject to one or more charter or
corporate restrictions that would, in the aggregate, have a Material Adverse
Effect.

6.08  OWNERSHIP OF PROPERTY; LIENS.

      Each of the Borrower and its Subsidiaries has good record and marketable
title in fee simple to, or valid leasehold interests in, all Real Property
necessary or used in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. No Property of the Borrower or any
of its Subsidiaries is subject to any Liens, other than Permitted Liens.

6.09  ENVIRONMENTAL COMPLIANCE.

      Except as could not reasonably be expected to have a Material Adverse
Effect:

      (a) Each of the Facilities and all operations at the Facilities are and,
to the knowledge of the Borrower and its Subsidiaries, have been in compliance
with all applicable Environmental Laws and there are no conditions relating to
the Facilities or the Businesses that could reasonably be expected to give rise
to liability under any applicable Environmental Laws.

      (b) None of the Facilities contains, or has previously contained, any
Hazardous Materials at, on or under the Facilities in amounts or concentrations
that constitute or constituted a violation of, or could reasonably be expected
to give rise to liability under, Environmental Laws.

      (c) Neither the Borrower nor any Subsidiary has received any written
notice of, or inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or Environmental Laws with regard to any of the Facilities
or the Businesses, nor does any Responsible Officer of any Loan Party have
knowledge or reason to believe that any such notice will be received or is being
threatened.

      (d) Hazardous Materials have not been transported or disposed of from any
Facilities of the Borrower or its Subsidiaries (irrespective of whether such
Facilities are now, or were previously, owned, leased or operated by such
Person), or generated, treated, stored or disposed of at, on or under any of the
Facilities or any other location, in each case by or on behalf the Borrower or
any Subsidiary in violation of, or in a manner that would be reasonably likely
to give rise to liability under, any applicable Environmental Law.

      (e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Responsible Officers of the Loan Parties,
threatened, under any Environmental Law to which the Borrower or any Subsidiary
is or will be named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Borrower, any Subsidiary, the Facilities or the Businesses.

      (f) There has been no Release or, threat of Release of Hazardous Materials
at or from the

                                       55


Facilities, or arising from or related to the operations (including disposal) of
the Borrower or any Subsidiary in connection with the Facilities or otherwise in
connection with the Businesses, in violation of or in amounts or in a manner
that could reasonably be expected to give rise to liability under Environmental
Laws.

      (g) As of the Funding Date, the Borrower and its Subsidiaries have
provided the Administrative Agent with copies of all material environmental
reports, assessments, audits and/or documentation relating to any current or
former Facilities or current Environmental Liabilities to the extent in the
possession, custody or control of the Borrower or any of its Subsidiaries.

6.10  INSURANCE.

      The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies and, to the extent not
prohibited by Section 7.07 (Maintenance of Insurance) or Section 8.02
(Investments) of this Agreement, with PSI Surety, in such amounts (after giving
effect to any self-insurance compatible with the following standards), with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Borrower or the applicable Subsidiary operates.

6.11  TAXES.

      The Borrower and its Subsidiaries have filed all federal, state and other
material tax returns and reports required to be filed, and have paid all
federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against the Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.

6.12  ERISA COMPLIANCE.

      (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Internal Revenue Code and other federal or
state Laws. Each Plan that is intended to qualify under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the IRS
or an application for such a letter is currently being processed by the IRS with
respect thereto and, to the knowledge of the Loan Parties, nothing has occurred
which would prevent, or cause the loss of, such qualification. Each Loan Party
and each ERISA Affiliate have made all required contributions to each Plan
subject to Section 412 of the Internal Revenue Code, and no application for a
funding waiver or an extension of any amortization period pursuant to Section
412 of the Internal Revenue Code has been made with respect to any Plan.

      (b) There are no pending or, to the knowledge of the Loan Parties,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

      (c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) no Loan Party or
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) no Loan Party or any
ERISA

                                       56


Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; and (v) no Loan Party or any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.

6.13  SUBSIDIARIES.

      (a) As of the Funding Date, the authorized capital stock of the Borrower
consists of 48,000,000 shares of common stock, $0.01 par value per share, of
which 32,405,000 shares are issued and outstanding. As of the Funding Date,
except as set forth on Schedule 6.13 (Ownership of Borrower; Subsidiaries), no
Capital Stock of the Borrower is subject to any outstanding option, warrant,
right of conversion or purchase or any similar right. As of the Funding Date,
there are no agreements or understandings to which the Borrower is a party with
respect to the voting, sale or transfer of any shares of Capital Stock of the
Borrower or any agreement restricting the transfer or hypothecation of any such
shares. All of the outstanding capital stock of the Borrower has been validly
issued, is fully paid and non-assessable.

      (b) Set forth on Schedule 6.13 (Ownership of Borrower; Subsidiaries) is a
complete and accurate list as of the Funding Date of each Subsidiary (separately
identifying any Subsidiary that is an Immaterial Subsidiary), together with the
percentage of outstanding shares of each class owned (directly or indirectly) by
the Borrower or any Subsidiary. None of the shares of Capital Stock of any
Subsidiary is subject to any outstanding options, warrants, rights of conversion
or purchase or any similar right. All of the outstanding Capital Stock of each
Subsidiary is validly issued, fully paid and non-assessable.

6.14  MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
      ACT.

      (a) The Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the FRB), or extending
credit for the purpose of purchasing or carrying margin stock. No proceeds of
any Loan will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin stock
in contravention of Regulation T, U or X of the FRB.

      (b) None of the Borrower, any Person Controlling the Borrower or any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.

6.15  DISCLOSURE.

      No report, financial statement, certificate or other information furnished
(whether in writing or orally) by or on behalf of any Loan Party to the Arranger
or the Administrative Agent or any Lender (including the Confidential
Information Memorandum) in connection with the Transactions, the other
transactions contemplated hereby and the negotiation of this Agreement or the
Exchange Indenture or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Loan Parties represent only that such information was prepared
in good faith based upon assumptions believed to be reasonable at the time (it
being understood that such projected financial information is not a guaranty of
future performance and

                                       57


that actual results during the periods covered by the Projections may differ
from the projected results therein and that such differences may be material).

6.16  COMPLIANCE WITH LAWS.

      (a) Each of the Borrower and each Subsidiary is in compliance with the
requirements of all Laws (including Medicare Regulations, Medicaid Regulations,
HIPAA, 42 U.S.C. Section 1320a-7b and 42 U.S.C. Section 1395nn) and all orders,
writs, injunctions, decrees, licenses and permits applicable to it, its
Properties or the Facilities, except in such instances in which (i) such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted or (ii) the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect.

      (b) Without limiting the generality of the foregoing clause (a):

            (i) neither the Borrower nor any Subsidiary, nor any individual
      employed by the Borrower or any Subsidiary, would reasonably be expected
      to have criminal culpability or to be excluded from participation in any
      Medical Reimbursement Program for corporate or individual actions or
      failures to act known to the Borrower or any Subsidiary where such
      culpability or exclusion has resulted or could reasonably be expected to
      result in an Exclusion Event;

            (ii) to the knowledge of the Loan Parties, no officer or other
      member of management continues to be employed by the Borrower or any
      Subsidiary who may reasonably be expected to have individual culpability
      for matters under investigation by the OIG or other Governmental Authority
      unless such officer or other member of management has been, within a
      reasonable period of time after discovery of such actual or potential
      culpability, either suspended or removed from positions of responsibility
      related to those activities under challenge by the OIG or other
      Governmental Authority;

            (iii) current billing policies, arrangements, protocols and
      instructions of the Borrower and its Subsidiaries comply with requirements
      of Medical Reimbursement Programs and are administered by properly trained
      personnel, except where any such failure to comply would not reasonably be
      expected to result in an Exclusion Event; and

            (iv) current medical director compensation arrangements of the
      Borrower and its Subsidiaries comply with state and federal anti-kickback,
      fraud and abuse, and self-referral laws, including without limitation 42
      U.S.C. Section 1320a-7b and 42 U.S.C. Section 1395nn, and all regulations
      promulgated under such laws, except where any such failure to comply would
      not reasonably be expected to result in an Exclusion Event.

      (c) The Borrower has in place a compliance program for the Borrower and
its Subsidiaries that is reasonably designed to provide effective internal
controls that promote adherence to, prevent and detect material violations of
any Laws applicable to the Borrower and its Subsidiaries, and which includes the
implementation of internal audits and monitoring on a regular basis to monitor
compliance with the compliance program and with Laws.

6.17  INTELLECTUAL PROPERTY; LICENSES; ETC.

      (a) The Borrower and its Subsidiaries own, or possess the legal right to
use, all of the trademarks, service marks, trade names, copyrights, patents,
patent rights, Internet domain names, franchises, licenses and other
intellectual property rights (collectively, "IP Rights") that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other

                                       58


Person.

      (b) Set forth on Schedule 6.17 (IP Rights) is a list of all IP Rights
registered or pending registration with the United States Copyright Office or
the United States Patent and Trademark Office and owned by any Loan Party, or
that any Loan Party has the right to use, as of the Funding Date.

      (c) Except for such claims and infringements that could not reasonably be
expected to have a Material Adverse Effect, no claim has been asserted and is
pending by any Person challenging or questioning the use of any IP Rights or the
validity or effectiveness of any IP Rights, nor does any Loan Party know of any
such claim.

      (d) To the knowledge of the Responsible Officers of the Loan Parties, the
use of any IP Rights, slogan or other advertising device, product, process,
method, substance, part or component, or other material now employed, or now
contemplated to be employed, by the Borrower or any of its Subsidiaries or the
granting of a right or a license in respect of any the foregoing from the
Borrower or any Subsidiary does not infringe on the rights of any Person.

      (e) As of the Funding Date, none of the IP Rights owned by any of the Loan
Parties is subject to any licensing agreement or similar arrangement except as
set forth on Schedule 6.17 (IP Rights).

6.18  BROKER'S FEES.

      Neither the Borrower nor any Subsidiary has any obligation to any Person
in respect of any finder's, broker's, investment banking or other similar fee in
connection with any of the transactions contemplated under the Loan Documents or
the Exchange Securities Documents.

6.19  USE OF PROCEEDS.

      (a) The proceeds of the Loans are being used by the Borrower solely (a) to
finance the Ardent Acquisition and for the payment of related transaction costs,
fees and expenses and (b) for the payment of transaction costs, fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby on or prior to the Funding Date.

6.20  LABOR MATTERS.

      There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower or any Subsidiary as of the Funding Date
and neither the Borrower nor any Subsidiary has suffered any strikes, walkouts,
work stoppages or other material labor difficulty within the last five years.

6.21  BUSINESS LOCATIONS.

      Set forth on Schedule 6.21(a) (Locations of Real Property) is a list of
all Real Property located in the United States that is owned or leased by any
Loan Party as of the Funding Date. Set forth on Schedule 6.21(b) (Locations of
Tangible Personal Property) is a list of all locations where any tangible
personal property of any Loan Party is located as of the Funding Date. Set forth
on Schedule 6.21(c) (Locations of Chief Executive Office) is the chief executive
office, tax payer identification number and organizational identification number
of each Loan Party as of the Funding Date. The exact legal name and state of
organization of each Loan Party is as set forth on the signature pages hereto.
Except as set forth on Schedule 6.21(e) (Changes in Legal Name, State of
Formation and Structure), no Loan Party has during the five years preceding the
Funding Date (i) changed its legal name, (ii) changed its state of

                                       59


formation, or (iii) been party to a merger, consolidation or other change in
structure.

6.22  SUBORDINATION.

      (a) The Obligations are "Senior Debt" under the Existing Senior
Subordinated Notes Documents.

      (b) The Obligations are "Designated Senior Debt" under the Existing Senior
Subordinated Notes Documents and, other than the Senior Secured Loans, no other
Indebtedness or other obligations constitute "Designated Senior Debt" under any
of the Senior Subordinated Notes Documents.

6.23  RELATED DOCUMENTS.

      (a) The execution, delivery and performance by each Loan Party of the
Related Documents to which it is a party and the consummation of the
transactions contemplated thereby by such Loan Party:

            (i) are within such Loan Party's respective corporate, limited
      liability company, partnership or other powers;

            (ii) have been duly authorized by all necessary corporate or other
      action, including the consent of stockholders where required;

            (iii) do not and will not (A) contravene or violate any Loan Party's
      Organization Documents, (B) violate any Law applicable to any Loan Party,
      or any order or decree of any Governmental Authority or arbitrator except
      to the extent such violation could not reasonably be expected to have a
      Material Adverse Effect, (C) conflict with or result in the breach or
      contravention of, constitute a default under, or result in or permit the
      termination or acceleration of, any Contractual Obligation of any Loan
      Party or any of its Subsidiaries, except for those that, in the aggregate,
      could not reasonably be expected to have a Material Adverse Effect or (D)
      result in the creation or imposition of any Lien upon any property of any
      Loan Party or any of its Subsidiaries (other than a Permitted Lien); and

            (iv) do not require the consent of, authorization by, approval of,
      notice to, or filing or registration with, any Governmental Authority or
      any other Person, other than those that (A) will have been obtained at the
      Funding Date, each of which will be in full force and effect on the
      Funding Date, none of which will on the Funding Date impose materially
      adverse conditions upon the exercise of control by the Borrower over any
      of its Subsidiaries, (B) are required to perfect the security interests
      granted pursuant to the Senior Secured Credit Documents and (C) in the
      aggregate, if not obtained, could not reasonably be expected to have a
      Material Adverse Effect.

      (b) Each of the Related Documents has been or at the Funding Date will
have been duly executed and delivered by each Loan Party party thereto and at
the Funding Date will be the legal, valid and binding obligation of each Loan
Party that is party thereto, enforceable against such Loan Party in accordance
with its terms, except as enforceability may be limited by applicable Debtor
Relief Laws or by equitable principles relating to enforceability.

      (c) None of the Related Documents has been amended or modified in any
respect and no provision therein has been waived, except in each case to the
extent permitted by Section 8.17 (Modification of Related Documents), and each
of the representations and warranties therein are true and correct in all
material respects and no default or event that, with the giving of notice or
lapse of time or

                                       60


both, would be a default has occurred thereunder.

6.24  FRAUD AND ABUSE.

      To the knowledge of the Responsible Officers of the Loan Parties, neither
the Borrower nor any Subsidiary nor any of their respective officers or
directors has engaged in any activities that are prohibited under any applicable
provision of the Social Security Act and the regulations promulgated thereunder,
including HIPAA, the Medicare Regulations or the Medicaid Regulations that could
reasonably be expected to have a Material Adverse Effect.

6.25  LICENSING AND ACCREDITATION.

      (a) Except to the extent it would not reasonably be expected to have a
Material Adverse Effect, each of the Borrower and its Subsidiaries has, to the
extent applicable: (i) obtained (or been duly assigned) all required
certificates of need or determinations of need as required by the relevant state
Governmental Authority for the acquisition, construction, expansion of,
investment in or operation of its businesses and Facilities as currently
operated; (ii) obtained and maintains in good standing all required licenses,
permits, authorizations and approvals of each Governmental Authority necessary
to the conduct of its business and Facilities; (iii) to the extent prudent and
customary in the industry in which it is engaged, obtained and maintains
accreditation from all generally recognized accrediting agencies; (iv) entered
into and maintains in good standing its Medicare Provider Agreements and
Medicaid Provider Agreements; and (v) ensured that all such required licenses
are in full force and effect on the date hereof and have not been revoked or
suspended or otherwise limited.

      (b) To the knowledge of the Loan Parties, each Contract Provider is duly
licensed by each state, state agency, commission or other Governmental Authority
having jurisdiction over the provision of such services by such Person in the
locations where the Borrower and its Subsidiaries conduct business, to the
extent such licensing is required to enable such Person to provide the
professional services provided by such Person and otherwise as is necessary to
enable the Borrower and its Subsidiaries to operate as currently operated and as
contemplated to be operated.

6.26  REIMBURSEMENT FROM MEDICAL REIMBURSEMENT PROGRAMS.

      The accounts receivable of Borrower and its Subsidiaries have been and
will continue to be adjusted to reflect the reimbursement policies (both those
most recently published in writing as well as those not in writing which have
been verbally communicated) of Medical Reimbursement Programs, including without
limitation Medicare, Medicaid, Blue Cross/Blue Shield, private insurance
companies, health maintenance organizations, preferred provider organizations,
alternative delivery systems, managed care systems, government contracting
agencies and other third party payors. In particular, accounts receivable
relating to such Medical Reimbursement Programs do not and shall not exceed in
any material respect amounts any obligee is entitled to receive under any
capitation arrangement, fee schedule, discount formula, cost-based reimbursement
or other adjustment or limitation to its usual charges.

6.27  MEDICARE AND MEDICAID NOTICES AND FILINGS RELATED TO HEALTH CARE BUSINESS.

      To the extent applicable and except to the extent as would not be
reasonably be expected to have a Material Adverse Effect: (i) each of the
Borrower and each of its Subsidiaries has timely filed all reports required to
be filed in connection with Medicare and applicable Medicaid programs and due on
or before the date hereof, and all required reports and administrative forms and
filings are true and complete in all material respects; (ii) there are no
claims, actions, proceedings or appeals pending (and neither Borrower

                                       61


nor any of its Subsidiaries has filed anything that would result in any claims,
actions or appeals) before any Governmental Authority with respect to any
Medicare or Medicaid cost reports or claims filed by the Borrower or any of its
Subsidiaries on or before the date hereof, or with respect to any adjustments,
denials, recoupments or disallowances by any intermediary, carrier, other
insurer, commission, board or agency in connection with any cost reports or
claims; (iii) no validation review, survey, inspection, audit, investigation or
program integrity review related to the Borrower or any Subsidiary has been
conducted by any Governmental Authority or government contractor in connection
with the Medicare or Medicaid programs, and no such reviews are scheduled,
pending or, threatened against or affecting the Borrower or any Subsidiary; and
(iv) each of the Borrower and its Subsidiaries has timely filed all material
reports, data and other information required by any other Governmental Authority
with authority to regulate the Borrower or any such Subsidiary or its business
in any manner.

                                  ARTICLE VII

                              AFFIRMATIVE COVENANTS

      PART A: Each of the Borrower and each other Loan Party agrees with the
Lenders and the Administrative Agent to each of the following, as long as any
Initial Loan and any Obligation with respect thereto remains outstanding and, in
each case, unless the Required Lenders otherwise consent in writing, that it
shall and shall cause each Subsidiary to:

7.01  FINANCIAL STATEMENTS.

      Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:

      (a) as soon as available, but in any event within ninety (90) days after
the end of each fiscal year of the Borrower, consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such fiscal
year, and the related consolidated and consolidating statements of income or
operations, retained earnings, shareholders' equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures as of
the end of and for the previous fiscal year, all in reasonable detail and
prepared in accordance with GAAP, audited and accompanied by a report and
opinion of Ernst & Young or other independent certified public accountants of
nationally recognized standing reasonably acceptable to the Administrative
Agent, which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any "going concern" or
like qualification or exception or any qualification or exception as to the
scope of such audit; and

      (b) as soon as available, but in any event within forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year of
the Borrower, consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated and consolidating statements of income or operations, retained
earnings, shareholders' equity and cash flows for such fiscal quarter and for
the portion of the Borrower's fiscal year then ended, setting forth in each case
in comparative form the figures as of the end of and for the corresponding
fiscal quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail and certified by a Responsible
Officer of the Borrower as fairly presenting in all material respects the
financial condition, results of operations, shareholders' equity and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes.

As to any information contained in the Borrower's periodic reports filed with
the SEC on Form 10-K or Form 10-Q, as the case may be, furnished pursuant to
Section 7.02(e)(i) (Certificates; Other Information),

                                       62


the Borrower shall not be separately required to furnish such information under
clause (a) or (b) above, but the foregoing shall not be in derogation of the
obligation of the Borrower to furnish the information and materials described in
clauses (a) and (b) above at the times specified therein.

7.02  CERTIFICATES; OTHER INFORMATION.

      Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:

      (a) concurrently with the delivery of the financial statements referred to
in Section 7.01(a) (Financial Statements), a certificate of its independent
certified public accountants certifying such financial statements; and

      (b) concurrently with the delivery of the financial statements referred to
in Sections 7.01(a) and (b) (Financial Statements), a duly completed Compliance
Certificate signed by a Responsible Officer of the Borrower.

      (c) within thirty (30) days after end of each fiscal year, the annual
business plan and budget of the Borrower and its Subsidiaries containing, among
other things, projected financial statements for each fiscal quarter of the next
fiscal year;

      (d) copies of any detailed audit reports, management letters or
recommendations promptly after being submitted to the board of directors (or the
audit committee of the board of directors) of the Borrower by independent
accountants in connection with the accounts or books of the Borrower or any
Subsidiary, or any audit of any of them;

      (e) promptly after the same are available, (i) copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of the Borrower, and copies of all annual, regular, periodic
and special reports and registration statements which the Borrower may file or
be required to file with the SEC under Section 13 or 15(d) of the Securities
Exchange Act of 1934 or to a holder of any Indebtedness owed by the Borrower or
any Subsidiary in its capacity as such a holder and not otherwise required to be
delivered to the Administrative Agent pursuant hereto and (ii) upon the request
of any Administrative Agent all reports and written information to and from the
United States Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational Health and
Safety Administration, or any state or local agency responsible for health and
safety matters, or any successor agencies or authorities concerning
environmental, health or safety matters; and

      (f) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary, or compliance
with the terms of the Loan Documents, as any Administrative Agent or any Lender
may from time to time reasonably request.

      Documents required to be delivered pursuant to Section 7.01(a) or (b)
(Financial Statements) or Section 7.02(e) above may (to the extent any such
documents are included in materials otherwise filed with the SEC) be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrower posts such documents, or provides a link
thereto on the Borrower's website on the Internet at the website address listed
on Schedule 11.02 (Lending Offices and Addresses for Notices); or (ii) on which
such documents are posted on the Borrower's behalf on IntraLinks(TM) or other
Approved Electronic Platform to which each Lender and the Administrative Agent
have access; provided, that: (i) the Borrower shall deliver paper copies of such
documents to the Administrative Agent or any Lender that requests the Borrower
to deliver such paper copies until a written request to cease delivering paper
copies is given by the Administrative Agent or such Lender and (ii) the Borrower
shall

                                       63


notify (which may be by facsimile or electronic mail) the Administrative Agent
and each Lender of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents. Notwithstanding anything contained herein, in every instance
the Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 7.02(b) above to the Administrative Agent and
each of the Lenders. Except for such Compliance Certificates, the Administrative
Agent shall have no obligation to request the delivery or to maintain copies of
the documents referred to above, and in any event shall have no responsibility
to monitor compliance by the Borrower with any such request for delivery, and
each Lender shall be solely responsible for requesting delivery to it or
maintaining its copies of such documents.

7.03  NOTICES.

      (a) Promptly (and in any event within five (5) Business Days) after any
Loan Party obtains knowledge thereof, notify the Administrative Agent and each
Lender of the occurrence of any Default.

      (b) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agent and each Lender of any matter that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

      (c) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agent and each Lender of the occurrence of any ERISA Event.

      (d) Promptly notify the Administrative Agent and each Lender of any
material change in accounting policies or financial reporting practices by the
Borrower or any Subsidiary.

      (e) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agent and each Lender of any litigation, investigation or
proceeding affecting any Loan Party in which the amount involved or relief
sought would reasonably be expected to have a Material Adverse Effect.

      (f) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agent and each Lender of (i) the institution of any
investigation, review or proceeding against any Loan Party to suspend, revoke or
terminate (or that may result in the termination of) any Medicaid Provider
Agreement or Medicare Provider Agreement, or any such investigation or
proceeding that may result in an Exclusion Event or (ii) any notice of loss or
threatened loss of accreditation, loss of participation under any Medical
Reimbursement Program or loss of applicable health care license, in the case of
clauses (i) and (ii), that would reasonably be expected to result in a Material
Adverse Effect.

      (g) Promptly after any Loan Party obtains knowledge thereof, notify the
Administrative Agent and each Lender of any event or condition which has caused
the representations and warranties set forth in Section 6.09 (Environmental
Compliance) to be untrue or incorrect and, upon request by any Administrative
Agent, furnish or cause to be furnished to the Administrative Agent, at the Loan
Parties' expense, a report of an environmental assessment of reasonable scope,
form and depth, (including, where appropriate, invasive soil or groundwater
sampling) by a consultant reasonably acceptable to the Administrative Agent as
to the nature and extent of the presence of any Hazardous Materials on any
Facilities and as to the compliance by the Borrower or any of its Subsidiaries
with Environmental Laws at such Facilities. If the Loan Parties fail to deliver
such an environmental report within seventy-five (75) days after receipt of such
written request then the Administrative Agent may arrange for same, and the Loan
Parties hereby grant to the Administrative Agent and their respective
representatives access to the Facilities to reasonably undertake such an
assessment (including, where appropriate, invasive soil or groundwater
sampling). The reasonable cost of any assessment arranged for by the
Administrative Agent pursuant to this provision will be payable by the Loan
Parties on demand.

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      Each notice pursuant to this Section 7.03 shall be accompanied by a
statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower or the
applicable Loan Party has taken and proposes to take with respect thereto. Each
notice pursuant to Section 7.03(a) shall describe with particularity any and all
provisions of this Agreement and any other Loan Document that have been
breached.

7.04  PAYMENT OF OBLIGATIONS.

      Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings diligently
conducted and adequate reserves in accordance with GAAP are being maintained by
the Borrower or such Subsidiary; and (b) all lawful claims which, if unpaid,
would by law become a Lien upon its Property unless the same are being contested
in good faith by appropriate proceedings diligently conducted and adequate
reserves in accordance with GAAP are being maintained by the Borrower or such
Subsidiary.

7.05  PRESERVATION OF EXISTENCE, ETC.

      (a) Preserve, renew and maintain in full force and effect its legal
existence under the Laws of the jurisdiction of its organization except in a
transaction permitted by Section 8.04 (Fundamental Changes) or 8.05
(Dispositions).

      (b) Preserve, renew and maintain in full force and effect its good
standing under the Laws of the jurisdiction of its organization, except to the
extent the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

      (c) Take all reasonable action to maintain all rights, privileges,
permits, licenses, franchises, certifications and approvals as are necessary for
the conduct of its business as currently conducted and herein contemplated,
including without limitation professional licenses, CLIA certifications,
Medicare Provider Agreements and Medicaid Provider Agreements, except to the
extent the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

      (d) Preserve or renew all of its material registered patents, copyrights,
trademarks, trade names and service marks, except to the extent the failure to
do so could not reasonably be expected to have a Material Adverse Effect.

7.06  MAINTENANCE OF PROPERTIES.

      (a) Maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear and Involuntary Dispositions excepted.

      (b) Make all necessary repairs thereto and renewals and replacements
thereof, except to the extent the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

      (c) Use the standard of care typical in the industry in the operation and
maintenance of its facilities.

7.07  MAINTENANCE OF INSURANCE.

      Maintain in full force and effect insurance (including worker's
compensation insurance, liability

                                       65


insurance, casualty insurance, business interruption insurance and reinsurance)
with PSI Surety (to the extent PSI Surety is capitalized in accordance with this
Agreement) and/or financially sound and reputable insurance companies and
reinsurance companies or associations (as applicable), in such amounts, with
such deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Borrower or the applicable Subsidiary operates.

7.08  COMPLIANCE WITH LAWS.

      Except the extent the failure to do so would not reasonably be expected to
result in a Material Adverse Effect:

      (a) Comply with the requirements of all Laws (including without limitation
Titles XVIII and XIX of the Social Security Act, HIPAA, Medicare Regulations,
Medicaid Regulations) and all orders, writs, injunctions and decrees applicable
to it or to its business or Property, except in such instances in which such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted;

      (b) Ensure that (i) billing policies, arrangements, protocols and
instructions will comply with reimbursement requirements under Medicare,
Medicaid and other Medical Reimbursement Programs and will be administered by
properly trained personnel; and (ii) medical director compensation arrangements
and other arrangements with referring physicians will comply with applicable
state and federal self-referral and anti-kickback laws, including without
limitation 42 U.S.C. Section 1320a-7b(b)(1) - (b)(2) 42 U.S.C. and 42 U.S.C.
Section 1395nn; and

      (c) Make commercially reasonable efforts to implement policies that are
consistent with HIPAA on or before the date that any provision of HIPAA becomes
applicable to the Borrower and its Subsidiaries.

7.09  BOOKS AND RECORDS.

      (a) Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of the
Borrower or such Subsidiary, as the case may be.

      (b) Maintain such books of record and account in conformity in all
material respects with all applicable requirements of any Governmental Authority
having regulatory jurisdiction over the Borrower or such Subsidiary, as the case
may be.

7.10  ACCESS; INSPECTION RIGHTS.

      (a) Permit representatives and independent contractors of the
Administrative Agent and each Lender to visit and inspect any of its properties,
to examine its corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants
(provided that the Borrower shall be provided an opportunity to attend such
meetings), all at the expense of the Lenders and at such reasonable times during
normal business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower; provided, however, that when an Event of Default
exists, the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.

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      (b) To the extent required by applicable Law, prior to receiving any
information that contains patient information subject to (i) state privacy laws,
(ii) the Drug Abuse Prevention, Treatment and Rehabilitation Act, 42 U.S.C.
290ee-3 et seq., (iii) the HIPAA, 42 U.S.C. 1320d et seq. or (iv) regulations
promulgated pursuant to the foregoing statutes, each of the Administrative Agent
and each of the Lenders agree to execute an agreement reasonably satisfactory to
the Administrative Agent and each of the Lenders that complies with the
requirements relating to "business associates" as set forth in 45 C.F.R. 502(e)
and any applicable state Laws.

7.11  USE OF PROCEEDS.

      Use the proceeds of the Loans and other Borrowings as provided in Section
6.19 (Use of Proceeds).

7.12  ADDITIONAL SUBSIDIARIES AND GUARANTEES.

      (a) New Subsidiaries. Within thirty (30) days (or such longer period as
the Administrative Agent may agree) after (x) the acquisition or formation of
any Subsidiary (other than an Excluded Subsidiary) and (y) any Subsidiary ceases
to be an Excluded Subsidiary:

            (i) notify the Administrative Agent thereof in writing, together
      with notice of (A) the jurisdiction of formation of such Subsidiary, (B)
      number of shares of each class of Capital Stock of such Subsidiary
      outstanding, (C) number and percentage of outstanding shares of each class
      of Capital Stock of such Subsidiary owned (directly or indirectly) by the
      Borrower or any Subsidiary and (D) number and effect, if exercised, of all
      outstanding options, warrants, rights of conversion or purchase and all
      other similar rights with respect thereto; and

            (ii) cause such Subsidiary (other than any Excluded Subsidiary) to
      (A) become a Guarantor by executing and delivering to the Administrative
      Agent a Joinder Agreement or such other document as the Administrative
      Agent shall deem appropriate for such purpose and (B) deliver to the
      Administrative Agent documents of the types referred to in clauses (iv)
      and (v) of Section 5.01(a) (Conditions Precedent to Initial Borrowings)
      and favorable opinions of counsel to such Person acceptable to the
      Administrative Agent (which shall cover, among other things, the legality,
      validity, binding effect and enforceability of the documentation referred
      to in the preceding clause (A), all in form, content and scope reasonably
      satisfactory to the Administrative Agent; provided, however, (x) if such
      Subsidiary is a Foreign Subsidiary and compliance with clause (A) above
      would reasonably be expected to cause any material adverse tax
      consequences to the Borrower and its Subsidiaries taken as a whole, then
      such Subsidiary shall not be required to comply with this clause (ii) and
      (y) if such Subsidiary is an Immaterial Subsidiary, then such Subsidiary
      shall not be required to comply with this clause (ii) so long as the
      aggregate amount of assets owned by all Immaterial Subsidiaries that are
      not Guarantors does not, as of any date of determination, exceed $250,000
      in the aggregate.

      (b) Guarantee of Other Indebtedness. If any Subsidiary that is not a
Guarantor (including any Foreign Subsidiary and any Excluded Subsidiary)
provides a Guarantee in respect of the Existing Senior Subordinated Notes, any
other Subordinated Indebtedness or any other Indebtedness of the Borrower in
excess of the Threshold Amount, such Subsidiary shall, concurrent with providing
the Guarantee in respect of any such Indebtedness of the Borrower in excess of
the Threshold Amount, (i) become a Guarantor by executing and delivering to the
Administrative Agent a Joinder Agreement or such other document as the
Administrative Agent shall deem appropriate for such purposes and (ii) deliver
to the Administrative Agent documents of the types referred to in clauses (iv)
and (v) of Section 5.01(a) (Conditions Precedent to Initial Borrowings) and
favorable opinions of counsel to such Person

                                       67


(which shall cover, among other things, the legality, validity, binding effect
and enforceability of the documentation referred to in clause (A)), all in form,
content and scope reasonably satisfactory to the Administrative Agent.

7.13  ERISA COMPLIANCE.

      Do, and cause each of its ERISA Affiliates to do, each of the following:
(a) maintain each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Internal Revenue Code and other federal or
state Law; (b) cause each Plan that is qualified under Section 401(a) of the
Internal Revenue Code to maintain such qualification; and (c) make all required
contributions to any Plan subject to Section 412 of the Internal Revenue Code.

7.14  ENVIRONMENTAL COMPLIANCE.

      Do, and cause each Subsidiary of the Borrower to, comply in all material
respects with Environmental Laws and, without limiting the foregoing, the
Borrower shall, at its sole cost and expense, upon receipt of any notification
or otherwise obtaining knowledge of any Release or other event that has any
reasonable likelihood of any of the Borrower or any Subsidiary of the Borrower
incurring Environmental Liabilities in excess of the Threshold Amount in the
aggregate, (a) conduct, or pay for consultants to conduct, tests or assessments
of environmental conditions at such operations or properties, including the
investigation and testing of subsurface conditions and (b) take such Remedial
Action and undertake such investigation or other action as required by
Environmental Laws or as any Governmental Authority requires or as is
appropriate and consistent with good business practice to address the Release or
event and otherwise ensure compliance with Environmental Laws.

7.15  PAYMENT OR PERFORMANCE OF OBLIGATIONS

      The Borrower shall (a) perform and (b) pay, discharge, or otherwise
satisfy as the same shall become due and payable all of its obligations and
liabilities except, in each case, to the extent the failure to pay or discharge
the same could not reasonably be expected to have a Material Adverse Effect.

      PART B: From and after the Conversion Date and at all times while the
Extended Loans and the other Obligations with respect thereto are outstanding,
the Borrower shall, and shall ensure that each of its Subsidiaries shall comply
with each of the reporting and other affirmative covenants set forth in the
Exchange Indenture and such provisions of the Exchange Indenture shall be deemed
incorporated and set forth in this Agreement to the extent necessary to give
effect to the foregoing; provided, however, that notwithstanding anything to the
contrary in the foregoing, if the Borrower and the Arranger have not agreed upon
a form of Exchange Indenture, the covenants set forth in Part A of Article VII
(Affirmative Covenants) shall apply until such time as the form of Exchange
Indenture shall have been agreed upon between the Borrower and the Arranger.

                                  ARTICLE VIII

                               NEGATIVE COVENANTS

      PART A: Each of the Borrower and each other Loan Party agrees with the
Lenders and the Administrative Agent that as long as any Initial Loan and any
Obligations with respect thereto remains outstanding and, in each case, unless
the Required Lenders otherwise consent in writing, no Loan Party shall, nor
shall it permit any Subsidiary to, directly or indirectly:

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8.01  LIENS.

      Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, other than the following:

      (a) Liens created pursuant to the Senior Secured Credit Documents or
securing any "Obligations" as defined in the Senior Secured Credit Agreement;

      (b) Liens existing on the date hereof and listed on Schedule 8.01
(Existing Liens) and any renewals or extensions thereof, provided that the
Property covered thereby is not increased and any renewal or extension of the
obligations secured or benefited thereby is permitted by Section 8.03(b)
(Indebtedness);

      (c) Liens (other than Liens imposed under ERISA) for taxes, assessments or
governmental charges or levies not yet due or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

      (d) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other Liens imposed by law or pursuant
to customary reservations or retentions of title arising in the ordinary course
of business, provided that such Liens secure only amounts not yet due and
payable or, if due and payable, are unfiled and no other action has been taken
to enforce the same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with GAAP have
been established;

      (e) pledges or deposits in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

      (f) deposits to secure the performance of bids, trade contracts, licenses
and leases (other than Indebtedness), statutory obligations, surety bonds (other
than bonds related to judgments or litigation), performance bonds and other
obligations of a like nature incurred in the ordinary course of business;

      (g) easements, rights-of-way, restrictions and other similar encumbrances
affecting Real Property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;

      (h) Liens securing judgments for the payment of money (or appeal or other
surety bonds relating to such judgments) not in excess of the Threshold Amount
(except to the extent covered by independent third-party insurance as to which
the insurer has acknowledged in writing its obligation to cover), unless any
such judgment remains undischarged for a period of more than thirty (30)
consecutive days during which execution is not effectively stayed;

      (i) Liens securing Indebtedness permitted under Section 8.03(c)
(Indebtedness); provided that (i) such Liens do not at any time encumber any
Property other than the Property financed by such Indebtedness, (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the Property being acquired on the date of acquisition
and (iii) such Liens attach to such Property concurrently with or within ninety
days after the acquisition thereof;

      (j) leases, licenses or subleases granted to others solely to the extent
that such leases,

                                       69


licenses or subleases do not interfere in any material respect with the business
of the Borrower or any Subsidiary;

      (k) any interest of title of a lessor under, and Liens arising from UCC
financing statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, operating leases permitted by this
Agreement;

      (l) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 8.02 (Investments);

      (m) normal and customary rights of setoff upon deposits of cash in favor
of banks or other depository institutions;

      (n) Liens of a collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection;

      (o) Liens created or deemed to exist by the establishment of trusts for
the purpose of satisfying (i) Governmental Reimbursement Program Costs of the
Borrower and its Subsidiaries and (ii) other actions or claims pertaining to the
same or related matters or other Medical Reimbursement Programs, provided, that
in each case, the Borrower and such Subsidiary shall have established adequate
reserves for such claims or actions;

      (p) Liens of sellers of goods to the Borrower and any of its Subsidiaries
arising under Article 2 of the Uniform Commercial Code or similar provisions of
applicable Law in the ordinary course of business, covering only the goods sold
and securing only the unpaid purchase price for such goods and related expenses;

      (q) Liens on the Property of PSI Surety created or deemed to exist in
connection with its self-insurance programs;

      (r) Liens on the Property of the HUD Financing Subsidiaries securing HUD
Financings to the extent such HUD Financings are permitted under this Agreement;

      (s) Liens on the Property (other than Accounts) of Aeries Healthcare of
Illinois, Inc. securing the applicable HUD Financing; and

      (t) Liens securing Indebtedness permitted by Section 8.03(m); provided,
that such Liens shall only attach to the proceeds of insurance which have been
financed by such Indebtedness.

8.02  INVESTMENTS.

      Make any Investments, except:

      (a) Investments consisting of cash or Cash Equivalents;

      (b) Investments consisting of Accounts and promissory notes created,
acquired or made and trade credit extended in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;

      (c) Investments consisting of stock, obligations, securities or other
property received in settlement of Accounts from financially troubled obligors
in the ordinary course of business;

                                       70


      (d) Investments existing as of the Funding Date and set forth in Schedule
8.02 (Existing Investments);

      (e) Guarantees permitted by Section 8.03 (Indebtedness);

      (f) Permitted Acquisitions;

      (g) loans and advances to employees, directors and officers in the
ordinary course of business (other than any such loans or advance that would be
in violation of Section 4.02 of the Sarbanes-Oxley Act) in an aggregate amount
for all such loans and advances not to exceed $1,000,000 at any time
outstanding;

      (h) Investments made by any Loan Party in any Subsidiary that is not a
Loan Party; provided, that the aggregate outstanding amount of all such
Investments permitted pursuant to this clause (h) shall not exceed $1,000,000 at
any time;

      (i) Investments by any Foreign Subsidiary in another Foreign Subsidiary;

      (j) Investments in any Person that is a Loan Party prior to giving effect
to such Investment;

      (k) Investments in PSI Surety to pay its reasonable general corporate and
overhead expenses and to cause PSI Surety to maintain the minimum amount of
capital required by applicable Laws, provided that the aggregate amount of
Investments in PSI Surety pursuant to this clause (k) shall not exceed
$2,000,000 in any fiscal year;

      (l) Investments consisting of non-cash consideration received in
connection with a Disposition permitted under Section 8.05 (Dispositions);

      (m) Investments consisting of Physician Support Obligations; provided,
that (i) in the case of any such Investment that is a Guarantee, such Guarantee
is permitted under Section 8.03(h) (Indebtedness) and (ii) the aggregate amount
of all such Investments does not exceed $5,000,000 at any one time outstanding;

      (n) Investments arising under Swap Contracts permitted under Section
8.03(d) (Indebtedness); and

      (o) Investments not otherwise permitted by the foregoing clauses in an
amount outstanding amount for all such Investments permitted pursuant to this
clause (o) not to exceed $10,000,000.

8.03  INDEBTEDNESS.

      Create, incur, assume or suffer to exist any Indebtedness, except:

      (a) Indebtedness under the Loan Documents;

      (b) Indebtedness of the Borrower and its Subsidiaries set forth in
Schedule 8.03 (Existing Indebtedness);

      (c) purchase money Indebtedness (including obligations in respect of
Capital Leases or Synthetic Leases) hereafter incurred by the Borrower or any of
its Subsidiaries to finance the purchase of Fixed Assets, provided that (i) such
Indebtedness when incurred shall not exceed the purchase price of the asset(s)
financed, (ii) no such Indebtedness shall be refinanced for a principal amount
in excess of the

                                       71


principal balance outstanding thereon at the time of such refinancing and (iii)
the total amount of all such Indebtedness at any time outstanding shall not
exceed $10,000,000;

      (d) obligations (contingent or otherwise) of the Borrower or any
Subsidiary existing or arising under any Swap Contract, provided that (i) such
obligations are entered into by such Person in the ordinary course of business
for the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a "market view"; and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

      (e) intercompany Indebtedness permitted under Section 8.02 (Investments);

      (f) Indebtedness arising under the Senior Secured Credit Facilities in an
aggregate principal amount not to exceed $475,000,000;

      (g) additional HUD Financings incurred or assumed after the Funding Date
in an aggregate principal amount not to exceed $10,000,000 outstanding at any
time;

      (h) Earn-Out Obligations in an aggregate amount not to exceed $10,000,000
at any one time outstanding, provided that such Earn-Out Obligations are
subordinated to the Obligations in a manner and to an extent acceptable to the
Administrative Agent;

      (i) Guarantees by any Loan Party of Indebtedness incurred by Qualified
Physicians in the ordinary course of business; provided, that (i) the aggregate
amount of all such Indebtedness that is Guaranteed by the Loan Parties does not
exceed $5,000,000 and (ii) any such Guarantee shall be expressly subordinated in
right of payment to the Obligations;

      (j) other additional unsecured Indebtedness entered into on and after the
Funding Date in an aggregate principal amount not to exceed $15,000,000 at any
one time outstanding;

      (k) subject to Section 8.13 (c) (Prepayment of Other Indebtedness;
Modification of Debt Agreements), renewals, refinancings and extensions of
Indebtedness permitted under clauses (b), (c) and (f) on terms and conditions
not materially less favorable to the applicable obligors or the Lenders;
provided, that the principal amount of such Indebtedness so renewed, refinanced
or extended shall not be renewed, refinanced or extended for a principal amount
in excess of the principal balance outstanding thereof at the time of such
renewal, refinancing or extension.

      (l) Guarantees with respect to Indebtedness permitted under this Section
8.03 (Indebtedness);

      (m) Indebtedness consisting of the financing of insurance premiums in the
ordinary course of business.

8.04  FUNDAMENTAL CHANGES.

      Merge, dissolve, liquidate, consolidate with or into another Person, or
(except to the extent expressly permitted by Section 8.05) Dispose of (whether
in one transaction or in a series of transactions) all or substantially all of
its assets and Properties (whether now owned or hereafter acquired) to or in
favor of any Person; provided, that, notwithstanding the foregoing provisions of
this Section 8.04 but subject to the terms of Sections 7.12 (Additional
Subsidiaries and Guarantees), (a) the Borrower may merge or

                                       72


consolidate with any Subsidiary, provided that the Borrower shall be the
continuing or surviving corporation of such merger or consolidation, (b) any
Subsidiary may merge or consolidate with any other Subsidiary, provided that (i)
if a Guarantor is a party thereto, then a Guarantor shall be the continuing or
surviving corporation of such merger or consolidation and (ii) if a Guarantor is
not a party thereto and a Domestic Subsidiary is a party thereto, then a
Domestic Subsidiary shall be the continuing or surviving corporation of such
merger or consolidation, (c) any Subsidiary may merge with any Person that is
not a Loan Party in connection with a Disposition permitted under Section 8.05
(Dispositions), (d) the Borrower or any Subsidiary may merge with any Person
that is not a Loan Party in connection with a Permitted Acquisition provided
that, if such transaction involves the Borrower, the Borrower shall be the
continuing or surviving corporation of such merger, and (e) any Wholly Owned
Subsidiary may dissolve, liquidate or wind up its affairs at any time provided
that such dissolution, liquidation or winding up, as the case may be, could not
have a Material Adverse Effect.

8.05  DISPOSITIONS.

      Except as otherwise permitted under Section 8.04 (Fundamental Changes),
make any Disposition unless:

      (a) if such Disposition is an Investment, such transaction is not
prohibited by the terms of Section 8.02 (Investments);

      (b) if such transaction is a Sale and Leaseback Transaction, such
transaction is not prohibited by the terms of Section 8.16 (Sale and Leaseback
Transactions; Operating Leases);

      (c) such transaction does not involve the sale or other disposition of a
minority equity interest in any Subsidiary;

      (d) such transaction does not involve a sale or other disposition of
Accounts other than Accounts owned by or attributable to other Property
concurrently being Disposed of in a transaction otherwise permitted under this
Section 8.05;

      (e) no Default has occurred and is continuing or would result from giving
effect to such Disposition;

      (f) the consideration paid in connection therewith shall be cash or Cash
Equivalents received contemporaneous with the consummation of such Disposition
and shall be in an amount not less than the fair market value of the Property
disposed of; and

      (g) the aggregate fair market value of all the Property sold or otherwise
Disposed of by the Borrower and its Subsidiaries in any fiscal year shall not
exceed an amount equal to seven and one-half percent (7.5%) of the aggregate
consolidated net book value of the Fixed Assets of the Borrower and its
Subsidiaries as of the end of the immediately preceding fiscal year.

8.06  RESTRICTED PAYMENTS.

      Declare or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, except that:

      (a) each Subsidiary may make Restricted Payments to the holders of its
Capital Stock;

      (b) the Borrower and each Subsidiary may declare and make dividend
payments or other

                                       73


distributions payable solely in the Capital Stock of the Person making such
dividend or distribution; and

      (c) the Borrower may repurchase the Capital Stock of the Borrower held by
departing employees, former employees, directors and former directors of the
Borrower or any of its Subsidiaries in an amount not to exceed $1,500,000 in the
aggregate during any fiscal year of the Borrower.

8.07  CHANGE IN NATURE OF BUSINESS.

      Engage in any material line of business substantially different from those
lines of business conducted by the Borrower and its Subsidiaries on the Funding
Date or any business substantially related or incidental thereto.

8.08  TRANSACTIONS WITH AFFILIATES AND INSIDERS.

      Enter into or permit to exist any transaction or series of transactions
with any officer, director or Affiliate of such Person other than (a)
transactions between Loan Parties, (b) intercompany transactions expressly
permitted by Section 7.07 (Maintenance of Insurance), Section 8.02
(Investments), Section 8.03 (Indebtedness), Section 8.04 (Fundamental Changes),
Section 8.05 (Dispositions) or Section 8.06 (Restricted Payments), (c)
reasonable compensation and reimbursement of expenses of, and indemnification
of, officers and directors, and (d) except as otherwise specifically limited in
this Agreement, other transactions which are entered into in the ordinary course
of such Person's business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length transaction
with a Person other than an officer, director or Affiliate.

8.09  BURDENSOME AGREEMENTS.

      Enter into or permit to exist any Contractual Obligation that encumbers or
restricts the ability of the Borrower or any Subsidiary (other than any Excluded
Subsidiary) to (a) pay dividends or make any other distributions to any Loan
Party on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, (b) pay any Indebtedness or other
obligation owed to any Loan Party, (c) make loans or advances to any Loan Party,
(d) sell, lease or transfer any of its Property to any Loan Party or (e) act as
a Loan Party pursuant to the Loan Documents or the Exchange Securities Documents
or any renewals, refinancings, exchanges, refundings or extension thereof,
except (in respect of any of the matters referred to in clauses (a) through (e)
above) for (i) this Agreement, the other Loan Documents, the Exchange Securities
Documents and the Senior Secured Credit Documents, (ii) any document or
instrument governing Indebtedness incurred pursuant to Section 8.03(c)
(Indebtedness), provided that any such restriction contained therein relates
only to the asset or assets constructed or acquired in connection therewith,
(iii) any Permitted Lien or any document or instrument governing any Permitted
Lien, provided that any such restriction contained therein relates only to the
asset or assets subject to such Permitted Lien, (iv) customary restrictions and
conditions contained in any agreement relating to the sale or other Disposition
of any Property permitted under Section 8.05 (Dispositions) pending the
consummation of such sale or other Disposition and (v) in the case of the
matters referred to in clause (a) through (d) above, Contractual Obligations of
any Person that becomes a Subsidiary after the Funding Date, provided that such
Contractual Obligations were in existence at the time such Person became a
Subsidiary and were not created in contemplation of or in connection with such
Person becoming a Subsidiary.

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8.10  USE OF PROCEEDS.

      Use the proceeds of any Borrowing, whether directly or indirectly, and
whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U of the FRB) or to extend credit to
others for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose.

8.11  INTENTIONALLY DELETED.

8.12  PORTAL-ELIGIBLE SECURITIES.

      Not later than the date which is 30 days prior to the Initial Maturity
Date, the Borrower shall have been advised by the NASD's PORTAL Market that the
Exchange Securities have been designated PORTAL-eligible securities in
accordance with the rules and regulations of the NASD.

8.13  PREPAYMENT OF OTHER INDEBTEDNESS; MODIFICATION OF DEBT AGREEMENTS.

      (a) Amend or modify any of the terms of any Existing Senior Subordinated
Notes or of any other Subordinated Indebtedness of the Borrower or any
Subsidiary (or the Existing Senior Subordinated Notes Indenture or any other
indenture or agreement entered into in connection therewith) if such amendment
or modification would add or change any terms in a manner adverse to the
Borrower, any Subsidiary, the Administrative Agent or the Lenders (including any
amendment or modification that would shorten the final maturity or average life
to maturity or require any payment to be made sooner than originally scheduled
or increase the interest rate applicable thereto) or confer additional material
rights to the holder of such Indebtedness in a manner adverse to Borrower, any
Subsidiary, the Administrative Agent or the Lenders (other than supplements to
the Senior Subordinated Note Indentures which add one or more Subsidiaries of
the Borrower as guarantors thereunder, which Subsidiaries are, or shall
concurrently therewith become, Guarantors pursuant to this Agreement).

      (b) Amend or modify any of the subordination provisions of any
Subordinated Indebtedness.

      (c) Make (or give any notice with respect thereto) any principal payment
(including any prepayment, whether optional or mandatory, upon conversion or
otherwise) on, or redeem, repurchase, acquire for value (including without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange, the Existing Senior Subordinated Notes or any other
Subordinated Indebtedness, other than, in the case of the AHS Untendered Notes,
the redemption or purchase thereof pursuant to the Transactions.

8.14  ORGANIZATION DOCUMENTS; FISCAL YEAR; LEGAL NAME, STATE OF FORMATION AND
      FORM OF ENTITY.

      (a) Amend, modify or change its Organization Documents in a manner that
(i) materially affects the rights and privileges of the Borrower or any
Subsidiary of the Borrower or (ii) is adverse to the interests of the
Administrative Agent and the Lenders under the Loan Documents or the Exchange
Securities Documents.

      (b) Change its fiscal year.

      (c) Without providing twenty (20) days prior written notice to the
Administrative Agent, change its name, state of formation or form of
organization.

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8.15  OWNERSHIP OF SUBSIDIARIES.

      Notwithstanding any other provisions of this Agreement to the contrary,
(i) permit any Person (other than the Borrower or any Wholly Owned Subsidiary)
to own any Capital Stock of any Subsidiary, except to qualify directors where
required by applicable Law or to satisfy other requirements of applicable Law
with respect to the ownership of Capital Stock of Foreign Subsidiaries, (ii)
permit any Subsidiary to issue or have outstanding any shares of preferred
Capital Stock or (iii) create, incur, assume or suffer to exist any Lien on any
Capital Stock of any Subsidiary.

8.16  SALE AND LEASEBACK TRANSACTIONS; OPERATING LEASES.

      (a) Enter into any Sale and Leaseback Transaction.

      (b) Create or suffer to exist any obligations for the payment of rent for
any property under lease or agreement to lease, except:

            (i) leases in existence as of the Funding Date, and any renewal,
refunding, extension or refinancing thereof; provided that with respect to
Capital Leases and Synthetic Leases (A) the amount of such Capital Lease or
Synthetic Lease is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to the fees and expenses
reasonably incurred in connection with such refinancing, and (B) none of the
instruments and agreements evidencing or governing such Capital Lease or
Synthetic Lease shall be amended, modified or supplemented after the Funding
Date, including in connection with any refinancing, refunding, renewal or
extension, to change any terms of subordination, repayment or rights of
enforcement, conversion, put, exchange or other rights, or to make any covenants
or events of default materially more restrictive or in any event more
restrictive than as set forth herein, from such terms and rights as in effect on
the Funding Date; and

            (ii) operating leases (other than those constituting Synthetic
Leases) entered into or assumed by the Borrower or any Subsidiary after the
Funding Date in the ordinary course of business.

8.17  MODIFICATION OF RELATED DOCUMENTS.

      (a) Alter, rescind, terminate, amend, supplement, waive or otherwise
modify any provision of any Related Document, except for (i) modifications to
the terms of the Senior Credit Agreement, the Existing Senior Subordinated Notes
or any other Subordinated Indebtedness (or any indenture or agreement entered
into in connection therewith) permitted under Section 8.13 (Prepayment of Other
Indebtedness; Modification of Debt Agreements) and (ii) modifications that do
not materially affect the rights and privileges of the Borrower or any
Subsidiary under such Related Document and that do not materially affect the
interests of the Lenders under the Loan Documents or the Exchange Securities
Documents; or

      (b) Permit any breach or default to exist under any Related Document or
take or fail to take any action thereunder, if to do so could reasonably be
expected to have a Material Adverse Effect.

8.18  NO SPECULATIVE TRANSACTIONS.

      Engage in any transaction involving Swap Contracts or any similar
speculative transactions of the type contemplated within the definition of "Swap
Contract" in Section 1.01 (Defined Terms) except as required by Section 7.16
(Interest Rate Contracts) or for the sole purpose of hedging in the normal
course of business and consistent with industry practices.

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8.19  COMPLIANCE WITH ERISA.

      Permit, nor shall any ERISA Affiliate, cause or permit to occur, (a) an
event that could result in the imposition of a Lien under Section 412 of the
Code or Section 302 or 4068 of ERISA or (b) ERISA Events that would have a
Material Adverse Effect in the aggregate.

8.20  ENVIRONMENTAL.

      Allow a Release of any Hazardous Material in violation of any
Environmental Law; provided, however, that the Borrower and the other Loan
Parties shall not be deemed in violation of this Section 8.20 if all
Environmental Liabilities incurred or reasonably expected to be incurred by the
Loan Parties as the consequence of all such Releases shall not exceed the
Threshold Amount in the aggregate.

8.21  ADDITIONAL SENIOR DEBT.

      Designate any Indebtedness (other than the Obligations and the Senior
Secured Loans) as "Designated Senior Debt" (or any other comparable terms) under
any of the Subordinated Indebtedness Documents.

      PART B: Each of the Borrower and each other Loan Party agrees with the
Lenders and the Administrative Agent that, at all times when the Extended Loans
and any Obligations with respect thereto are outstanding, the Borrower and each
such Loan Party shall, and shall ensure that each of its Subsidiaries shall,
comply with each of the negative covenants set forth in the Exchange Indenture
and such provisions of the Exchange Indenture shall be deemed incorporated and
set forth in this Agreement to the extent necessary to give effect to the
foregoing; provided, however, that notwithstanding anything to the contrary in
the foregoing, if the Borrower and the Arranger have not agreed upon a form of
Exchange Indenture, the covenants set forth in Part A of Article VIII (Negative
Covenants) shall apply until such time as the form of Exchange Indenture shall
have been agreed upon between the Borrower and the Arranger

                                   ARTICLE IX

                         EVENTS OF DEFAULT AND REMEDIES

9.01  EVENTS OF DEFAULT.

      Each of the following shall constitute an Event of Default:

      (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i)
when and as required to be paid herein, any amount of principal of any Loan, or
(ii) any interest on any Obligation or any fee under any of the Loan Documents
(A) within three (3) days after the same becomes due in the case of the Initial
Loans and (B) within thirty (30) days after the same becomes due in the case of
the Extended Loans or (iii) any other Obligation or other amount payable
hereunder or any other Loan Document (A) within five (5) days after the same
becomes due in the case of the Initial Loans and (B) within thirty (30) days
after the same becomes due in the case of the Extended Loans; or

      (b) Specific Covenants. On or prior to the Conversion Date,

            (i) any Loan Party fails to perform or observe any term, covenant or
agreement contained in any of Section 7.01 (Financial Statements), 7.02
(Certificates; Other Information) or 7.03 (Notices) and such failure continues
for five (5) Business Days; or

                                       77


            (ii) any Loan Party fails to perform or observe any term, covenant
or agreement contained in any of Section 7.05(a) (Preservation of Existence,
Etc.), 7.10 (Access; Inspection Rights), 7.11 (Use of Proceeds), 7.12
(Additional Subsidiaries and Guarantees) or Article VIII (Negative Covenants);
or

      (c) Other Defaults.

            (i) On or prior to the Conversion Date, any Loan Party fails to
perform or observe any other covenant or agreement (not specified in clauses (a)
or (b) above) contained in any Loan Document on its part to be performed or
observed and such failure continues for thirty (30) days after the earlier of
(i) a Responsible Person of any Loan Party becoming aware of such failure or
(ii) notice thereof to any Loan Party by any Administrative Agent; or

            (ii) After the Conversion Date,

                  (A) the occurrence of an event of default under, and as
            defined by, the Exchange Indenture; or

                  (B) any Loan Party fails to perform or observe any other term,
            covenant or agreement contained in this Agreement or any other Loan
            Document (to the extent applicable at the time) if such failure
            under this clause (ii)(B) shall remain unremedied for thirty (30)
            days; or

      (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower or any other Loan Party herein, in any other Loan Document, or in any
document delivered in connection herewith or therewith shall be incorrect or
misleading in any material respect when made or deemed made; or

      (e) Cross-Default.

            (i) On prior to the Conversion Date, (A) the Borrower or any
Subsidiary fails to make any payment when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) in respect of any
Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness
under Swap Contracts) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) in excess of the Threshold
Amount; (B) the Borrower or any Subsidiary fails to observe or perform any other
agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
is to cause, or (prior to the Conversion Date) to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (C) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (I) any event
of default under such Swap Contract as to which the Borrower or any Subsidiary
is the Defaulting Party (as defined in such Swap Contract) or (II) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount; or

                                       78


            (ii) From and after the Conversion Date, (A) the Borrower or any
Subsidiary fails to make any payment when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) in respect of any
Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness
under Swap Contracts) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) in excess of $10,000,000;
(B) the Borrower or any Subsidiary fails to observe or perform any other
agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
is to cause the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity, or such Guarantee to become payable or cash
collateral in respect thereof to be demanded; or (C) there occurs under any Swap
Contract an Early Termination Date (as defined in such Swap Contract) resulting
from (I) any event of default under such Swap Contract as to which the Borrower
or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or
(II) any Termination Event (as so defined) under such Swap Contract as to which
the Borrower or any Subsidiary is an Affected Party (as so defined) and, in
either event, the Swap Termination Value owed by the Borrower or such Subsidiary
as a result thereof is greater than $10,000,000; or

      (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its Property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for sixty calendar days; or any proceeding under any Debtor Relief
Law relating to any such Person or to all or any material part of its Property
is instituted without the consent of such Person and continues undismissed or
unstayed for sixty calendar days, or an order for relief is entered in any such
proceeding; or

      (g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
Property of any such Person and is not released, vacated or fully bonded within
thirty days after its issue or levy; or

      (h) Judgments. There is entered against the Borrower or any Subsidiary (i)
one or more final judgments or orders for the payment of money in an aggregate
amount exceeding (A) prior to Conversion Date, the Threshold Amount and (B) from
and after the Conversion Date, $10,000,000, in each case, to the extent not
covered by independent third-party insurance as to which the insurer has
acknowledged in writing its obligation to cover, or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either case,
(A) enforcement proceedings are commenced by any creditor upon such judgment or
order, or (B) there is a period of ten (10) consecutive days during which a stay
of enforcement of such judgment, by reason of a pending appeal or otherwise, is
not in effect; or

      (i) ERISA. On or prior to the Conversation Date, (i) an ERISA Event occurs
with respect to a Pension Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of the Borrower under Title IV of
ERISA to the Pension Plan, Multiemployer Plan or the PBGC

                                       79


in an aggregate amount in excess the Threshold Amount or (ii) the Borrower or
any ERISA Affiliate fails to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of the Threshold Amount; or

      (j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect or ceases to give the Administrative Agent, for the benefit of
the Lenders, any material part of the Liens purported to be created thereby; or
any Loan Party or any other Person contests in any manner the validity or
enforceability of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document; or

      (k) Change of Control. On or prior to the Conversion Date, there occurs
any Change of Control; or

      (l) Subordinated Notes; Senior Secured Credit Facilities.

            (i) There shall occur an "Event of Default" (or any comparable term)
under, and as defined in, any of the Existing Senior Subordinated Notes
Documents or the Senior Credit Agreement, (ii) any of the Obligations for any
reason shall cease to be "Senior Debt" (or any comparable term) under, and as
defined in, any of the Existing Senior Subordinated Notes Documents, (iii) any
Indebtedness, other than the Obligations and the Senior Secured Loans, shall
constitute "Designated Senior Debt" (or any comparable term) under, and as
defined in, any of the Existing Senior Subordinated Notes Documents or (iv) the
subordination provisions of any of the Senior Subordinated Notes Documents
shall, in whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable against any holder of any of the Existing
Senior Subordinated Notes; or

      (m) Exclusion Event. On or prior to the Conversion Date, there shall occur
an Exclusion Event that could reasonably be expected to result in a Material
Adverse Effect.

9.02  REMEDIES UPON EVENT OF DEFAULT.

      During the continuance of any Event of Default (including (i) any Event of
Default pursuant to Section 9.01 (Events of Default) which occurs and is
outstanding on the Initial Maturity Date and (ii) any Default pursuant to
Section 9.01 (Events of Default) which occurs and is outstanding on the Initial
Maturity Date, in each case so long as it is continuing and without giving
effect to any extended grace period), the Administrative Agent may, and at the
request of the Required Lenders, shall, by notice to the Borrower, declare the
Loans, all interest thereon and all other amounts and Obligations payable under
this Agreement to be forthwith due and payable, whereupon the Loans, all such
interest and all such amounts and Obligations shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower;

provided, however, that upon the occurrence of the Events of Default specified
in Section 9.01(f) (Insolvency Proceedings, Etc.) or Section 9.01(g) (Inability
to Pay Debts; Attachment), the Loans, all such interest and all such amounts and
Obligations shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower and the other Loan Parties. In addition to the
remedies set forth above, the Administrative Agent may exercise any remedies
provided by applicable Law.

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                                   ARTICLE X

                                      AGENT

10.01 AUTHORIZATION AND ACTION

      (a) Each Lender hereby appoints CNAI as the Administrative Agent hereunder
and each such Lender authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement, the other
Loan Documents and the Exchange Securities Documents as are delegated to the
Administrative Agent under such agreements and to exercise such powers as are
reasonably incidental thereto. Without limiting the foregoing, each Lender
hereby authorizes the Administrative Agent to execute and deliver, and to
perform its obligations under, each of the Loan Documents and the Exchange
Securities Documents to which the Administrative Agent is a party, to exercise
all rights, powers and remedies that the Administrative Agent may have under
such Loan Documents and Exchange Securities Documents.

      (b) Each Lender agrees that any action taken by the Administrative Agent
or the Required Lenders in accordance with the provisions of this Agreement or
of the other Loan Documents, and the exercise by the Administrative Agent or the
Required Lenders of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders.

      (c) As to any matters not expressly provided for by this Agreement, the
other Loan Documents and the Exchange Securities Documents (including
enforcement or collection), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders and such instructions
shall be binding upon all Lenders; provided, however, that the Administrative
Agent shall not be required to take any action that (i) the Administrative Agent
in good faith believes exposes it to personal liability unless the
Administrative Agent receives an indemnification satisfactory to it from the
Lenders with respect to such action or (ii) is contrary to this Agreement or
applicable Law. The Administrative Agent agrees to give to each Lender prompt
notice of each notice given to it by any Loan Party pursuant to the terms of
this Agreement, the other Loan Documents or the Exchange Securities Documents.

      (d) In performing its functions and duties hereunder and under the other
Loan Documents, the Administrative Agent is acting solely on behalf of the
Lenders, except to the limited extent provided in Section 2.11(b) (Evidence of
Debt), and each of their respective duties are entirely administrative in
nature. The Administrative Agent shall not assume, and shall not be deemed to
have assumed, any obligation other than as expressly set forth herein, in the
other Loan Documents and in the Exchange Securities Documents or any other
relationship as the agent, fiduciary or trustee of or for any Lender. The
Administrative Agent may perform any of its duties under any Loan Document and
in the Exchange Securities Documents by or through its agents or employees.

10.02 ADMINISTRATIVE AGENT'S RELIANCE, ETC.

      None of the Administrative Agent, any of its Affiliates or any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it, him, her or them under or in
connection with this Agreement, the other Loan Documents, or the Exchange
Securities Documents, except for its, his, her or their own gross negligence or
willful misconduct. Without limiting the foregoing, the Administrative Agent (a)
may treat the payee of any Note as its holder until such Note has been assigned
in accordance with Section 11.07 (Assignments and Participations), (b) may rely
on the

                                       81


Register to the extent set forth in Section 2.11 (Evidence of Debt), (c) may
consult with legal counsel (including counsel to the Borrower or any other Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts, (d)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations made by or on
behalf of the Borrower or any of its Subsidiaries in or in connection with this
Agreement, any other Loan Document or any Exchange Securities Document, (e)
shall not have any duty to ascertain or to inquire either as to the performance
or observance of any term, covenant or condition of this Agreement, any other
Loan Document or any Exchange Securities Document, as to the financial condition
of any Loan Party or as to the existence or possible existence of any Default or
Event of Default and (f) shall incur no liability under or in respect of this
Agreement, any other Loan Document or any Exchange Securities Document by acting
upon any notice, consent, certificate or other instrument or writing (which
writing may be a telecopy or electronic mail) or any telephone message believed
by it to be genuine and signed or sent by the proper party or parties.

10.03 POSTING OF APPROVED ELECTRONIC COMMUNICATIONS

      (a) Each of the Administrative Agent, the Lenders, the Borrower and each
Guarantor agrees that the Administrative Agent may, but shall not be obligated
to, make the Approved Electronic Communications available to the applicable
Lenders by posting such Approved Electronic Communications on IntraLinks(TM) or
a substantially similar electronic platform chosen by the Administrative Agent
to be its electronic transmission system for matters in connection with this
Agreement and the other Loan Documents (the "Approved Electronic Platform").

      (b) Although the Approved Electronic Platform and its primary web portal
are secured with generally-applicable security procedures and policies
implemented or modified by the Administrative Agent from time to time
(including, as of the Funding Date, a dual firewall and a User ID/Password
Authorization System) and the Approved Electronic Platform is secured through a
single-user-per-deal authorization method whereby each user may access the
Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders,
the Borrower and the Guarantors acknowledges and agrees that the distribution of
material through an electronic medium is not necessarily secure and that there
are confidentiality and other risks associated with such distribution. In
consideration for the convenience and other benefits afforded by such
distribution and for the other consideration provided hereunder, the receipt and
sufficiency of which is hereby acknowledged, each of the Lenders, the Borrower
and the Guarantors hereby approves distribution of the Approved Electronic
Communications through the Approved Electronic Platform and understands and
assumes the risks of such distribution.

      (c) The Approved Electronic Communications and the Approved Electronic
Platform are provided "as is" and "as available". None of the Administrative
Agent or any of its Affiliates or any of the other Agent-Related Persons warrant
the accuracy, adequacy or completeness of the Approved Electronic Communications
and the Approved Electronic Platform and each expressly disclaims liability for
errors or omissions in the Approved Electronic Communications and the Approved
Electronic Platform. No warranty of any kind, express, implied or statutory
(including any warranty of merchantability, fitness for a particular purpose,
non-infringement of third party rights or freedom from viruses or other code
defects) is made by any of the Agent-Related Persons in connection with the
Approved Electronic Communications or the Approved Electronic Platform.

      (d) Each of the Administrative Agent, the Lenders, the Borrower and the
Subsidiary Guarantors agree that the Administrative Agent may, but (except as
may be required by applicable Law) shall not be obligated to, store the Approved
Electronic Communications on the Approved Electronic Platform in accordance with
the Administrative Agent's generally-applicable document retention

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procedures and policies.

10.04 THE ADMINISTRATIVE AGENT INDIVIDUALLY.

      With respect to its Pro Rata Share, CNAI shall have and may exercise the
same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" and "Required Lenders" and any similar terms shall, unless the
context clearly otherwise indicates, include, without limitation, the
Administrative Agent in its individual capacity as a Lender or as one of the
Required Lenders, as the case may be. CNAI and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of banking, trust
or other business with, any Loan Party as if such Person were not acting as an
Agent under the Loan Documents.

10.05 LENDER CREDIT DECISION.

      Each Lender acknowledges that it shall, independently and without reliance
upon the Administrative Agent or any other Lender conduct its own independent
investigation of the financial condition and affairs of the Borrower and each
other Loan Party in connection with the making and continuance of the Loans.
Each Lender also acknowledges that it shall, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement, other
Loan Documents and the Exchange Securities Documents.

10.06 INDEMNIFICATION.

      Each Lender agrees to indemnify the Administrative Agent and each of its
Affiliates, and each of its directors, officers, employees, agents and advisors
(to the extent not reimbursed by the Borrower), in each case from and against
such Lender's aggregate Pro Rata Share of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements (including fees, expenses and disbursements of financial and legal
advisors) of any kind or nature whatsoever that may be imposed on, incurred by,
or asserted against, the Administrative Agent or any of its Affiliates,
directors, officers, employees, agents and advisors in any way relating to or
arising out of this Agreement or the other Loan Documents or any action taken or
omitted by the Administrative Agent under this Agreement, the other Loan
Documents or the Exchange Securities Documents; provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's or such Affiliate's gross negligence
or willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse the Administrative Agent promptly upon demand for its ratable share of
any out-of-pocket expenses (including Attorney Costs and fees, expenses and
disbursements of financial advisors) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of its rights or
responsibilities under, this Agreement or the other Loan Documents, to the
extent that the Administrative Agent is not reimbursed for such expenses by the
Borrower or another Loan Party.

10.07 SUCCESSOR ADMINISTRATIVE AGENT.

      (a) The Administrative Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower.

      (b) Upon any such resignation, the Required Lenders shall have the right
to appoint a successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by

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the Required Lenders, and shall have accepted such appointment, within thirty
(30) days after the retiring Administrative Agent's giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, selected from among the
Lenders. In either case, such appointment shall be subject to the prior written
approval of the Borrower (which approval may not be unreasonably withheld and
shall not be required upon the occurrence and during the continuance of an Event
of Default).

      (c) Upon the acceptance of any appointment as Administrative Agent by a
successor Administrative Agent in accordance with clause (a) above, such
successor Administrative Agent shall succeed to, and become vested with, all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents and the Exchange
Securities Documents. Prior to any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the retiring Administrative Agent shall take
such action as may be reasonably necessary to assign to the successor
Administrative Agent its rights as Administrative Agent under the Loan Documents
and the Exchange Securities Documents. After such resignation, the retiring
Administrative Agent shall continue to have the benefit of this Article X as to
any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement and the other Loan Documents and the Exchange Securities
Documents.

10.08 GUARANTY MATTERS. Each of the Lenders hereby consents to the release of,
and hereby directs the Administrative Agent, at their option and in their
discretion, to release, any Guarantor from its Obligations under the Guaranty if
such Person ceases to be a Subsidiary as a result of a transaction permitted
under this Agreement (or permitted pursuant to a waiver of or consent to a
transaction otherwise prohibited by this Agreement). Upon request by the
Administrative Agent, the Required Lenders will confirm in writing the
Administrative Agent's authority to release any Guarantor from its Obligations
under the Guaranty pursuant to this Section 10.08(d).

10.09 ARRANGER; ADMINISTRATIVE AGENT. None of the Arranger, the Lenders or other
Persons identified on the facing page or signature pages of this Agreement as a
"documentation agent," "syndication agent" or "arranger" shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other
than, in the case of such Persons in their respective capacities as Lenders,
those applicable to all Lenders as such. Without limiting the foregoing, none of
the Arranger, the Lenders or other Persons so identified shall have or be deemed
to have any fiduciary relationship with any Lender. Each Lender acknowledges
that it has not relied, and will not rely, on any of the Arranger, the Lenders
or other Persons so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.

                                   ARTICLE XI

                                  MISCELLANEOUS

11.01 AMENDMENTS, ETC.

      (a) No amendment or waiver of any provision of this Agreement or any other
Loan Document nor consent to any departure by any Loan Party therefrom shall in
any event be effective unless the same shall be in writing and (x) in the case
of an amendment to cure any ambiguity, omission, defect or inconsistency, signed
by the Administrative Agent, the Borrower and the other Loan Parties, (y) in the
case of any such waiver or consent, signed by the Required Lenders (or by the
Administrative Agent with the consent of the Required Lenders) and (z) in the
case of any other amendment, by the Required Lenders (or the Administrative
Agent with the consent of the Required Lenders), the Borrower and the other Loan
Parties, and then any such waiver or consent shall be effective only in the
specific

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instance and for the specific purpose for which given; provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by each
Lender directly affected thereby, in addition to the parties required by clauses
(x), (y) or (z) above, do any of the following:

            (i) waive any condition specified in Section 5.01 (Conditions
Precedent to Initial Borrowings) or 5.02 (Conditions Precedent to Each
Borrowing), except with respect to a condition based upon another provision
hereof, the waiver of which requires only the concurrence of the Required
Lenders and, in the case of the conditions specified in Section 5.01 (Conditions
Precedent to Initial Borrowings), subject to the provisions of Section 5.03
(Determination of Initial Borrowing Conditions);

            (ii) extend or increase the Commitment of such Lender or subject
such Lender to any additional obligation;

            (iii) extend the Initial Maturity Date or the Final Maturity Date,
or waive, reduce or postpone any scheduled date fixed for the payment or
reduction of principal of any such Loan (it being understood that Section 2.08
(Mandatory Prepayments) does not provide for scheduled dates fixed for payment)
or for the reduction of such Lender's Commitment;

            (iv) reduce or forgive the principal amount of any Loan owing to
such Lender (other than by the payment or prepayment thereof pursuant to the
terms of this Agreement);

            (v) reduce the rate of interest on any Loan outstanding to such
Lender except as otherwise permitted hereunder or any fee payable hereunder to
such Lender;

            (vi) postpone any scheduled date fixed for payment of such interest
or fees owing to such Lender or waive any such payment;

            (vii) change the aggregate Pro Rata Shares of Lenders required for
any or all Lenders to take any action hereunder;

            (viii) release the Borrower from its payment obligation to such
Lender under this Agreement or the Notes owing to such Lender (if any) or
release any material Guarantors from their obligations under the Guaranty except
in connection with the sale or other Disposition of such material Guarantors (or
all or substantially all of the assets thereof) permitted by this Agreement (or
permitted pursuant to a waiver or consent of a transaction otherwise prohibited
by this Agreement);

            (ix) increase or add additional restrictions on the right of such
Lender to exchange Loans for Exchange Securities (including any amendment of the
rate applicable to any such exchange);

            (x) amend or modify the terms of the Exchange Securities such that
the unanimous written approval of all holders of Exchange Securities is
required; or

            (xi) amend Section 2.13 (Payments and Computations), Section
10.08(c) or (d) (Guaranty Matters), this Section 11.01, Section 11.16 (Sharing
of Payments, Etc.) or the definitions of the terms "Required Lenders" or "Pro
Rata Share";

      and provided, further, that (x) no amendment, waiver or consent shall,
unless in writing and signed by any Special Purpose Vehicle that has been
granted an option pursuant to Section 11.07(e) (Assignments and Participations)
affect the grant or nature of such option or the right or duties of such Special
Purpose Vehicle hereunder, and (y) no amendment, waiver or consent shall, unless
in writing and signed by the Administrative Agent in addition to the Lenders
required above to take such action, affect

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the rights or duties of the Administrative Agent under this Agreement or the
other Loan Documents.

      (b) The Administrative Agent may, but shall have no obligation to, with
the written concurrence of any applicable Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances unless otherwise required hereunder.

      (c) If, in connection with any proposed amendment, modification, waiver or
termination (a "Proposed Change") requiring the consent of all affected Lenders,
the consent of Required Lenders is obtained but the consent of other Lenders
whose consent is required is not obtained (any such Lender whose consent is not
obtained as described in this Section 11.01 being referred to as a
"Non-Consenting Lender"), then, so long as the Lender acting as the
Administrative Agent is not a Non-Consenting Lender, at the Borrower's request,
an Eligible Assignee reasonably acceptable to the Administrative Agent shall
have the right with the Administrative Agent's consent and in the Administrative
Agent's reasonable discretion (but shall have no obligation) to purchase from
such Non-Consenting Lender, and such Non-Consenting Lender agrees that it shall,
upon the Administrative Agent's request, sell and assign to the Lender acting as
the Administrative Agent or such Eligible Assignee, all of the Outstanding
Amount of the Loan owing to such Non-Consenting Lender, for an amount equal to
the principal balance of all such Loans, as applicable, held by the
Non-Consenting Lender and all accrued and unpaid interest and fees with respect
thereto through the date of sale; provided, however, that such purchase and sale
shall be recorded in the Register maintained by the Administrative Agent and
shall not be effective until (x) the Administrative Agent shall have received
from such Eligible Assignee a duly executed Assignment and Assumption and (y)
such Non-Consenting Lender shall have received payments of the Outstanding
Amount of the Loans owing to such Non-Consenting Lender and all accrued and
unpaid interest and fees with respect thereto through the date of the sale. Each
Lender agrees that, if it becomes a Non-Consenting Lender, it shall execute and
deliver to the Administrative Agent an Assignment and Assumption to evidence
such sale and purchase and shall deliver to the Administrative Agent any Note
(if the assigning Lender's Loans are evidenced by Notes) subject to such
Assignment and Assumption; provided, however, that the failure of any
Non-Consenting Lender to execute an Assignment and Assumption shall not render
such sale and purchase (and the corresponding assignment) invalid and such
assignment shall be recorded in the Register.

11.02 NOTICES, ETC.

      (a) Addresses for Notices. All notices, demands, requests and other
communications provided for in this Agreement shall be given in writing, or by
any telecommunication device capable of creating a written record (including
electronic mail), and addressed to the party to be notified as follows:

            (i)   if to the Borrower:

                  Psychiatric Solutions, Inc.
                  840 Crescent Centre Drive
                  Suite 460
                  Franklin, TN 37067
                  Attention: Brent Turner
                  Telecopy no: (615) 312-5711
                  E-Mail Address: bturner@psysolutions.com

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            (ii) if to any Lender, at its Lending Office specified opposite its
name on Schedule 11.02 (Lending Offices and Addresses for Notices) or on the
signature page of any applicable Assignment and Assumption; and

            (iii) if to the Administrative Agent:

                  CITICORP NORTH AMERICA, INC.
                  390 Greenwich Street
                  New York, New York 10013
                  Attention: Dawayne Sims
                  Telecopy no: (212) 994-0961
                  E-Mail Address: Dawayne.Sims@citigroup.com

      or at such other address as shall be notified in writing (x) in the case
of the Borrower and the Administrative Agent, to the other parties and (y) in
the case of all other parties, to the Borrower and the Administrative Agent. All
such notices and communications shall be effective upon personal delivery (if
delivered by hand, including any overnight courier service), when deposited in
the mails (if sent by mail), or when properly delivered (if sent by a
telecommunications device or through the Internet); provided, however, that
notices and communications to an Administrative Agent pursuant to Article II
(The Commitments and Borrowings) or Article X (Administrative Agent) shall not
be effective until received by the Administrative Agent.

      (b) Effectiveness of Notices. All notices, demands, requests, consents and
other communications described in clause (a) above shall be effective (i) if
delivered by hand, including any overnight courier service, upon personal
delivery, (ii) if delivered by mail, when deposited in the mails, (iii) if
delivered by posting to an Approved Electronic Platform, an Internet website or
a similar telecommunication device requiring a user prior access to such
Approved Electronic Platform, website or other device, when such notice, demand,
request, consent and other communication shall have been made generally
available on such Approved Electronic Platform, Internet website or similar
device to the class of Person being notified (regardless of whether any such
Person must accomplish, and whether or not any such Person shall have
accomplished, any action prior to obtaining access to such items, including
registration, disclosure of contact information, compliance with a standard user
agreement or undertaking a duty of confidentiality) and (iv) if delivered by
electronic mail or any other telecommunications device, when transmitted to an
electronic mail address (or by another means of electronic delivery) as provided
in clause (a) above; provided, however, that notices and communications to the
Administrative Agent pursuant to Article II (The Commitments and Borrowings) or
Article X (Administrative Agent) shall not be effective until received by the
Administrative Agent.

      (c) Use of Electronic Platform. Notwithstanding clauses (a) and (b) above
(unless the Administrative Agent requests that the provisions of clause (a) and
(b) above be followed) and any other provision in this Agreement or any other
Loan Document providing for the delivery of, any Approved Electronic
Communication by any other means, the Loan Parties shall deliver all Approved
Electronic Communications to the Administrative Agent by properly transmitting
such Approved Electronic Communications electronically (in a format acceptable
to the Administrative Agent) to (i) in the case of the Administrative Agent,
oploanswebadmin@citigroup.com or (ii) such other electronic mail address (or
similar means of electronic delivery) as the Administrative Agent may notify the
Borrower. Nothing in this clause (c) shall prejudice the right of the
Administrative Agent or any Lender to deliver any Approved Electronic
Communication to any Loan Party in any manner authorized in this Agreement.

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11.03 NO WAIVER; CUMULATIVE REMEDIES.

      No failure on the part of any Lender or the Administrative Agent to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by Law.

11.04 ATTORNEY COSTS, EXPENSES AND TAXES.

      (a) Each of the Borrower and each other Loan Party agrees upon demand to
pay, or reimburse the Administrative Agent for all of its reasonable external
audit, legal, appraisal, valuation, filing, document duplication and
reproduction and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including (x) the
Attorney Costs of counsel to the Administrative Agent and the Administrative
Agent, Weil, Gotshal & Manges LLP, (y) the Attorney Costs of such other local
legal counsel as may be retained by the Administrative Agent in connection with
the security arrangements contemplated by the Loan Documents and, if necessary
or reasonably advisable in connection with the Loan Documents regulatory
counsel, and (z) the costs and expenses of auditors, accountants, appraisers,
printers, insurance and environmental advisors, and other consultants and
agents) incurred by the Administrative Agent in connection with any of the
following: (i) the Administrative Agent' audit and investigation of the Borrower
and its Subsidiaries in connection with the preparation, negotiation or
execution of any Loan Document or the Administrative Agent' periodic audits of
the Borrower or any of its Subsidiaries, as the case may be, (ii) the
preparation, negotiation, execution or interpretation of this Agreement
(including the satisfaction or attempted satisfaction of any condition set forth
in Article V (Conditions Precedent)), any Loan Document, any Exchange Securities
Document or any proposal letter or commitment letter issued in connection
therewith, or the making of the Loans or other Borrowing hereunder, (iii) the
creation, perfection or protection of the Liens under any Loan Document
(including any Attorney Costs for local counsel in various jurisdictions), (iv)
the ongoing administration of this Agreement and the Loans including
consultation with attorneys in connection therewith and with respect to the
rights and responsibilities of the Administrative Agent hereunder, under the
other Loan Documents and the Exchange Securities Documents, (v) the protection,
collection or enforcement of any Obligation or the enforcement of any Loan
Document or any Exchange Securities Document, (vi) the commencement, defense or
intervention in any court proceeding relating in any way to the Obligations, the
Borrower, any other Loan Party, any of the Borrower's Subsidiaries, the Ardent
Acquisition, the other Transactions, the Related Documents, this Agreement, any
other Loan Document or any Exchange Securities Document, (vii) the response to,
and preparation for, any subpoena or request for document production with which
the Administrative Agent is served or deposition or other proceeding in which
the Administrative Agent is called to testify, in each case, relating in any way
to the Obligations, the Borrower, any other Loan Party, any of the Borrower's
Subsidiaries, the Ardent Acquisition, the Related Documents, this Agreement or
any other Loan Document or any Exchange Securities Document or (viii) any
amendment, consent, waiver, assignment, restatement, or supplement to any Loan
Document or the preparation, negotiation and execution of the same.

      (b) Each of the Borrower and each other Loan Party further agrees to pay
or reimburse each of the Administrative Agent and each of the Lenders upon
demand for all out-of-pocket costs and expenses (including Attorney Costs,
allocated costs of internal counsel and costs of settlement), incurred by the
Administrative Agent or such Lenders in connection with any of the following:
(i) in enforcing any Loan Document or any Exchange Securities Document or
Obligation or exercising or enforcing any other right or remedy available by
reason of an Event of Default, (ii) in connection with any refinancing or
restructuring of the credit arrangements provided hereunder in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding, (iii) in commencing,
defending or intervening in any litigation or in filing a petition, complaint,
answer, motion or other pleadings in any legal proceeding relating to the

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Obligations, the Borrower, any other Loan Party, any of the Borrower's
Subsidiaries and related to or arising out of the transactions contemplated
hereby or by any other Loan Document or Related Document or (iv) in taking any
other action in or with respect to any suit or proceeding (bankruptcy or
otherwise) described in clause (i), (ii) or (iii) above.

      (c) All amounts due under this Section 11.04 shall be payable within ten
(10) Business Days after demand therefor. The agreements in this Section 11.04
shall survive the termination of the Commitments and repayment of all
Obligations.

11.05 INDEMNIFICATION BY THE BORROWER; LIMITATION OF LIABILITY.

      (a) Indemnification.

            (i) Each of the Borrower and each other Loan Party agrees to
indemnify and hold harmless the Administrative Agent, the Arranger and each
Lender and each of their respective Affiliates, and each of the directors,
officers, employees, agents, trustees, representatives, attorneys, consultants
and advisors of or to any of the foregoing (including those retained in
connection with the satisfaction or attempted satisfaction of any condition set
forth in Article V (Conditions Precedent) (each such Person being an
"Indemnitee") from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses, joint or several, of any kind or nature (including reasonable
fees, disbursements and expenses of financial and legal advisors to any such
Indemnitee) that may be imposed on, incurred by or asserted against any such
Indemnitee in connection with or arising out of any investigation, litigation or
proceeding, whether or not such investigation, litigation or proceeding is
brought by any such indemnitee or any of its directors, security holders or
creditors or any such Indemnitee, director, security holder or creditor is a
party thereto, whether direct, indirect, or consequential and whether based on
any federal, state or local law or other statutory regulation, securities or
commercial law or regulation, or under common law or in equity, or on contract,
tort or otherwise, in any manner relating to or arising out of this Agreement,
any other Loan Document, any Exchange Securities Document, any Obligation, any
Related Document, or any act, event or transaction related or attendant to any
thereof, or the use or intended use of the proceeds of the Borrowings or in
connection with any investigation of any potential matter covered hereby
(collectively, the "Indemnified Matters"); provided, however, that neither the
Borrower nor any other Loan Party shall have any liability under this Section
11.05 to an Indemnitee with respect to any Indemnified Matter that has resulted
primarily from the gross negligence or willful misconduct of that Indemnitee, as
determined by a court of competent jurisdiction in a final non-appealable
judgment or order. Without limiting the foregoing, "Indemnified Matters" shall
include (A) all Environmental Liabilities arising from or connected with the
past, present or future operations of the Borrower or any of its Subsidiaries
involving any of its Real Estate, or damage to real or personal property or
natural resources or harm or injury alleged to have resulted from any Release of
Hazardous Materials on, upon or into such property or any contiguous Real
Estate, (B) any costs or liabilities incurred in connection with any Remedial
Action concerning the Borrower or any of its Subsidiaries, (C) any costs or
liabilities incurred in connection with any Lien in favor of any Governmental
Authority for Environmental Liabilities and (D) any costs or liabilities
incurred in connection with any other matter under any Environmental Law,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (49 U.S.C. Section 9601 et seq.) and applicable state property
transfer laws, whether, with respect to any such matter, such Indemnitee is a
mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the
successor in interest to the Borrower or any of its Subsidiaries, or the owner,
lessee or operator of any property of the Borrower or any of its Subsidiaries by
virtue of foreclosure, except, with respect to those matters referred to in
clauses (A), (B), (C) and (D) above, to the extent (x) incurred following
foreclosure by the Administrative Agent or any Lender, or the Administrative
Agent or any Lender having become the

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successor in interest to the Borrower or any of its Subsidiaries and (y)
attributable to acts of the Administrative Agent or such Lender or the
Administrative Agent on behalf of such Lender.

            (ii) Each of the Borrower and each other Loan Party shall indemnify
the Administrative Agent and the Lenders for, and hold the Administrative Agent
and the Lenders harmless from and against, any and all claims for brokerage
commissions, fees and other compensation made against the Administrative Agent
and the Lenders for any broker, finder or consultant with respect to any
agreement, arrangement or understanding made by or on behalf of the Borrower or
any other Loan Party or any of its respective Subsidiaries in connection with
the transactions contemplated by this Agreement.

            (iii) Each of the Borrower and each of the other Loan Parties, at
the request of any Indemnitee, shall have the obligation to defend against any
investigation, litigation or proceeding or requested Remedial Action, in each
case contemplated in clause (a) above, and the Borrower and such other Loan
Parties, in any event, may participate in the defense thereof with legal counsel
of the Borrower's choice. In the event that such indemnitee requests the
Borrower or any Loan Party to defend against such investigation, litigation or
proceeding or requested Remedial Action, the Borrower or such Loan Party shall
promptly do so and such Indemnitee shall have the right to have legal counsel of
its choice participate in such defense. No action taken by legal counsel chosen
by such Indemnitee in defending against any such investigation, litigation or
proceeding or requested Remedial Action, shall vitiate or in any way impair the
obligation and duty hereunder of the Borrower and such other Loan Parties to
indemnify and hold harmless such Indemnitee.

            (iv) Each of the Borrower and each other Loan Party agrees that any
indemnification or other protection provided to any Indemnitee pursuant to this
Agreement (including pursuant to this Section 11.05) or any other Loan Document
or any Exchange Securities Document shall (A) survive payment in full of the
Obligations and (B) inure to the benefit of any Person that was at any time an
Indemnitee under this Agreement or any other Loan Document or any Exchange
Securities Document.

      (b) Limitation of Liability.

            (i) Each of the Borrower and each other Loan Party agrees that no
Indemnitee shall have any liability (whether in contract, tort or otherwise) to
any Loan Party or any of their respective Subsidiaries or any of their
respective equity holders or creditors for or in connection with the
transactions contemplated hereby and in the other Loan Documents, the Exchange
Securities Documents and Related Documents, except to the extent such liability
is determined in a final non-appealable judgment by a court of competent
jurisdiction to have resulted primarily from such Indemnitee's gross negligence
or willful misconduct. In no event, however, shall any Indemnitee be liable on
any theory of liability for any special, indirect, consequential or punitive
damages (including any loss of profits, business or anticipated savings). Each
of the Borrower and each of the other Loan Parties hereby waives, releases and
agrees (each for itself and on behalf of its Subsidiaries) not to sue upon any
such claim for any special, indirect, consequential or punitive damages, whether
or not accrued and whether or not known or suspected to exist in its favor.

            (ii) IN NO EVENT SHALL ANY AGENT RELATED PERSON HAVE ANY LIABILITY
TO ANY LOAN PARTY, LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, INCLUDING
DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR
EXPENSES (WHETHER IN TORT OR CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN
PARTY OR ANY AGENT RELATED PERSON'S TRANSMISSION OF APPROVED ELECTRONIC
COMMUNICATIONS THROUGH THE INTERNET OR ANY USE OF THE APPROVED ELECTRONIC
PLATFORM, EXCEPT TO THE EXTENT SUCH LIABILITY OF ANY AGENT RELATED PERSON IS
FOUND IN A FINAL NON-

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APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
PRIMARILY FORM SUCH AGENT RELATED PERSON'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

11.06 MARSHALLING; PAYMENTS SET ASIDE.

      None of the Administrative Agent or any Lender shall be under any
obligation to marshal any assets in favor of the Borrower or any other party or
against or in payment of any or all of the Obligations. To the extent that the
Borrower makes a payment or payments to the Administrative Agent or the Lenders
or any such Person receives payment from the exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party, then to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all right and remedies therefor, shall
be revived and continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred.

11.07 ASSIGNMENTS AND PARTICIPATIONS.

      (a) Each Lender may sell, transfer, negotiate or assign to one or more
Eligible Assignees all or a portion of its rights and obligations hereunder
(including all of its rights and obligations with respect to the Loans);
provided, however, that

            (i) the aggregate amount being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Assumption with
respect to such assignment) shall in no event (if less than the Assignor's
entire interest) be less than $1,000,000 or an integral multiple of $1,000,000
in excess thereof, except, in any case, (A) with the consent of the
Administrative Agent or (B) if such assignment is being made to a Lender or an
Affiliate or Approved Fund of such Lender; and

            (ii) if such Eligible Assignee is not, prior to the date of such
assignment, a Lender or an Affiliate or Approved Fund of a Lender, such
assignment shall be subject to the prior consent of the Administrative Agent.

      (b) The parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording, an Assignment and
Assumption, together with any Note (if the assigning Lender's Loans are
evidenced by a Note) subject to such assignment. Upon the execution, delivery,
acceptance and recording of any Assignment and Assumption and, other than in
respect of assignments made pursuant to Section 3.07 (Substitution of Lenders)
and Section 11.01(c) (Amendments, Etc.), the receipt by the Administrative Agent
from the assignee (other than an assignee that is CNAI or any of its Affiliates)
of an assignment fee in the amount of $3,500 from and after the effective date
specified in such Assignment and Assumption (provided that in respect of
multiple contemporaneous assignments by any Lender to its Approved Funds, such
assignment fee shall be in an amount equal to $3,500 for the first such
assignment to an Approved Fund of such Lender), (i) the assignee thereunder
shall become a party hereto and, to the extent that rights and obligations under
the Loan Documents have been assigned to such assignee pursuant to such
Assignment and Assumption, have the rights and obligations of a Lender, (ii) the
Notes (if any) corresponding to the Loans assigned thereby shall be transferred
to such assignee by notation in the Register and (iii) the assignor thereunder
shall, to the extent that rights and obligations under this Agreement have been
assigned by it pursuant to such Assignment and Assumption, relinquish its rights
(except for those surviving the payment in full of the Obligations) and be
released from its obligations under the Loan Documents, other than those
relating to events or circumstances occurring prior to such assignment (and, in
the case of an Assignment and Assumption

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covering all or the remaining portion of an assigning Lender's rights and
obligations under the Loan Documents, such Lender shall cease to be a party
hereto).

      (c) The Administrative Agent shall maintain at its address referred to in
Section 11.02 (Notices, Etc.) a copy of each Assignment and Assumption delivered
to and accepted by it and shall record in the Register the names and addresses
of the Lenders and the principal amount of the Loans owing to each such Lender
from time to time. Any assignment pursuant to this Section 11.02 shall not be
effective until such assignment is recorded in the Register.

      (d) Upon its receipt of an Assignment and Assumption executed by an
assigning Lender and an assignee, the Administrative Agent shall, if such
Assignment and Assumption has been completed, (i) accept such Assignment and
Assumption, (ii) record, or cause to be recorded, the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower, at its
own expense, shall, if requested by such assignee, execute and deliver to the
Administrative Agent new Notes to the order of such assignee in an amount equal
to the Commitments and Borrowings assumed by such assignee pursuant to such
Assignment and Assumption and, if the assigning Lender has surrendered any Note
for exchange in connection with the assignment and has retained Commitments or
Borrowings hereunder, new Notes to the order of the assigning Lender in an
amount equal to the Commitments and Borrowings retained by it hereunder. Such
new Notes shall be dated the same date as the surrendered Notes and be in
substantially the form of Exhibit C-1 (Form of Initial Loan Note) or Exhibit C-2
(Form of Extended Loan Note), as applicable.

      (e) In addition to the other assignment rights provided in this Section
11.07, each Lender may:

            (i) grant to a Special Purpose Vehicle the option to make all or any
part of any Loan that such Lender would otherwise be required to make hereunder
and the exercise of such option by any such Special Purpose Vehicle and the
making of Loans pursuant thereto shall satisfy (once and to the extent that such
Loans are made) the obligation of such Lender to make such Loans thereunder,
provided, however, that (x) nothing herein shall constitute a commitment or an
offer to commit by such a Special Purpose Vehicle to make Loans hereunder and no
such Special Purpose Vehicle shall be liable for any indemnity or other
Obligation (other than the making of Loans for which such Special Purpose
Vehicle shall have exercised an option, and then only in accordance with the
relevant option agreement) and (y) such Lender's obligations under the Loan
Documents shall remain unchanged, such Lender shall remain responsible to the
other parties for the performance of its obligations under the terms of this
Agreement and shall remain the holder of the Obligations for all purposes
hereunder, and

            (ii) assign, as collateral or otherwise, any of its rights under
this Agreement, whether now owned or hereafter acquired (including rights to
payments of principal or interest on the Loans), to (A) without notice to or
consent of the Administrative Agent or the Borrower, any Federal Reserve Bank
(pursuant to Regulation A of the FRB) and (B) without consent of the
Administrative Agent or the Borrower, (1) any holder of, or trustee for the
benefit of, the holders of such Lender's Securities and (2) any Special Purpose
Vehicle to which such Lender has granted an option pursuant to clause (i) above;

provided, however, that no such assignment or grant shall release such Lender
from any of its obligations hereunder except as expressly provided in clause (i)
above and except, in the case of a subsequent foreclosure pursuant to an
assignment as collateral, if such foreclosure is made in compliance with the
other provisions of this Section 11.07 other than this clause (e) or clause (f)
below. Each party hereto acknowledges and agrees that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior debt of any such Special Purpose Vehicle, such party shall
not institute against, or join any other Person in instituting against, any
Special Purpose Vehicle that has

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been granted an option pursuant to this clause (e) any bankruptcy,
reorganization, insolvency or liquidation proceeding (such agreement shall
survive the payment in full of the Obligations). The terms of the designation
of, or assignment to, such Special Purpose Vehicle shall not restrict such
Lender's ability to, or grant such Special Purpose Vehicle the right to, consent
to any amendment or waiver to this Agreement or any other Loan Document or to
the departure by the Borrower from any provision of this Agreement or any other
Loan Document without the consent of such Special Purpose Vehicle except, as
long as the Administrative Agent and the Lenders shall continue to, and shall be
entitled to continue to, deal solely and directly with such Lender in connection
with such Lender's obligations under this Agreement, to the extent any such
consent would reduce the principal amount of, or the rate of interest on, any
Obligations, amend clause (e) or postpone any scheduled date of payment of such
principal or interest. Each Special Purpose Vehicle shall be entitled to the
benefits of Section 3.01 (Taxes), 3.02 (Illegality) and Section 3.04(b)
(Increased Cost and Reduced Return; Capital Adequacy) as if it were such Lender;
provided, however, that anything herein to the contrary notwithstanding, no
Borrower shall, at any time, be obligated to make under Section 3.01 (Taxes),
3.02 (Illegality) or Section 3.04(b) (Increased Cost and Reduced Return; Capital
Adequacy) a to any such Special Purpose Vehicle and any such Lender any payment
in excess of the amount the Borrower would have been obligated to pay to such
Lender in respect of such interest if such Special Purpose Vehicle had not been
assigned the rights of such Lender hereunder; and provided, further, that such
Special Purpose Vehicle shall have no direct right to enforce any of the terms
of this Agreement against the Borrower, the Administrative Agent or the other
Lenders.

      (f) Each Lender may sell participations to one or more Persons in or to
all or a portion of its rights and obligations under the Loan Documents
(including all its rights and obligations with respect to the Loans). The terms
of such participation shall not, in any event, require the participant's consent
to any amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights such Lender may
have under or in respect of the Loan Documents (including the right to enforce
the obligations of the Loan Parties), except if any such amendment, waiver or
other modification or consent would reduce the amount, or postpone any date
fixed for, any amount (whether of principal, interest or fees) payable to such
participant under the Loan Documents, to which such participant would otherwise
be entitled under such participation. In the event of the sale of any
participation by any Lender, (w) such Lender's obligations under the Loan
Documents shall remain unchanged, (x) such Lender shall remain solely
responsible to the other parties for the performance of such obligations, (y)
such Lender shall remain the holder of such Obligations for all purposes of this
Agreement and (z) the Borrower, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement. Each participant
shall be entitled to the benefits of Section 3.01 (Taxes), Section 3.02
(Illegality) and Section 3.04(b) (Increased Cost and Reduced Return; Capital
Adequacy) as if it were a Lender; provided, however, that anything herein to the
contrary notwithstanding, the Borrower shall not, at any time, be obligated to
make under Section 3.01 (Taxes), Section 3.02 (Illegality) and Section 3.04(b)
(Increased Cost and Reduced Return; Capital Adequacy) to the participants in the
rights and obligations of any Lender (together with such Lender) any payment in
excess of the amount the Borrower would have been obligated to pay to such
Lender in respect of such interest had such participation not been sold.

11.08 CONFIDENTIALITY.

      Each Lender and the Administrative Agent agrees to maintain the
confidentiality of the Confidential Borrower Information, except that
Confidential Borrower Information may be disclosed (a) to its and its
Affiliates' directors, officers, trustees, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Confidential Borrower Information and instructed to keep such
Confidential Borrower Information confidential), (b) to the extent requested by
any regulatory

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authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 11.08, to
any assignee of or participant in, or any prospective assignee of or participant
in, any of its rights or obligations under this Agreement, (g) with the written
consent of the Borrower, (h) to current or prospective assignees, participants
and Special Purpose Vehicles grantees of any option described in Section
11.07(e) (Assignments and Participations), contractual counterparties in any
Swap Contract permitted hereunder and to their respective legal or financial
advisors, in each case and to the extent such assignees, participants, grantees
or counterparties agree to be bound by, and to cause their advisors to comply
with, the provisions of this Section 11.08 or (i) to the extent such
Confidential Borrower Information (i) becomes publicly available other than as a
result of a breach of this Section 11.08 or (ii) becomes available to any Lender
or Agent on a non-confidential basis from a source other than the Borrower or
any other Loan Party. Any Person required to maintain the confidentiality of
Confidential Borrower Information as provided in this Section 11.08 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Confidential Borrower Information as such Person would accord to its own
confidential information. Notwithstanding anything in this Agreement or in any
other Loan Document to the contrary, the Borrowers, each Lender and the
Administrative Agent (and each employee, representative or other agent of the
Borrowers) may disclose to any and all persons, without limitation of any kind,
the U.S. tax treatment and U.S. tax structure of the Transactions and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Borrower relating to such U.S. tax treatment and U.S. tax
structure..

11.09 SET-OFF.

      Upon the occurrence and during the continuance of any Event of Default
each Lender and each Affiliate of a Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other Indebtedness at any time owing by such Lender or its
Affiliates to or for the credit or the account of the Borrower against any and
all of the Obligations now or hereafter existing whether or not such Lender
shall have made any demand under this Agreement or any other Loan Document and
even though such Obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender
or its Affiliates; provided, however, that the failure to give such notice shall
not affect the validity of such set-off and application. Each Lender agrees that
it shall not, without the express consent of the Required Lenders (and that, it
shall, to the extent lawfully entitled to do so, upon the request of the
Required Lenders) exercise its set-off rights under this Section 11.09 against
any deposit accounts of the Loan Parties and their Subsidiaries maintained with
such Lender or any Affiliate thereof. The rights of each Lender under this
Section 11.09 are in addition to the other rights and remedies (including other
rights of set-off) that such Lender may have.

11.10 INTEREST RATE LIMITATION.

      Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not exceed
the maximum rate of non-usurious interest permitted by applicable Law (the
"Maximum Rate"). If the Administrative Agent or any Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Borrower. In determining whether the interest
contracted for, charged, or received by the Administrative Agent or any Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by applicable
Law, (a) characterize

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any payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the contemplated term of the Obligations
hereunder.

11.11 COUNTERPARTS.

      This Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are attached to the same document. Delivery of an executed signature page of
this Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart hereof. A set of the copies of this Agreement
signed by all parties shall be lodged with the Borrower and the Administrative
Agent.

11.12 INTEGRATION.

      This Agreement, together with the other Loan Documents and the Exchange
Securities Documents, comprises the complete and integrated agreement of the
parties on the subject matter hereof and thereof and supersedes all prior
agreements, written or oral, on such subject matter. In the event of any
conflict between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control; provided that the
inclusion of supplemental rights or remedies in favor of the Administrative
Agent or the Lenders in any other Loan Document shall not be deemed a conflict
with this Agreement. Each Loan Document and each Exchange Securities Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.

11.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

      All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in connection
herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Lender, regardless of any investigation made
by the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Borrowing, and shall continue in full force and
effect as long as any Loan or any other Obligation hereunder shall remain unpaid
or unsatisfied.

11.14 SEVERABILITY.

      If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

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11.15 TAX FORMS.

      (a)   (i)   Each Lender that is not a "United States person" within the
meaning of Section 7701(a)(30) of the Code (a "Foreign Lender") shall deliver to
the Administrative Agent, prior to receipt of any payment subject to withholding
under the Code (or upon accepting an assignment of an interest herein), two duly
signed completed copies of (A) either (I) IRS Form W-8BEN or any successor
thereto relating to such Foreign Lender and entitling it to an exemption from,
or reduction of, withholding tax (including any exemption pursuant to Section
881(c) of the Code) on all payments to be made to such Person by the Borrower
pursuant to this Agreement) or (II) IRS Form W-8ECI or any successor thereto
relating to all payments to be made to such Foreign Lender by the Borrower
pursuant to this Agreement or such other evidence satisfactory to the Borrower
and the Administrative Agent that such Foreign Lender is entitled to an
exemption from, or reduction of, U.S. withholding tax and (B) in the case of any
Lender claiming an exemption from, or reduction of, withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", such Foreign Lender shall also provide a certificate of such Foreign
Lender is not (I) a "bank" for purposes of Section 881(c)(3)(B) of the Code,
(II) a 10% shareholder (within the meaning of Section 881(c)(3)(B) of the Code)
of the Borrower or any Subsidiary or (3) a controlled foreign corporation
related to the Borrower or any Subsidiary (within the meaning of Section
881(c)(3)(C) of the Code). Thereafter and from time to time, each such Foreign
Lender shall (A) promptly submit to the Administrative Agent such additional
duly completed and signed copies of one of such forms (or such successor forms
as shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to the Borrower and
the Administrative Agent of any available exemption from or reduction of, United
States withholding taxes in respect of all payments to be made to such Foreign
Lender by the Borrower pursuant to this Agreement, (B) promptly notify the
Administrative Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction, and (C) take such steps as shall not
be materially disadvantageous to it, in the reasonable judgment of such Lender,
and as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws that the Borrower make any
deduction or withholding for taxes from amounts payable to such Person.

            (ii) Each Foreign Lender, to the extent it does not act or ceases to
act for its own account with respect to any portion of any sums paid or payable
to such Lender under any of the Loan Documents (for example, in the case of a
participation by such Lender), shall deliver to the Administrative Agent on the
date when such Foreign Lender ceases to act for its own account with respect to
any portion of any such sums paid or payable, and at such other times as may be
necessary in the determination of the Administrative Agent (in its reasonable
discretion), (A) two duly signed completed copies of the forms or statements
required to be provided by such Lender as set forth above, to establish the
portion of any such sums paid or payable with respect to which such Lender acts
for its own account that is not subject to U.S. withholding tax, and (B) two
duly signed completed copies of IRS Form W-8IMY (or any successor thereto),
together with any information such Lender chooses to transmit with such form,
and any other certificate or statement of exemption required under the Code, to
establish that such Lender is not acting for its own account with respect to a
portion of any such sums payable to such Lender.

            (iii) The Borrower shall not be required to pay any additional
amount to any Foreign Lender under Section 3.01(a) (Taxes) (A) with respect to
any Taxes required to be deducted or withheld on the basis of the information,
certificates or statements of exemption such Lender transmits with an IRS Form
W-8IMY pursuant to this Section 11.15(a) or (B) if such Lender shall have failed
to satisfy the foregoing provisions of this Section 11.15(a); provided that if
such Lender shall have satisfied the requirements of this Section 11.15(a) on
the date such Lender became a Lender or ceased to act for its own account with
respect to any payment under any of the Loan Documents, nothing in this Section

                                       96


11.15(a) shall relieve the Borrower of its obligation to pay any amounts
pursuant to Section 3.01(a) (Taxes) in the event that, as a result of any change
in any applicable Law, treaty or governmental rule, regulation or order, or any
change in the interpretation, administration or application thereof, such Lender
is no longer properly entitled to deliver forms, certificates or other evidence
at a subsequent date establishing the fact that such Lender or other Person for
the account of which such Lender receives any sums payable under any of the Loan
Documents is not subject to withholding or is subject to withholding at a
reduced rate.

            (iv) The Administrative Agent may, without reduction, withhold any
Taxes required to be deducted and withheld from any payment under any of the
Loan Documents with respect to which the Borrower is not required to pay
additional amounts under this Section 11.15(a).

      (b) Upon the request of the Administrative Agent, each Lender that is a
"United States person" within the meaning of Section 7701(a)(30) of the Code
shall deliver to the Administrative Agent two duly signed completed copies of
IRS Form W-9. If such Lender fails to deliver such forms, then the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable back-up withholding tax imposed by the Code,
without reduction.

      (c) If any Governmental Authority asserts that any Administrative Agent
did not properly withhold or backup withhold, as the case may be, any tax or
other amount from payments made to or for the account of any Lender, such Lender
shall indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, and costs and expenses (including
Attorney Costs) of the Administrative Agent. The obligation of the Lenders under
this Section shall survive the termination of the Commitments, repayment of all
Obligations and the resignation of the Administrative Agent.

11.16 SHARING OF PAYMENTS, ETC.

      (a) If any Lender (directly or through an Affiliate thereof) obtains any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off (including pursuant to Section 11.09 (Set-off) or otherwise) of the
Loans owing to it, any interest thereon, fees in respect thereof or amounts due
pursuant to Section 11.04 (Attorney Costs, Expenses and Taxes) or 11.05
(Indemnification by the Borrower; Limitation of Liability) (other than payments
pursuant to Section 3.01 (Taxes), 3.02 (Illegality), 3.03 (Determination of
Rates; Inability to Determine Rates), 3.04 (Increased Cost and Reduced Return;
Capital Adequacy) or 3.05 (Funding Losses)) (in each case, whether voluntary,
involuntary, through the exercise of any right of set-off or otherwise
(including pursuant to Section 11.09 (Set-off)) in excess of its Pro Rata Share
of all payments of such Obligations obtained by all the Lenders, such Lender (a
"Purchasing Lender") shall forthwith purchase from the other Lenders (each, a
"Selling Lender") such participations in their Loans or other Obligations as
shall be necessary to cause such Purchasing Lender to share the excess payment
ratably with each of them.

      (b) If all or any portion of any payment received by a Purchasing Lender
is thereafter recovered from such Purchasing Lender, such purchase from each
Selling Lender shall be rescinded and such Selling Lender shall repay to the
Purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Selling Lender's ratable share (according to the
proportion of (i) the amount of such Selling Lender's required repayment in
relation to (ii) the total amount so recovered from the Purchasing Lender) of
any interest or other amount paid or payable by the Purchasing Lender in respect
of the total amount so recovered.

      (c) The Borrower agrees that any Purchasing Lender so purchasing a
participation from a Selling Lender pursuant to this Section 11.16 may, to the
fullest extent permitted by law, exercise all its

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rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

11.17 GOVERNING LAW.

      This Agreement and the rights and obligations of the parties hereto shall
be governed by, and construed and interpreted in accordance with, the law of the
State of New York.

11.18 WAIVER OF RIGHT TO TRIAL BY JURY.

      EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS AND THE BORROWER IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR ANY EXCHANGE SECURITIES DOCUMENT.

11.19 SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.

      (a) Any legal action or proceeding with respect to this Agreement, or
other Loan Document may be brought in the courts of the State of New York
located in the City of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Borrower hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The parties
hereto hereby irrevocably waive any objection, including any objection to the
laying of venue or based on the grounds of forum non conveniens, that any of
them may now or hereafter have to the bringing of any such action or proceeding
in such respective jurisdictions.

      (b) Nothing contained in this Section 11.18 shall affect the right of the
Administrative Agent or any Lender to serve process in any manner permitted by
law or commence legal proceedings or otherwise proceed against the Borrower or
any other Loan Party in any other jurisdiction.

      (c) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder in Dollars into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures that Citigroup could purchase Dollars with such other currency at the
spot rate of exchange quoted by Citibank at 11:00 a.m. on the Business Day
preceding that on which final judgment is given, for the purchase of Dollars,
for delivery two Business Days thereafter.

11.20 USA PATRIOT ACT NOTICE.

      The Administrative Agent and the Lenders hereby notify the Borrower that
pursuant to the requirements of the Patriot Act, each Lender is required to
obtain, verify and record information that identifies the Borrower, which
information includes the name, address, tax identification number and other
information regarding the Borrower that will allow such Lender to identify the
Borrower in accordance with the Patriot Act. This notice is given in accordance
with the requirements of the Patriot Act and is effective as to each Lender.

11.21 SECTION TITLES.

      The section titles contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto, except when used to reference a section.
Any reference to the number of a clause, sub-clause or subsection hereof
immediately followed by a reference in parenthesis to the title of the Section
containing such

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clause, sub-clause or subsection is a reference to such clause, sub-clause or
subsection and not to the entire Section; provided, however, that, in case of
direct conflict between the reference to the title and the reference to the
number of such Section, the reference to the title shall govern absent manifest
error. If any reference to the number of a Section (but not to any clause,
sub-clause or subsection thereof) is followed immediately by a reference in
parenthesis to the title of a Section, the title reference shall govern in case
of direct conflict absent manifest error.

11.22 ENTIRE AGREEMENT.

      This Agreement, together with all of the other Loan Documents and all
certificates and documents delivered hereunder or thereunder, embodies the
entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof. In the event of any
conflict between the terms of this Agreement and any other Loan Document, the
terms of this Agreement shall govern.

                            [SIGNATURE PAGES FOLLOW]

                                       99


      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

BORROWER:

PSYCHIATRIC SOLUTIONS, INC., a Delaware corporation

By: /s/ Jack E. Polson
    ---------------------------------
Name: Jack E. Polson
Title: Vice President

GUARANTORS:

AERIES HEALTHCARE CORPORATION, a Delaware corporation
AERIES HEALTHCARE OF ILLINOIS, INC., an Illinois corporation
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC., a Utah corporation
BRENTWOOD ACQUISITION, INC., a Tennessee corporation
BRENTWOOD ACQUISITION - SHREVEPORT, INC., a Delaware corporation
COLLABORATIVE CARE CORPORATION, a Tennessee corporation
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION, a North Carolina corporation
FORT LAUDERDALE HOSPITAL, INC., a Florida corporation
GREAT PLAINS HOSPITAL, INC., a Missouri corporation
GULF COAST TREATMENT CENTER, INC., a Florida corporation
H. C. CORPORATION, an Alabama corporation
HAVENWYCK HOSPITAL INC., a Michigan corporation
HSA HILL CREST CORPORATION, an Alabama corporation
HSA OF OKLAHOMA, INC., an Oklahoma corporation
INFOSCRIBER CORPORATION, a Delaware corporation
LAURELWOOD CENTER, INC., a Mississippi corporation
MICHIGAN PSYCHIATRIC SERVICES, INC., a Michigan corporation
PEAK BEHAVIORAL HEALTH SERVICES, INC., a Delaware corporation
PREMIER BEHAVIORAL SOLUTIONS, INC., a Delaware corporation
PREMIER BEHAVIORAL SOLUTIONS OF ALABAMA, INC., a Delaware corporation
PSI CEDAR SPRINGS HOSPITAL, INC., a Delaware corporation
PSI COMMUNITY MENTAL HEALTH AGENCY MANAGEMENT, INC., a Tennessee corporation
PSI-EAP, INC., a Delaware corporation
PSI HOSPITALS, INC., a Delaware corporation
PSI PRIDE INSTITUTE, INC., a Minnesota corporation
PSI SUMMIT HOSPITAL, INC., a New Jersey corporation
PSYCHIATRIC MANAGEMENT RESOURCES, INC., a California corporation
PSYCHIATRIC PRACTICE MANAGEMENT OF ARKANSAS, INC., a Tennessee corporation
PSYCHIATRIC SOLUTIONS HOSPITALS, INC., a Delaware corporation
PSYCHIATRIC SOLUTIONS OF ALABAMA, INC. a Tennessee corporation
PSYCHIATRIC SOLUTIONS OF ARIZONA, INC., a Delaware corporation

By: /s/ Jack E. Polson
    ----------------------------------
Name: Jack E. Polson
Title: Vice President of each of the foregoing Guarantors

                  [SIGNATURE PAGE TO CREDIT AGREEMENT]


PSYCHIATRIC SOLUTIONS OF LEESBURG, INC., a Tennessee corporation
PSYCHIATRIC SOLUTIONS OF NORTH CAROLINA, INC., a Tennessee corporation
PSYCHIATRIC SOLUTIONS OF OKLAHOMA, INC., a Delaware corporation
PSYCHIATRIC SOLUTIONS OF SOUTH CAROLINA, INC., a Delaware corporation
PSYCHIATRIC SOLUTIONS OF TENNESSEE, INC., a Tennessee corporation
PSYCHIATRIC SOLUTIONS OF VIRGINIA, INC., a Tennessee corporation
RAMSAY MANAGED CARE, INC., a Delaware corporation
RAMSAY TREATMENT SERVICES, INC., a Delaware corporation
RAMSAY YOUTH SERVICES OF GEORGIA, INC., a Delaware corporation
RHCI SAN ANTONIO, INC., a Delaware corporation
SOLUTIONS CENTER OF LITTLE ROCK, INC., a Tennessee corporation
SUNSTONE BEHAVIORAL HEALTH, INC., a Tennessee corporation
THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC., a Tennessee corporation
TRANSITIONAL CARE VENTURES, INC., a Delaware corporation
TRANSITIONAL CARE VENTURES (TEXAS), INC., a Delaware corporation
PSI TEXAS HOSPITALS, LLC, a Texas limited liability company
THERAPEUTIC SCHOOL SERVICES, LLC, an Oklahoma limited liability company

CANYON RIDGE HOSPITAL, INC., a California corporation
TUCSON HEALTH SYSTEMS, INC., a Delaware corporation
WELLSTONE HOLDINGS, INC., a Delaware corporation
WELLSTONE REGIONAL HOSPITAL ACQUISITION, LLC, an Indiana limited liability
company
WHISPER RIDGE OF STAUNTON, INC., a Delaware corporation
PREMIER BEHAVIORAL SOLUTIONS OF FLORIDA, INC., a Delaware corporation
PSI CROSSINGS, LLC, a Delaware limited liability company
RAMSAY YOUTH SERVICES PUERTO RICO, INC., a Puerto Rico corporation


AHS CUMBERLAND HOSPITAL, LLC, a Virginia limited liability company
ARDENT HEALTH SERVICES, INC., a Delaware corporation
BEHAVIORAL HEALTHCARE CORPORATION, a Delaware corporation
BHC ALHAMBRA HOSPITAL, INC., a Tennessee corporation
BHC BELMONT PINES HOSPITAL, INC., a Tennessee corporation
BHC CANYON RIDGE HOSPITAL, LLC, a Delaware limited liability company
BHC CEDAR CREST RTC, INC., a Texas corporation
BHC CEDAR VISTA HOSPITAL, INC., a California corporation
BHC CLINICAS DEL ESTE HOSPITAL, INC., a Tennessee corporation
BHC COLUMBUS HOSPITAL, INC., a Tennessee corporation
BHC FAIRFAX HOSPITAL, INC., a Tennessee corporation
BHC FORT LAUDERDALE HOSPITAL, INC., a Tennessee corporation
BHC FOX RUN HOSPITAL, INC., a Tennessee corporation
BHC FREMONT HOSPITAL, INC., a Tennessee corporation
BHC GULF COAST MANAGEMENT GROUP, INC., a Tennessee corporation
BHC HEALTH SERVICES OF NEVADA, INC., a Nevada corporation
BHC HERITAGE OAKS HOSPITAL, INC., a Tennessee corporation
BHC HOSPITAL HOLDINGS, INC., a Delaware corporation
BHC INTERMOUNTAIN HOSPITAL, INC., a Tennessee corporation
BHC LEBANON HOSPITAL, INC., a Tennessee corporation


By: /s/ Jack E. Polson
    ------------------------------
Name: Jack E. Polson
Title: Vice President of each of the foregoing Guarantors


BHC MANAGEMENT HOLDINGS, INC., a Delaware corporation
BHC MANAGEMENT SERVICES, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF INDIANA, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF KENTUCKY, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF LOUISIANA, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF NEW MEXICO, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF PENNSYLVANIA, LLC, a Delaware limited liability
company


                 [SIGNATURE PAGE TO CREDIT AGREEMENT]


BHC MANAGEMENT SERVICES OF STREAMWOOD, LLC, a Delaware limited liability company
BHC MANAGEMENT SERVICES OF TULSA, LLC, a Delaware limited liability company
BHC MILLWOOD HOSPITAL, INC., a Tennessee corporation
BHC MONTEVISTA HOSPITAL, INC., a Nevada corporation
BHC MESILLA VALLEY HOSPITAL, LLC, a Delaware limited liability company
BHC NEWCO 2, LLC, a Delaware limited liability company
BHC NEWCO 3, LLC, a Delaware limited liability company
BHC NEWCO 4, LLC, a Delaware limited liability company
BHC NEWCO 5, LLC, a Delaware limited liability company
BHC NEWCO 6, LLC, a Delaware limited liability company
BHC NEWCO 7, LLC, a Delaware limited liability company
BHC NEWCO 8, LLC a Delaware limited liability company
BHC NEWCO 9, LLC, a Delaware limited liability company
BHC NEWCO 10, LLC a Delaware limited liability company
BHC NORTHWEST PSYCHIATRIC HOSPITAL, LLC, a Delaware limited liability company
BHC OF INDIANA GENERAL PARTNERSHIP, a Tennessee general partnership
BHC OF NORTHERN INDIANA, INC., a Tennessee corporation
BHC PACIFIC GATEWAY HOSPITAL, INC., a Tennessee corporation
BHC PACIFIC SHORES HOSPITAL, INC., a California corporation
BHC PACIFIC VIEW RTC, INC., a Tennessee corporation
BHC PHYSICIAN SERVICES OF KENTUCKY, LLC, a Delaware limited liability company
BHC PINNACLE POINTE HOSPITAL, INC., a Tennessee corporation
BHC Properties, Inc., a Tennessee corporation
BHC ROSS HOSPITAL, INC., a California corporation
BHC SAN JUAN CAPESTRANO HOSPITAL, INC., a Tennessee corporation
BHC SIERRA VISTA HOSPITAL, INC., a Tennessee corporation
BHC SPIRIT OF ST. LOUIS HOSPITAL, INC., a Tennessee corporation
BHC STREAMWOOD HOSPITAL, INC., a Tennessee corporation
BHC VALLE VISTA HOSPITAL, INC., a Tennessee corporation
BHC VISTA DEL MAR HOSPITAL, INC., a Tennessee corporation
BHC WINDSOR HOSPITAL, INC., a Ohio corporation
BLOOMINGTON MEADOWS, G.P., a Delaware general partnership
COLUMBUS HOSPITAL, LLC, a Delaware limited liability company
COMMUNITY PSYCHIATRIC CENTERS OF TEXAS, INC., a Texas corporation
CPC/CLINICAS DEL ESTE, INC., a Puerto Rico corporation
INTEGRATED HEALTH CARE SYSTEMS CORP., a Puerto Rico corporation
INDIANA PSYCHIATRIC INSTITUTES, INC., a Delaware corporation
LEBANON HOSPITAL, LLC, a Delaware limited liability company
MESILLA VALLEY GENERAL PARTNERSHIP, a New Mexico general partnership
MESILLA VALLEY HOSPITAL, INC., a New Mexico corporation
MESILLA VALLEY MENTAL HEALTH ASSOCIATES, INC., a New Mexico corporation

By: /s/ Jack Polson
    --------------------------------
Name: Jack Polson
Title: Vice President of each of the foregoing Guarantors

                      [SIGNATURE PAGE TO CREDIT AGREEMENT]


PSI VERMILION, LLC, a Louisiana limited liability company
PSI WILLOW CREST, INC., an Oklahoma corporation
PSYCHIATRIC SOLUTIONS OF MONTANA, INC., a Montana corporation
PSYCHIATRIC SOLUTIONS OF UTAH, INC., a Utah corporation
NORTHERN INDIANA HOSPITAL, LLC, a Delaware limited liability company
VALLE VISTA, LLC, a Delaware limited liability company
WILLOW SPRINGS, LLC, a Delaware limited liability company
RED ROCK SOLUTIONS, LLC, a Delaware limited liability company
PALMETTO BEHAVIORAL HEALTH SYSTEM, L.L.C., a South Carolina limited liability
company
PALMETTO LOWCOUNTRY BEHAVIORAL HEALTH, L.L.C., a South Carolina limited
liability company
PALMETTO PEEDEE BEHAVIORAL HEALTH, L.L.C., a South Carolina limited liability
company


By:      /s/ Jack Polson
    ---------------------------------
Name:  Jack Polson
Title: Vice President of each of the foregoing Guarantors


MILLWOOD HOSPITAL, L.P., a Texas limited partnership
NEURO INSTITUTE OF AUSTIN, L.P., a Texas limited partnership
TEXAS CYPRESS CREEK HOSPITAL, L.P., a Texas limited partnership
TEXAS LAUREL RIDGE HOSPITAL, L.P., a Texas limited partnership
TEXAS OAKS PSYCHIATRIC HOSPITAL, L.P., a Texas limited partnership
TEXAS SAN MARCOS TREATMENT CENTER, L.P., a Texas limited partnership
TEXAS WEST OAKS HOSPITAL, L.P., a Texas limited partnership

By: PSI TEXAS HOSPITALS, LLC, its general partner

    By: PSYCHIATRIC SOLUTIONS HOSPITALS, INC., its sole member

        By: /s/ Jack E. Polson
            -----------------------------
        Name: Jack E. Polson
        Title: Vice President

                      [SIGNATURE PAGE TO CREDIT AGREEMENT]


BHC OF INDIANA GENERAL PARTNERSHIP, a Tennessee general partnership

          By:     BHC COLUMBUS HOSPITAL, INC.
                  BHC LEBANON HOSPITAL, INC.
                  BHC OF NORTHERN INDIANA, INC.
                  BHC VALLE VISTA HOSPITAL, INC.,  its partners

                  By:      /s/ Jack Polson
                           ------------------------------------------
                  Name:    Jack Polson
                           ------------------------------------------
                  Title:   Vice President
                           ------------------------------------------





BLOOMINGTON MEADOWS GENERAL PARTNERSHIP, a Delaware general partnership

          By:     BHC OF INDIANA GENERAL PARTNERSHIP, its partner

                  By:      BHC COLUMBUS HOSPITAL, INC.
                           BHC LEBANON HOSPITAL, INC.
                           BHC OF NORTHERN INDIANA, INC.
                           BHC VALLE VISTA HOSPITAL, INC., its partners

                           By:      /s/ Steven T. Davidson
                                    --------------------------
                           Name:    Steven T. Davidson
                                    --------------------------
                           Title:   Vice President
                                    --------------------------

MESILLA VALLEY GENERAL PARTNERSHIP, a New Mexico general partnership

          By:     MESILLA VALLEY HOSPITAL, INC.
                  MESILLA VALLEY MENTAL HEALTH ASSOCIATES, INC., its partners

                          By:       /s/ Steven T. Davidson
                                    --------------------------
                          Name:     Steven T. Davidson
                                    --------------------------
                          Title:    Vice President
                                    --------------------------



H.C. PARTNERSHIP, an Alabama general partnership

By: H.C. CORPORATION
    HSA HILL CREST CORPORATION, its partners

    By: ____________________________
    Name:
    Title:




CITICORP NORTH AMERICA, INC.
as Administrative Agent and a Lender

By: /s/ Ross A. Mac Intyre
    --------------------------------
Name: Ross A. Mac Intyre
Title: Managing Director

CITIGROUP GLOBAL MARKETS INC.,
as Arranger, Documentation Agent and Syndication
Agent

By: /s/ Ross A. Mac Intyre
    --------------------------------
Name: Ross A. Mac Intyre
Title: Managing Director

                      [SIGNATURE PAGE TO CREDIT AGREEMENT]

EX-99.1

                                                                    EXHIBIT 99.1

[PSI LOGO]

CONTACT:
Brent Turner
Vice President, Treasurer and
Investor Relations
(615) 312-5700

                 PSYCHIATRIC SOLUTIONS COMPLETES ACQUISITION OF
         20 INPATIENT PSYCHIATRIC FACILITIES FROM ARDENT HEALTH SERVICES

FRANKLIN, Tenn. (July 1, 2005) - Psychiatric Solutions, Inc. ("PSI") (NASDAQ:
PSYS) announced today the completion of the acquisition of 20 inpatient
psychiatric facilities from Ardent Health Services. The facilities produced
revenues of approximately $300 million in 2004 and have a total of approximately
2,000 inpatient beds. As a result of the transaction, PSI is the country's
largest provider of inpatient psychiatric care, operating 54 inpatient
psychiatric facilities with more than 6,300 beds.

      Joey Jacobs, Chairman, President and Chief Executive Officer of PSI, said,
"The completion of this acquisition solidifies PSI's position as the country's
leading provider of inpatient psychiatric services and strengthens our ability
to sustain consistent profitable growth. Having examined the facilities
thoroughly during the process of completing the transaction, we can again attest
to the high quality of the skilled professionals who are joining PSI and of the
care they provide their patients. We now have more than 14,000 employees and are
excited to welcome all of these new members to the PSI family. We also remain
fully confident of our ability to produce further significant organic growth in
these facilities as we increase same-facility revenues and improve operating
efficiencies. There is a tremendous market opportunity to meet growing demand
for inpatient psychiatric services in this country, and the new facilities and
expanded geographic presence we have gained through this transaction expand our
capacity to meet this demand efficiently and with the highest quality of care."

      As previously announced, the purchase price for the facilities was $560
million, consisting of $500 million cash and the issuance of 1,362,760 shares of
PSI common stock. PSI financed the cash portion of the acquisition price through
its new $475 million senior credit facilities, consisting of a $325 million term
loan facility, which has an interest rate of LIBOR + 2% and matures in 2012, and
a $150 million revolving credit facility, which has an interest rate of LIBOR +
2.5% and matures in December 2009, and a $150 million Senior Unsecured Term
Loan. In addition, PSI announced the pricing of $220 million 7.75% Senior
Subordinated Notes due 2015, the proceeds of which will be used to repay the
Senior Unsecured Term Loan as well as repurchase approximately $61 million of
the Company's 10.625% Senior Subordinated Notes due June 2013.

                                    - MORE -



PSYS Completes Acquisition from Ardent
Page 2
July 1, 2005

      Brent Turner, Vice President, Treasurer of PSI, commented, "We are
extremely pleased with the terms of our bank financing and believe that our
capital structure provides us with great flexibility and positions us well to
continue to execute our growth strategy in the behavioral health care industry."

      Neither the Company's 7.75% Senior Subordinated Notes due 2015 nor the
shares of PSI common stock issued in connection with the acquisition have been
registered under the Securities Act of 1933. These securities may not be offered
or sold in the United States absent registration or an applicable exemption from
registration requirements.

      This press release contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements include statements other than those
made solely with respect to historical fact and are based on the intent, belief
or current expectations of PSI and its management. PSI's business and operations
are subject to a variety of risks and uncertainties that might cause actual
results to differ materially from those projected by any forward-looking
statements. Factors that could cause such differences include, but are not
limited to: (1) potential competition which alters or impedes PSI's acquisition
strategy by decreasing PSI's ability to acquire additional inpatient facilities
on favorable terms; (2) the ability of PSI to improve the operations of acquired
inpatient facilities, including the inpatient facilities acquired from Ardent
Heath Services; (3) the ability to maintain favorable and continuing
relationships with physicians who use PSI's facilities; (4) the ability to
receive timely additional financing on terms acceptable to PSI to fund PSI's
acquisition strategy and capital expenditure needs; (5) risks inherent to the
health care industry, including the impact of unforeseen changes in regulation,
reimbursement rates from federal and state health care programs or managed care
companies and exposure to claims and legal actions by patients and others; and
(6) potential difficulties in integrating the operations of PSI with recently
acquired operations, including the inpatient facilities acquired from Ardent
Heath Services. The forward-looking statements herein are qualified in their
entirety by the risk factors set forth in PSI's filings with the Securities and
Exchange Commission, including the factors listed in PSI's Annual Report on Form
10-K for 2004 filed on March 15, 2005, under the caption "Risk Factors." PSI
undertakes no obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise. Readers should not place
undue reliance on forward-looking statements, which reflect management's views
only as of the date hereof.

      Psychiatric Solutions, Inc. offers an extensive continuum of behavioral
health programs to critically ill children, adolescents and adults through its
operation of 54 owned or leased freestanding psychiatric inpatient facilities
with more than 6,300 beds. The Company also manages freestanding psychiatric
inpatient facilities for government agencies and psychiatric inpatient units
within medical/surgical hospitals owned by others.

                                     - END -