EXHIBIT 4.6


                              AMENDED AND RESTATED
                             SHAREHOLDERS AGREEMENT

                            Dated as of June 1, 2000

                                     among

                         VANGUARD HEALTH SYSTEMS, INC.

                   MORGAN STANLEY CAPITAL PARTNERS III, L.P.

                            MSCP 892 INVESTORS, L.P.

                     MORGAN STANLEY CAPITAL INVESTORS, L.P.

              MORGAN STANLEY DEAN WITTER CAPITAL PARTNERS IV, L.P.

             MORGAN STANLEY DEAN WITTER CAPITAL INVESTORS IV, L.P.

                          MSDW IV 892 INVESTORS, L.P.

                                      and

                            THE OTHER PERSONS LISTED
                         ON THE SIGNATURES PAGES HEREOF


<PAGE>


                              AMENDED AND RESTATED
                             SHAREHOLDERS AGREEMENT

     AMENDED AND RESTATED SHAREHOLDERS AGREEMENT dated as of June 1, 2000 among
Vanguard Health Systems, Inc., a Delaware corporation (the "Issuer"), Morgan
Stanley Capital Partners III, L.P., a Delaware limited partnership ("MSCP
III"), MSCP III 892 Investors, L.P., a Delaware limited partnership ("892
Investors"), Morgan Stanley Capital Investors, L.P., a Delaware limited
partnership ("MSCI"), Morgan Stanley Dean Witter Capital Partners IV, L.P.
("MSCP IV"), Morgan Stanley Dean Witter Capital Investors IV, L.P. ("MSCI-IV"),
MSDW IV 892 Investors, L.P. ("892-IV Investors") and each of the other Persons
listed on the signature pages hereof. Each of the parties to this Agreement
(other than the Issuer) and any other Person who, pursuant to the terms hereof,
shall become a party to or agree to be bound by the terms of this Agreement
after the date hereof is sometimes hereinafter referred to as a "Holder".

     WHEREAS, the parties hereto have entered into an Amended and Restated
Subscription Agreement dated as of June 1, 2000 (as further amended from time
to time, the "Subscription Agreement") pursuant to which the Holders purchased
or will, subject to the terms and conditions therein, purchase Common Shares
(as defined below) from the Issuer;

     WHEREAS, the parties hereto have entered into a Surviving Shareholders
Agreement dated as of June 1, 1998 (as amended from time to time, the
"Surviving Shareholders Agreement") which shall not become effective pursuant
to the terms thereof until the date of the termination of this Agreement
pursuant to Section hereof; and

     WHEREAS, the parties hereto, desiring to restrict the sale, assignment,
transfer, encumbrance or other disposition of the Common Shares and to provide
for certain rights and obligations relating to the capital stock of the Issuer
and certain matters relating to the conduct of the business and the affairs of
the Issuer, have previously entered into a Shareholders Agreement dated as of
June 1, 1998 (the "Original Shareholders Agreement") which contains such
restrictions, rights and obligations and now desire to amend and restate the
Original Shareholders Agreement in the manner set forth herein.

     NOW, THEREFORE, the parties hereto agree that Articles 1 through 5 of the
Original Shareholders Agreement are hereby amended and restated in their
entirety as follows:


<PAGE>


                                   ARTICLE 1
                                  DEFINITIONS

     SECTION 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:

          "Affiliate" means, with respect to any Person, any other Person,
     directly or indirectly, controlling, controlled by, or under common
     control with, such Person; provided that, for purposes of this Agreement,
     (i) the Issuer shall not be treated as an Affiliate of any Holder or such
     Holder's Affiliates and (ii) a Holder and its Affiliates shall not be
     treated as Affiliates of the Issuer or its Affiliates or as Affiliates of
     any other Holder or such Holder's Affiliates solely by reason of its
     ownership interest in the Issuer. For purposes of this definition, the
     term "control" (including the correlative terms "controlling", "controlled
     by" and "under common control with") means the possession, direct or
     indirect, of the power to direct or cause the direction of the management
     and policies of a Person, whether through the ownership of voting
     securities, by contract, or otherwise.

          "Board of Directors" means the Board of Directors of the Issuer.

          "Business Day" means any day except a Saturday, Sunday or other day
     on which commercial banks in the City of New York are authorized by law to
     close.

          "Carry Option Plan" means the Vanguard Health Systems, Inc. Carry
     Option Plan dated as of June 1, 1998, as amended as of June 1, 2000.

          "Cause" means, with respect to any Management Investor who has an
     employment agreement with the Issuer, "Cause" as defined in such
     Management Investor's employment agreement with the Issuer or, if such
     Management Investor does not have an employment agreement with the Issuer,
     "Cause" shall mean (i) the conviction of such Management Investor by a
     court of competent jurisdiction of a criminal act classified as a felony
     or involving moral turpitude following the exhaustion of all possible
     appeals, (ii) the willful and continued failure by such Management
     Investor to substantially perform his or her duties with the Issuer (other
     than any such failure resulting from his or her incapacity due to physical
     or mental illness or any such actual or anticipated failure after the
     issuance of a notice of termination for Good Reason by such Management
     Investor pursuant to Section 7.1 of his or her Severance Protection
     Agreement with the Issuer) after a written demand for substantial
     performance is delivered to such Management Investor by the Issuer, which
     demand specifically identifies the manner in which the Issuer believes
     that such Management Investor has not substantially performed his or her
     duties, or (iii) the willful engaging by such Management Investor in
     conduct which is demonstrably and materially injurious to the Issuer or
     its subsidiaries, monetarily or otherwise. For purposes of clauses (ii)
     and (iii) of this definition, no act, or failure to act, on such
     Management Investor's part shall


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<PAGE>


     be deemed "willful" unless done, or omitted to be done, by such Management
     Investor not in good faith and without reasonable belief that his or her
     act, or failure to act, was in the best interest of the Issuer.

          "Commission" means the Securities and Exchange Commission or any
     successor commission or agency having similar powers.

          "Common Shares" means shares of the common stock of the Issuer, par
     value $0.01 per share.

          "Compensation Committee" means the Compensation Committee of the
     Board of Directors or, if at such time no such committee exists, the Board
     of Directors.

          "Cost" means, with respect to any share of capital stock or other
     equity security of the Issuer, the price paid for such share or other
     security, it being understood that (i) with respect to the Initial Shares
     and all other Common Shares purchased prior to June 1, 1998, "Cost" shall
     be equal to $100 per share, and (ii) with respect to (A) the Initial
     Options, "Cost" shall be equal to $1,531.06 per share for each Management
     Investor other than Mr. Ways for whom "Cost" shall be zero and (B) all
     other stock options of the Issuer, "Cost" shall be zero.

          "Debt" of any Person means at any date, without duplication, (i) all
     obligations of such Person for borrowed money, (ii) all obligations of
     such Person evidenced by bonds, debentures, notes or other similar
     instruments, (iii) all obligations of such Person to pay the deferred
     purchase price of property or services, except trade accounts payable
     arising in the ordinary course of business, (iv) all obligations of such
     Person as lessee that are capitalized in accordance with generally
     accepted accounting principles, (v) all Debt of others secured by a lien
     on any asset of such Person, whether or not such Debt is assumed by such
     Person, (vi) all contingent and non-contingent obligations of such Person
     to reimburse any bank or other Person in respect of amounts paid under a
     letter of credit or similar instrument, and (vii) all Debt of others
     guaranteed by such Person.

          "Duly Endorsed" means duly endorsed in blank by the Person or Persons
     in whose name a stock certificate is registered or accompanied by a duly
     executed stock assignment separate from the certificate.

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

          "Executive Managers" means collectively Charles N. Martin, Jr., W.
     Lawrence Hough, Joseph D. Moore, Keith B. Pitts and Ronald P. Soltman.


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          "Good Reason" means, with respect to any Management Investor who has
     an employment agreement with the Issuer, "Good Reason" as defined in such
     Management Investor's employment agreement with the Issuer or, if such
     Management Investor does not have an employment agreement with the Issuer,
     "Good Reason" shall mean the occurrence (without such Management
     Investor's express written consent), following a Change in Control (as
     defined in the Severance Protection Agreements between each Management
     Investor (other than the Executive Managers) and the Issuer dated as of
     June 1, 1998) during the term of this Agreement (including any events
     prior to a Change of Control that are deemed to have occurred following a
     Change of Control pursuant to Section 6.1 of such Severance Protection
     Agreements), of any one of the following acts by the Issuer, or failures
     by the Issuer to act, unless, in the case of any act or failure to act
     described below, such act or failure to act is corrected prior to the date
     of termination of employment of such Management Investor specified a
     notice of termination given by such Management Investor in respect thereof
     (which notice shall be delivered at least 15 and not more than 60 days
     prior to the termination by the Management Investor of his employment):
     (A) any change in such Management Investor's title, authorities,
     responsibilities (including reporting responsibilities) which represents,
     in such Management Investor's reasonable judgment, an adverse change from
     his status, title, position or responsibilities (including reporting
     responsibilities) which were in effect immediately prior to the Change in
     Control or from his status, title, position or responsibilities (including
     reporting responsibilities) which were in effect following a Change in
     Control pursuant to such Management Investor's consent to accept any such
     change; (B) the assignment to him of any duties or work responsibilities
     which in his reasonable judgment are inconsistent with his status, title,
     position or work responsibilities; or any removal of him from, or failure
     to reappoint or reelect him to, any of such positions, except if any such
     changes are because of disability, retirement, death or Cause; (C) a
     reduction by the Issuer in such Management Investor's annual base salary
     as in effect on June 1, 1998 or as the same may be increased from time to
     time except for across-the-board salary reductions similarly affecting all
     senior executives of the Issuer and all senior executives of any Person in
     control of the Issuer; (D) the relocation of such Management Investor's
     office at which he is to perform his duties, to a location more than
     thirty (30) miles from the location at which such Management Investor
     performed his duties prior to the Change in Control, except for required
     travel on the Issuer's business to an extent substantially consistent with
     his business travel obligations prior to the Change in Control; (E) if
     such Management Investor had been based at the Issuer's principal
     executive offices immediately prior to the Change in Control, the
     relocation of the Issuer's principal executive offices to a location more
     than 30 miles from the location of such offices immediately prior to the
     Change in Control; (F) the failure by the Issuer, without such Management
     Investor's consent, to pay to such Management Investor any portion of his
     current compensation, or to pay to such Management Investor any portion of
     an installment of deferred compensation under any deferred compensation
     program of the Issuer, within seven (7) days of the date that such
     compensation is due; (G) the failure by the Issuer to continue


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<PAGE>


     in effect any stock-based and/or cash annual- or long-term incentive
     compensation plan in which such Management Investor participates
     immediately prior to the Change in Control, unless such Management
     Investor participates after the Change in Control in other plans generally
     available to senior executives of the Issuer and senior executives of any
     Person in control of the Issuer that are comparable in the aggregate; (H)
     the failure by the Issuer to continue to provide such Management Investor
     with benefits substantially similar in aggregate value to such Management
     Investor in the aggregate to those enjoyed by such Management Investor
     under any of the Issuer's pension, life insurance, medical, health and
     accident, or disability plans in which such Management Investor was
     participating immediately prior to the Change in Control, unless such
     Management Investor participates after the Change in Control in other
     benefit plans generally available to senior executives of the Issuer and
     senior executives of any Person in control of the Issuer that are
     comparable in the aggregate; (I) the adverse and substantial alteration of
     the nature and quality of the office space within which such Management
     Investor performed his duties prior to a Change in Control as well as in
     the secretarial and administrative support provided to such Management
     Investor, provided, however, that a reasonable alteration of the
     secretarial or administrative support provided to such Management Investor
     as a result of reasonable measures implemented by the Issuer to effectuate
     a cost-reduction or consolidation program shall not constitute Good Reason
     hereunder; (J) any material breach by the Issuer of any provision of such
     Management Investor's Severance Protection Agreement; or (K) any
     termination of such Management Investor's employment which is not effected
     pursuant to a notice of termination setting forth in reasonable detail the
     facts and circumstances claimed to provide a basis for termination of such
     Management Investor's employment; provided that in respect of each of
     clauses (A) through (K), a Management Investor's continued employment
     shall not constitute consent to, or a waiver of rights with respect to,
     any act or failure to act constituting Good Reason hereunder.

          "Initial Options" means the stock options of the Issuer set forth
     opposite the name of each Management Investor under the heading "Initial
     Options" on Annex I hereto.

          "Initial Shares" means, with respect to any Management Investor, the
     number of Common Shares purchased prior to June 1, 1998, set forth under
     the heading "Initial Shares" and opposite the name of such Management
     Investor on Annex I hereto.

          "IPO" means the initial Public Offering.

          "Liquidity Event" means the first to occur of (i) the consummation of
     the IPO, (ii) the sale (by way of merger or otherwise) by the MSCP
     Entities for cash of all or substantially all of their aggregate equity
     interests in the Issuer in one transaction or a series of related
     transactions, (iii) the sale (by way of merger or otherwise) by the MSCP
     Entities, for capital stock of another Person, of all or substantially all
     of their equity

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<PAGE>


     interests in the Issuer in one transaction or a series of related
     transactions, but only if all of such capital stock received by the MSCP
     Entities (x) has been registered under the Securities Act, (y) is capable
     of being immediately sold by the MSCP Entities upon consummation of such
     transaction(s) on a national securities exchange or quotation system in
     accordance with applicable law (the capital stock described in clauses (x)
     and (y) is hereinafter referred to as "Marketable Securities") and (z)
     represents less than 30% of the total outstanding common stock of such
     Person, (iv) the sale (by way of merger or otherwise) for cash and/or
     Marketable Securities of all or substantially all of the assets (including
     stock) of the Issuer and its Subsidiaries in one transaction or a series
     of related transactions in which the Marketable Securities received by the
     MSCP Entities represent less than 30% of the total outstanding common
     stock of the acquiror or (v) the liquidation or dissolution of the Issuer
     and its Subsidiaries.

          "Management Investors" means each Person listed on Annex I hereto,
     regardless of whether any such Person is an employee of the Issuer at any
     applicable time.

          "Martin Percentage" means, as of any date, (i) the aggregate number
     of Common Shares Transferred prior to such date by Charles N. Martin, Jr.,
     any Holder that is an Affiliate of Charles N. Martin, Jr. and their
     respective Permitted Transferees (other than Common Shares Transferred to
     other Permitted Transferees of Charles N. Martin, Jr.), divided by (ii)
     the aggregate number of Common Shares acquired by Charles N. Martin, Jr.
     and any such Affiliate on or prior to such date (by way of purchase, upon
     exercise of Options or otherwise).

          "Material Subsidiary" means, as of any date, any Subsidiary whose
     assets (as set forth in its most recent regularly prepared balance sheet
     or, if there is no such balance sheet, as agreed by the Issuer and MSCP
     IV), together with capital commitments made to such Subsidiary by the
     Issuer (or by any of its Subsidiaries) but not funded, on or prior to such
     date, exceeds 10% of Total Assets.

          "MSCP DIK" means any Transfer by any MSCP Fund of any of its Common
     Shares to partners of such MSCP Fund pursuant to a distribution in respect
     of the partnership interests of such MSCP Fund in accordance with such
     MSCP Fund's partnership agreement as then in effect.

          "MSCP Entities" means the MSCP Funds and their Permitted Transferees.

          "MSCP Funds" means MSCP III, 892 Investors, MSCI, MSCP IV, MSCI-IV,
     892-IV Investors and any successors thereof.

          "MSCP Percentage" means, as of any date, (i) the aggregate number of
     Common Shares Transferred prior to such date by the MSCP Entities,
     including,


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     without limitation, any Common Shares Transferred pursuant to a MSCP DIK
     (other than (x) Common Shares Transferred between MSCP Entities and (y)
     any Common Shares forfeited by the MSCP Entities on or prior to such date
     pursuant to Section of this Agreement), divided by (ii) the aggregate
     number of Common Shares acquired (by way of purchase or otherwise) by the
     MSCP Entities on or prior to such date (other than any Common Shares
     forfeited by the MSCP Entities on or prior to such date pursuant to
     Section 2.08 of this Agreement).

          "Option Plans" means (i) the Carry Option Plan, (ii) the Vanguard
     Health Systems, Inc. 1998 Stock Option Plan, (iii) the Vanguard Health
     Systems, Inc. 2000 Stock Option Plan, (iv) the Vanguard Health Systems,
     Inc. Nonqualified Initial Option Plan, in each case dated as of June 1,
     1998 and as the same may be amended from time to time and (v) any other
     option or equity-based compensation plan adopted by the Issuer after the
     date hereof.

          "Options" means stock options granted pursuant to the Option Plans.

          "Permitted Transferee" means:

               (i) with respect to any MSCP Fund, (v) any Affiliate of such
          MSCP Fund, (w) any general or limited partner of such MSCP Fund (a
          "MSCP Partner"), (x) any officer, general partner, director or
          limited partner of such MSCP Fund or a MSCP Partner (collectively,
          "MSCP Associates"), (y) the heirs, executors, administrators,
          testamentary trustees, legatees or beneficiaries of any MSCP
          Associate and (z) a trust, corporation, partnership or other entity
          substantially all the economic interests of which are held by or for
          the benefit of the MSCP Funds, their Affiliates, MSCP Partners, MSCP
          Associates, their spouses or their children (whether by birth or
          adoption);

               (ii) with respect to any Holder that is an individual, (w) the
          spouse, issue, grandparents, grandchildren, aunts, uncles, nieces and
          nephews (in each case, whether natural or adopted) of such Holder,
          (x) a Person to whom Common Shares are Transferred by such Holder by
          will or the laws of descent and distribution, (y) a trust established
          for the exclusive benefit of such Holder or his or her Permitted
          Transferees and (z) if such Holder is a Management Investor, a fund
          in any community foundation established by such Management Investor
          or a foundation established by such Management Investor for the sole
          purpose of making charitable donations; and

               (iii) with respect to any other Holder, any Affiliate of such
          Holder.


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

          "Pro Rata Portion" means, with respect to any Holder at any time, (i)
     the number of Common Shares that such Holder owns at such time, divided by
     (ii) the number of Common Shares owned by all Holders (other than, (x) in
     the case of Section 2.04, the Tag-along Purchaser (if such Tag-along
     Purchaser is a Holder) and (y) in the case of Section 2.06, the Seller) at
     such time.

          "Public Offering" means any underwritten public offering of equity
     securities of the Issuer pursuant to an effective registration statement
     under the Securities Act other than pursuant to a registration statement
     on Form S-4 or Form S-8 or any successor or similar form.

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

          "Subsidiary" means any entity of which ownership interests having
     ordinary voting power to elect a majority of the board of directors or
     other Persons performing similar functions are at the time directly or
     indirectly owned by the Issuer.

          "Total Assets" means, as of any date, the total assets of the Issuer
     and its Subsidiaries on a consolidated basis as set forth in the most
     recent balance sheet delivered to the MSCP Funds pursuant to Section
     4.03(a) or 4.03(b) in respect of the most recently ended fiscal quarter of
     the Issuer.

          "Transaction Agreements" means this Agreement, the Subscription
     Agreement, the Surviving Shareholders Agreement and the other Ancillary
     Agreements (as defined in the Subscription Agreement).

          "Transfer" means, with respect to any security, (i) when used as a
     verb, to sell, assign, dispose of, exchange or otherwise transfer such
     security or any interest therein, whether directly or indirectly, or agree
     or commit to do any of the foregoing and (ii) when used as a noun, a
     direct or indirect sale, assignment, disposition, exchange or other
     transfer of such security or any interest therein or any agreement or
     commitment to do any of the foregoing.

          "Voting Proxy" means the Voting Proxy dated as of June 1, 1998, among
     the Issuer, Charles N. Martin, Jr., Joseph D. Moore and the other persons
     listed on the signature pages thereof, as amended from time to time.


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     (b) Each of the following terms is defined in the Section set forth
opposite such term:

                      Term                                  Section
                      ----                                  -------
          Compelled Sale Notice                             2.05(b)
          Compelled Sale Purchaser                          2.05(b)
          Compelled Sale Offer                              2.05(b)
          Designated Holders                                2.08
          892 Investors                                     Preamble
          892-IV Investors                                  Preamble
          Holder                                            Preamble
          Initial Order Period                              2.06(a)
          Issuer                                            Preamble
          Marketable Securities                             1.01
          Matter                                            4.01
          MSCI                                              Preamble
          MSCI-IV                                           Preamble
          MSCP III                                          Preamble
          MSCP IV                                           Preamble
          Offer Price                                       2.06(a)
          Offered Shares                                    2.06(a)
          Original Shareholders Agreement                   Recitals
          Rule 144                                          2.01(a)
          Second Order Period                               2.06(b)
          Section 2.05(f) Compelled Sale Offer              2.05(f)
          Seller                                            2.06(a)
          Seller's Notice                                   2.06(a)
          Subscription Agreement                            Recitals
          Surviving Shareholders Agreement                  Recitals
          Tag-along Notice                                  2.04(a)
          Tag-along Notice Date                             2.04(a)
          Tag-along Notice Period                           2.04(a)
          Tag-along Offer                                   2.04(a)
          Tag-along Offer Notice                            2.04(a)
          Tag-along Offerees                                2.04(a)
          Tag-along Purchaser                               2.04(a)
          Transfer Date                                     2.04(a)


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<PAGE>


                                   ARTICLE 2
                RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFER

     SECTION 2.01. General Restrictions. (a) No Holder may Transfer any Common
Shares or any interest therein on or prior to June 1, 2000, except (i) pursuant
to a Public Offering in connection with the exercise of registration rights in
accordance with Article or pursuant to Rule 144 (or any successor provision)
under the Securities Act (as such rule may be amended from time to time, "Rule
144"), (ii) to a Permitted Transferee of such Holder or (iii) as may be
required pursuant to Section 2.08 or Section 2.09. After June 1, 2000, no
Holder may Transfer any Common Shares, except (i) pursuant to a Public Offering
in connection with the exercise of registration rights in accordance with
Article or pursuant to Rule 144; provided that no Executive Manager may sell
pursuant to Rule 144 (other than pursuant to the provisions of paragraph (k) of
Rule 144) more than 10% of the total number of Common Shares purchased by such
Executive Manager prior to such time, (ii) to a Permitted Transferee of such
Holder, (iii) as may be required pursuant to Section 2.05 or (iv) otherwise in
a private Transfer, subject to the provisions of this Article 2.
Notwithstanding anything herein to the contrary, (x) no Holder may mortgage,
pledge, grant a security interest or participation in or otherwise encumber any
of its Common Shares and (y) no MSCP Fund may effect a MSCP DIK except in
connection with or subsequent to a Liquidity Event.

     (b) Notwithstanding anything herein to the contrary and except for
Transfers by a Management Investor to his or her Permitted Transferees, each
Management Investor and each Permitted Transferee of any Management Investor
agrees not to Transfer, mortgage, pledge, grant a security interest or
participation interest in or otherwise encumber, any of his or her Initial
Shares prior to the termination of this Agreement pursuant to Section 5.15.

     (c) Notwithstanding anything herein to the contrary, each Transfer of
Common Shares must be made in compliance with the Securities Act, any
applicable state and foreign securities law and this Article 2. Each Holder
understands and agrees that the Common Shares have not been registered under
the Securities Act and that they are restricted securities. Any attempt to
Transfer, pledge, grant a security interest or participation in, or otherwise
encumber any Common Shares not in compliance with this Agreement shall be null
and void and neither the Issuer nor any transfer agent shall give any effect in
the Issuer's transfer records to such Transfer, pledge, grant or encumbrance.

     (d) No Holder shall (i) grant any proxy or enter into or agree to be bound
by any voting trust or agreement with respect to the Common Shares, except as
may be expressly contemplated by the Subscription Agreement, (ii) enter into
any agreement or arrangement of any kind with any Person with respect to its
Common Shares inconsistent with the provisions of this Agreement or for the
purpose or with the effect of denying or reducing the rights of any other
Holder under this Agreement including,


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but not limited to, agreements or arrangements with respect to the Transfer or
voting of its Common Shares or (iii) act, for any reason, as a member of a
group or in concert with any other Person in connection with the Transfer or
voting of its Common Shares in any manner which is inconsistent with the
provisions of this Agreement.

     SECTION 2.02. Agreement to Be Bound. No Transfer of Common Shares
otherwise permitted pursuant to Article 2 (other than Transfers pursuant to a
Public Offering or Transfers to the Issuer) shall be effective unless (i) the
certificates representing such Common Shares delivered to such transferee shall
bear the legend set forth in Section 2.03, if required by such Section and (ii)
prior to such Transfer, such transferee (if not already a party to this
Agreement) shall have executed and delivered to the Issuer an instrument or
instruments substantially in the form of Exhibit A hereto confirming that such
transferee has agreed to be bound as a "Holder" by the terms of this Agreement
and the Surviving Shareholders Agreement, a copy of which instrument shall be
maintained on file with the Secretary of the Issuer and shall include the
address of such transferee to which notices hereunder shall be sent; provided
that the provisions of clause (ii) above shall not be applied to any MSCP DIK
in connection with which any MSCP Fund determines not to require its partners
to have agreed in writing to be bound by the terms of this Agreement or the
Surviving Shareholders Agreement or to be entitled to the benefit hereof or
thereof. The Issuer agrees that prior to issuing Common Shares or securities
convertible or exchangeable for Common Shares to (x) the owner of any hospital
or hospital system in partial consideration for the acquisition of assets from
the owner of such hospital or hospital system or (y) any holder of any Options
who is not otherwise a party to this Agreement, the Issuer will require such
owner or such holder, as the case may be, to agree to be bound by this
Agreement and the Surviving Shareholders Agreement in the manner described
above.

     SECTION 2.03. Legends. (a) Each certificate evidencing outstanding Common
Shares acquired by any Holder shall bear a legend in substantially the
following form:

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
     AND MAY NOT BE OFFERED, SOLD, OR TRANSFERRED EXCEPT IN COMPLIANCE
     THEREWITH. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
     TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN (I) THE AMENDED AND
     RESTATED SHAREHOLDERS AGREEMENT DATED AS OF JUNE 1, 2000 AND (II) THE
     SURVIVING SHAREHOLDERS AGREEMENT DATED AS OF JUNE 1, 1998, COPIES OF EACH
     OF WHICH WILL BE FURNISHED BY VANGUARD HEALTH SYSTEMS, INC. UPON REQUEST
     AND WITHOUT CHARGE.


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<PAGE>


     (b) If any Common Shares (i) shall cease to be Registrable Common Shares
or (ii) may be sold pursuant to Rule 144 or otherwise in the public market
without being registered under the Securities Act, upon the written request of
the Holder thereof (who shall provide with such request evidence reasonably
satisfactory to the Issuer (which may include an opinion of counsel) that such
Common Shares may be sold in the case of any sale under (ii) above), the Issuer
shall issue to such Holder a new certificate evidencing such Common Shares
without the first sentence of the legend required by Section 2.03(a) hereof
endorsed thereon. If any Common Shares shall cease to be subject to the
restrictions on Transfer set forth in this Agreement and the Surviving
Shareholders Agreement, the Issuer shall, upon the written request of the
Holder thereof, issue to such Holder a new certificate evidencing such Common
Shares without the second sentence of the legend (or the reference therein to
the applicable agreement) required by Section 2.03(a) hereof endorsed thereon.

     SECTION 2.04. Tag-along Rights. (a) Subject to the Transfer restrictions
set forth in Section 2.01 hereof and except as provided in Section 2.04(f), if
any Holder or group of Holders proposes to Transfer to any Person (a "Tag-along
Purchaser"), in a bona fide, arm's-length transaction or series of related
transactions, more than 5% of the outstanding Common Shares (a "Tag-along
Offer"), such Holder or Holders shall provide written notice (the "Tag-along
Offer Notice") of such Tag-along Offer to the Issuer and the Issuer shall
promptly provide written notice (the effective date of such notice being the
"Tag-along Notice Date") of such Tag-along Offer to the other Holders (the
"Tag-along Offerees") in the manner set forth in this Section 2.04.

     The Tag-along Offer Notice shall identify the Tag-along Purchaser, the
consideration per Common Share and the other material terms and conditions of
the Tag-along Offer and, in the case of a Tag-along Offer in which the
consideration payable for Common Shares consists in part or in whole of
consideration other than cash, such information relating to such consideration
as the Tag-along Offerees may reasonably request as being necessary to evaluate
such non-cash consideration, it being understood that such request shall not
obligate such Holder or Holders to deliver any information to the Tag-along
Offerees not available to such Holder or Holders.

     The Tag-along Offerees shall have the right, exercisable as set forth
below, to accept the Tag-along Offer for up to such number of their Common
Shares determined pursuant to Section 2.04(b); provided that the Holders (and
the Issuer) first shall have been afforded the opportunity to acquire, to the
extent required pursuant to Section 2.06, the Common Shares proposed to be
Transferred pursuant to the Tag-along Offer. Upon the consummation of any
Transfer of Common Shares pursuant to a Tag-along Offer, all of the Holders
participating therein will receive the same form and amount of consideration
per Common Share; provided that (i) the amount of the consideration to be
received shall include any payments to any Holder for an agreement not to
compete or any other payments or consulting fees payable to any Holder (other
than fees for


                                      12
<PAGE>


actually anticipated future services) and (ii) in no event shall any reasonable
and customary investment banking, advisory or financing fees payable to such
Holder(s) or any of their Affiliates be included in the amount of consideration
per Common Share. If any Holder is given an option as to the form and amount of
consideration to be received, all Holders participating in such Tag-along Offer
will be given the same option. If any Tag-along Offeree desires to accept the
Tag-along Offer, such Tag-along Offeree shall provide such Holder(s) with
written notice (a "Tag-along Notice") (specifying the number of Common Shares
which such Tag-along Offeree desires to Transfer, which shall in no event
exceed the number determined pursuant to Section 2.04(b)) within 15 Business
Days after the Tag-along Notice Date (the "Tag-along Notice Period"), and shall
simultaneously provide a copy of such Tag-along Notice to the Issuer. Such
Tag-along Notice shall be irrevocable and binding, and shall constitute an
irrevocable acceptance of the Tag-along Offer by such Tag-along Offeree for the
Common Shares specified therein. If, at the termination of the Tag-along Notice
Period, any Tag-along Offeree shall not have accepted the Tag-along Offer, such
Tag-along Offeree will be deemed to have waived any and all of its rights under
this Section 2.04 with respect to the Transfer of any of its Common Shares
pursuant to such Tag-along Offer.

     As soon as practicable after the expiration of the Tag-along Notice
Period, such Holder(s) shall notify the Issuer and the accepting Tag-along
Offerees of the number of Common Shares that the Tag-along Offerees are
obligated to Transfer pursuant to the Tag-along Offer and Section 2.04(b). Such
Holder(s) shall notify the Issuer and the accepting Tag-along Offerees of the
proposed date of any Transfer ("Transfer Date") pursuant to this Section 2.04
no less than 10 days prior to the Transfer Date. No less than 2 days prior to
the Transfer Date, the accepting Tag-along Offerees shall deliver to such
Holder(s) the certificate or certificates representing the Common Shares to be
Transferred pursuant to such offer by the Tag-along Offerees Duly Endorsed,
together with a limited power-of-attorney authorizing such Holder(s) to
Transfer such Common Shares pursuant to the terms of the Tag-along Offer and
all other documents required to be executed in connection with Tag-along Offer.

     (b) Each Tag-along Offeree shall have the right to Transfer, pursuant to
the Tag-along Offer, a number of Common Shares up to the product of the total
number of Common Shares offered to be Transferred by such Holder(s) or offered
to be purchased by the Tag-along Purchaser as set forth in such Tag-along Offer
and the Pro Rata Portion of such Tag-along Offeree.

     (c) Such Holder(s) shall have 120 days from the termination of the
Tag-along Notice Period in which to consummate the Transfer contemplated by the
Tag-along Offer to the Tag-along Purchaser at the price and on the terms
contained in the Tag-along Offer Notice; provided that if such Transfer is
subject to regulatory approval, such 120-day period shall be extended until the
expiration of 5 Business Days after all such approvals have been received, but
in no event later than 270 days following the


                                      13
<PAGE>


termination of the Tag-along Notice Period. If such Holder(s) have not
completed the Transfer contemplated by the Tag-along Offer Notice within the
period described above, then the rights of such Holder(s) to Transfer such
Common Shares, and the rights of the Tag-along Offerees to Transfer such Common
Shares, pursuant to this Section 2.04 shall terminate and such Holder(s) shall
again comply with the procedures set forth in this Section with respect to any
proposed Transfer.

     (d) Promptly after the consummation of the Transfer of the Common Shares
pursuant to the Tag-along Offer, such Holder(s) shall notify the Tag-along
Offerees thereof, shall remit to the Tag-along Offerees the total sales price
and consideration specified in the Tag-along Offer Notice of the Common Shares
of the Tag-along Offerees Transferred pursuant thereto, and shall furnish such
other evidence of such Transfer (including the time of completion) and the
terms thereof as may be reasonably requested by the Tag-along Offerees.
Notwithstanding the foregoing, the Tag-along Offerees shall be required to bear
their proportionate share of any escrows, holdbacks or adjustments in purchase
price and to make such representations, warranties and covenants and enter into
such agreements as are customary for transactions of the nature of the
Tag-along Offer, in each case under the terms of the definitive agreement(s)
relating to such Tag-along Offer.

     (e) Notwithstanding anything contained in this Section 2.04, there shall
be no liability on the part of such Holder(s) to the Tag-along Offerees if the
Transfer of Common Shares pursuant to Section 2.04(b) is not consummated for
whatever reason, regardless of whether such Holder(s) have delivered a
Tag-along Offer Notice. Whether to effect a Transfer of Common Shares pursuant
to this Section 2.04 by such Holder(s) is in the sole and absolute discretion
of such Holder(s).

     (f) The provisions of this Section 2.04 shall not apply to any proposed
Transfer of Common Shares by such Holder(s) (i) pursuant to a Public Offering,
(ii) to the Issuer, (iii) to a Permitted Transferee of such Holder(s), or (iv)
pursuant to Section 2.05 or Section 2.06.

     SECTION 2.05. MSCP Entities' Rights to Compel Transfer. (a) If the MSCP
Entities have delivered a Seller's Notice after June 1, 2003 with respect to
all of their Common Shares, and if all of such Common Shares have not been
purchased thereafter for cash by the Holders in a purchase and sale process to
be conducted in the manner set forth in Section 2.06, the MSCP Entities shall
have the right, subject to Section 2.05(e), in connection with any proposed
Transfer by the MSCP Entities of such Common Shares (the "Compelled Sale
Offer") to any Person (the "Compelled Sale Purchaser"), to require each Holder
to Transfer all of the Common Shares owned by such Holder to the Compelled Sale
Purchaser, for the same consideration per Common Share and otherwise on the
same terms and conditions upon which the MSCP Entities Transfer their Common
Shares; provided that if such Transfer is subject to regulatory


                                      14
<PAGE>


approval, such 120-day period shall be extended until the expiration of 5
Business Days after all such approvals have been received, but in no event
later than 365 days following the effective date of the Compelled Sale Notice.
If the MSCP Entities elect to exercise their right to compel the Holders to
sell Common Shares pursuant to this Section 2.05 in connection with any
Tag-Along Offer, the provisions of this Section 2.05 shall apply in lieu of the
provisions of Section 2.04.

     (b) If the MSCP Entities elect to exercise their right to compel sale
pursuant to this Section 2.05 they shall deliver written notice (a "Compelled
Sale Notice") of any Compelled Sale Offer to the Holders and the Issuer,
setting forth the consideration per Common Share and other terms thereof. Each
Holder shall deliver to the MSCP Entities prior to the expiration of a 30-day
period commencing on the date of the applicable Compelled Sale Notice, the
certificate or certificates representing the number of Common Shares required
to be sold by such Holder Duly Endorsed, together with all other documents
required to be executed by such Holders in connection with such Compelled Sale
Offer. If any such Holder fails to deliver such certificates to the MSCP
Entities, the Issuer shall cause the books and records of the Issuer to show
that such Common Shares are bound by the provisions of this Section 2.05 and
that such Common Shares shall be Transferred only to the Compelled Sale
Purchaser upon surrender for Transfer by such Holder.

     (c) The MSCP Entities shall have 120 days from the date of the Compelled
Sale Notice to sell to the Compelled Sale Purchaser all the Common Shares
subject to the Compelled Sale Offer; provided that if such Transfer is subject
to regulatory approval or other approvals, such 120-day period shall be
extended until the expiration of 5 Business Days after all such approvals have
been received, but in no event later than 365 days following the effective date
of the Compelled Sale Notice. Promptly after completion of any such Transfer
pursuant to this Section 2.05, the MSCP Entities shall notify the Issuer and
each Holder of such completion and shall furnish evidence of such sale
(including time of completion) and of the terms thereof as the Issuer or any
such Holder may request. The MSCP Entities shall also promptly remit to each
Holder the proceeds of such sale attributable to the sale of such Holder's
Common Shares. Notwithstanding the foregoing, each Holder shall be required to
bear its proportionate share of any escrows, holdbacks or adjustments in
purchase price and to make such representations, warranties and covenants and
enter into such agreements as are customary for transactions of the nature of
the Compelled Sale Offer, in each case under the terms of the definitive
agreement(s) relating to such Compelled Sale Offer. If any sale to a Compelled
Sale Purchaser is not completed prior to the expiration of the period described
above, the MSCP Entities may not consummate such Transfer and shall return to
each Holder all certificates representing the Common Shares which such Holder
previously delivered to the MSCP Entities in connection with such Compelled
Sale Offer, and the right of the MSCP Entities to compel sale pursuant to this
Section


                                      15
<PAGE>


2.05 shall terminate and the MSCP Entities shall again comply with the
procedures set forth in this Section 2.05 with respect to any proposed
Compelled Sale Offer.

     (d) Notwithstanding anything in this Section 2.05, there shall be no
liability on the part of the MSCP Entities to any Holder if any sale of Common
Shares pursuant to this Section 2.05 is not consummated for whatever reason,
regardless of whether the MSCP Entities have delivered a Compelled Sale Notice.
It is understood that the MSCP Entities, in their sole discretion, shall
determine whether to effect a sale of Common Shares to any Person pursuant to
this Section 2.05.

     (e) The provisions of this Section 2.05 shall not apply to any proposed
Transfer by the MSCP Entities of Common Shares (i) to the Issuer, (ii) to a
Permitted Transferee of the MSCP Entities, or (iii) pursuant to a Public
Offering.

     (f) Notwithstanding anything contained herein to the contrary in this
Agreement (including without limitation, the provisions of Sections 2.01 and
2.06), at any time after January 1, 2005 the MSCP Entities shall have the
right, subject only to Section 2.05(e) in connection with any proposed Transfer
by the MSCP Entities of all of their Common Shares to any Person, to require
each Holder to Transfer all of the Common Shares (and all derivatives thereof)
owned by such Holder to a purchaser, for the same consideration per Common
Share and otherwise on the same terms and conditions upon which the MSCP
Entities Transfer their Common Shares; provided that any such Holder may be
required to make representations, warranties and other similar agreements that
would be customary for such Holder, given such Holder's managerial
responsibilities and position with the Company, to make in a transaction of the
type giving rise to the Transfer (a "Section 2.05(f) Compelled Sale Offer").
The provisions and procedures set forth in Sections 2.05(b), (c) and (d) shall
apply in connection with a Section 2.05(f) Compelled Sale Offer.

     SECTION 2.06. Rights of First Offer. (a) Except as provided in Section
2.06(f), if at any time after June 1, 2000, any Holder desires to Transfer any
Common Shares to any Person, such Holder (the "Seller") shall give written
notice (the "Seller's Notice") to the Issuer stating that the Seller desires to
make such Transfer, the number and type of Common Shares proposed to be
Transferred (the "Offered Shares") and the cash price per Common Share (the
"Offer Price"). Each Seller's Notice shall, subject to the provisions of this
Section 2.06, constitute an irrevocable offer by the Seller to the remaining
Holders of the Offered Shares at the Offer Price and on the terms set forth in
the Seller's Notice. The Issuer shall mail a copy of any Seller's Notice
(together with a description of the offering procedures hereunder) to the other
Holders within 5 days after the receipt thereof. Each Holder receiving a
Seller's Notice shall have a 15-day period (the "Initial Order Period") in
which to accept such offer as to all, but not less than all, of such Holder's
Pro Rata Portion of the Offered Shares by giving a written notice of acceptance
to the Seller (together with a copy thereof to the Issuer) prior to the


                                      16
<PAGE>


expiration of the Initial Order Period. If any Holder has failed to deliver a
written notice of acceptance to the Seller and the Issuer prior to the
expiration of the Initial Order Period, such Holder will be deemed to have
waived any and all rights to purchase a portion of such Offered Shares pursuant
to this Section 2.06.

     (b) If every Holder receiving a Seller's Notice does not elect during the
Initial Order Period to purchase the number of Common Shares permitted to be
purchased by such Holder during the Initial Order Period, the Seller shall,
within 5 days after the expiration of the Initial Order Period, provide written
notice to all Holders that elected to purchase Offered Shares during the
Initial Order Period, informing them that they have the right to increase the
number of Common Shares that they may elect to purchase on the same terms as
the Offered Shares each such Holder has previously elected to purchase. Each
such accepting Holder will then have a 5-day period (the "Second Order Period")
in which to elect to purchase the number and type of the Offered Shares that
Holders have not previously elected to purchase during the Initial Order
Period, allocated among such accepting Holders on the basis of the relative
number of Common Shares that each such Holder indicated that it wished to
purchase during the Initial Order Period (which number of shares shall in no
event exceed such Holder's Pro Rata Portion of the Offered Shares) by delivery
of written notice of acceptance to the Seller (together with a copy thereof to
the Issuer) prior to the expiration of the Second Order Period. If any Holder
has failed to deliver a written notice of acceptance to the Seller and the
Issuer prior to the expiration of the Second Order Period, such Holder will be
deemed to have waived any and all rights to purchase a portion of such Offered
Shares in the Second Order Period.

     (c) If, following the expiration of the Second Offer Period, the Holders
have not elected to exercise (or are deemed to have waived) their right to
purchase all of the Offered Shares pursuant to this Section 2.06, the Seller
shall immediately notify the Issuer thereof and the Issuer may, upon receipt of
such notice, exercise the right of first offer with respect to the number of
Offered Shares which the Holders have not elected to purchase by giving notice
of acceptance to the Seller within 5 days of the expiration of the Second Order
Period.

     (d) If, but only if, the Holders and/or the Issuer have exercised their
rights of first offer as to all of the Offered Shares pursuant to Sections
2.06(a), 2.06(b) and 2.06(c), the purchase of the Offered Shares by such
Holders and/or the Issuer shall be consummated within 30 days following the
date on which all Common Shares subject to the right of first offer have been
accepted; provided that if the purchase and sale of such Common Shares is
subject to any prior regulatory approval, subject to Section 2.06(e)(ii), the
time period during which such purchase and sale may be consummated shall be
extended until the expiration of 5 Business Days after all such approvals shall
have been received, but in no event shall such period be extended for more than
an


                                      17
<PAGE>


additional 60 days. The purchase price for the Offered Shares shall be paid in
immediately available funds.

     (e) Upon the earlier to occur of (i) the expiration of the Second Order
Period without Holders and/or the Issuer electing to purchase all of the
Offered Shares or (ii) the failure to obtain any required consent or regulatory
approval for the purchase of all of the Offered Shares by such Holders or the
Issuer within 90 days of full acceptance of the Offered Shares by the Holders
pursuant to the terms hereof, the Seller shall have a 120-day period during
which to effect a Transfer of any or all of the Offered Shares on terms and
conditions that are substantially the same or more favorable (as to the Seller)
than those set forth in the Seller's Notice and at a price not less than the
Offer Price; provided that if the Transfer is subject to regulatory approval,
such 120-day period shall be extended until the expiration of 5 Business Days
after all such approvals shall have been received, but in no event shall such
period be extended for more than an additional 150 days. If the Seller does not
consummate the Transfer of the Offered Shares in accordance with the foregoing
time limitations, then the right of the Seller to Transfer such Common Shares,
and the rights of Holders to purchase such Common Shares pursuant to this
Section 2.06, shall terminate and the Seller shall again comply with the
procedures set forth in this Section 2.06 with respect to any proposed
Transfer.

     (f) The provisions of this Section 2.06 shall not apply to any Transfer
(i) pursuant to a Public Offering, (ii) to the Issuer, (iii) to a Permitted
Transferee of the Transferring Holder or (iv) pursuant to Section 2.05.

     (g) Notwithstanding anything in this Agreement to the contrary, the MSCP
Funds shall have the right to assign their rights under this Section 2.06 to
one or more of their Affiliates; provided that each such Affiliate shall have
agreed to be bound by the terms of this Agreement in accordance with the
provisions of Section 2.02 hereof.

     SECTION 2.07. Additional Restrictions on Certain Shares. Notwithstanding
anything in this Agreement to the contrary and except as provided below, none
of Charles N. Martin, Jr., any Holder that is an Affiliate of Charles N.
Martin, Jr. or any of their respective Permitted Transferees may Transfer
(other than to a Permitted Transferee of Charles N. Martin, Jr.) any Common
Shares if the number of Common Shares proposed to be Transferred, when added to
the aggregate number of Common Shares previously Transferred by Charles N.
Martin, Jr., any such Affiliate and their respective Permitted Transferees to
Persons other than Permitted Transferees of Charles N. Martin, Jr., would cause
the Martin Percentage to equal or exceed the MSCP Percentage on the date of
such Transfer.

     SECTION 2.08. Forfeiture of Common Shares by the MSCP Entitles and
Designated Holders. Each of the MSCP Entities and the Designated Holders agrees
to Transfer to the Issuer, in exchange for no consideration, its allocated
portion (as


                                      18
<PAGE>


described below) of an aggregate number of Common Shares equal to the Aggregate
Carry Amount (as defined in the Carry Option Plan). Any such Common Shares
shall be allocated among the MSCP Entities and the Designated Holders on a pro
rata basis in proportion to the aggregate number of Eligible Shares (as defined
in the Carry Option Plan) owned by each of such Persons at such time. Any such
Transfer to the Issuer shall be made as soon as practicable following the date
on which Options granted on June 1, 1998 pursuant to Section 4 of the Carry
Option Plan become vested and exercisable pursuant to Section 4 of the Carry
Option Plan. If any such Holder fails to deliver certificates representing such
Common Shares to the Issuer, the Issuer shall cause the books and records of
the Issuer to show that such Common Shares are bound by the provisions of this
Section 2.08 and that such Common Shares shall be Transferred only to the
Issuer upon surrender for Transfer by such Holder. As used herein, "Designated
Holders" means the Persons listed on Annex III hereto and their respective
Permitted Transferees.

     SECTION 2.09. Repurchase of Common Shares Held by Management Investors.
(a) If the Annual Revenues of the Issuer do not exceed $932.6 million for the
period of twelve fiscal months ending on the last day of the month immediately
prior to the earlier to occur of (i) a Liquidity Event and (ii) June 1, 2001,
the Issuer shall have the right, exercisable as set forth in Section 2.09(e),
to purchase from each Management Investor (and his or her Permitted
Transferees) the number of Initial Shares equal to the product of (A) the
number of Initial Shares set forth opposite the name of such Management
Investor on Annex I hereto and (B) the percentage set forth in Annex II
opposite the highest revenue target listed on such Annex that was achieved by
the Issuer during such twelve-month period, for a purchase price in cash of
$100 per share. As used herein, "Annual Revenues" means, for any twelve-fiscal
month period, the sum of (i) 100% of the net revenues of the Issuer and each
wholly-owned Subsidiary on a consolidated basis and (ii) the sum of, for each
less than wholly-owned Subsidiary, the product of (x) the Issuer's common and
participating preferred equity ownership percentage in such Subsidiary and (y)
100% of the net revenues of such Subsidiary. "Annual Revenues" shall be
calculated (i) on a pro forma basis with respect to any business that was
purchased by the Issuer or any of its Subsidiaries at any time within the
twelve-fiscal month period prior to the date of determination and (ii) without
duplication for transactions between the Issuer and its Subsidiaries or between
Subsidiaries of the Issuer. The independent auditors of the Issuer at such time
shall calculate "Annual Revenues"and MSCP IV or one or more of its Affiliates
shall pay all reasonable fees and expenses incurred by such independent
auditors in making such calculation. In making such calculation, such auditors
shall (i) except as required by the definition of "Annual Revenues" immediately
above, apply generally accepted accounting principles consistent with those
applied in the financial statements most recently delivered to Holders pursuant
to Section 4.03 and (ii) provide a reasonably detailed written calculation of
"Annual Revenues" to MSCP IV. Such calculation shall not be final until 10
Business Days after the receipt of such certificate by MSCP IV. The provisions
of


                                      19
<PAGE>


this Section 2.09(a) shall terminate after the issuance and sale by the Issuer
of all of the Common Shares set forth in Schedule 2.01(b) to the Subscription
Agreement.

     (b) If (i) the employment of an Executive Manager is terminated by the
Issuer for Cause or if the employment of any other Management Investor is
terminated by the Issuer for any reason or (ii) any Management Investor resigns
other than for Good Reason prior to June 1, 2002, the Issuer shall have the
right, exercisable as set forth in Section 2.09(e), to purchase, for a purchase
price in cash of $100 per share, a number of Initial Shares owned by any such
Management Investor (and his or her Permitted Transferees) equal to the product
of (x) the total number of Initial Shares set forth opposite the name of such
Management Investor on Annex I hereto, times (y) a fraction, the numerator of
which is (A) four minus (B) the integer which represents the number of
consecutive 365-day periods that have elapsed since June 1, 1998, and the
denominator of which is four. The Issuer may, at its discretion and with the
consent of the Compensation Committee, assign its repurchase right under this
Section 2.09(b) to the other Management Investor(s).

     (c) Upon any Liquidity Event in connection with which the MSCP Funds are
to receive aggregate net proceeds (in cash or marketable securities which in
the event of the IPO, shall be valued for purposes of this Section 2.09(c) at
the IPO price per Common Share (after underwriting discounts and commissions))
in an amount that is less than the aggregate amount of capital invested by the
MSCP Funds in the Issuer and its Subsidiaries, MSCP IV may, by delivery of
written notice to the Issuer, require the Issuer to purchase from each
Management Investor (and his or her Permitted Transferees), in the manner set
forth in Section 2.09(e), any and all Initial Shares then owned by such
Management Investor (and his or her Permitted Transferee) for a purchase price
per share equal to the lesser of (1) the Cost thereof and (2) the fair market
value of a Common Share on the date of such written notice (such fair market
value as determined by the Board of Directors). The purchase price payable
pursuant to this Section 2.09(c) may be paid in cash or, at the election of
MSCP IV or of the Issuer, if the Board of Directors determines that the Issuer
is financially incapable of making such cash payment at such time, in a
promissory note of the Issuer which either (i) matures not later than 3 years
after issuance and has an interest rate equal to the sum of (x) the then
current interest rate on a 3-year U.S. treasury bond and (y) 1.00% (the
"Stipulated Note Terms") or (ii) if the Stipulated Note Terms are not permitted
pursuant to the Issuer's agreements for borrowed money and other relevant
agreements, has the most favorable terms to the payee as would be allowed
pursuant to such Issuer (c) tlineagreements; provided that if such Issuer
agreements do not allow the Issuer to make such share purchases, the MSCP Funds
may be the purchaser of the Initial Shares and, if the MSCP Funds are the
purchaser, notwithstanding the foregoing, the purchase price payable pursuant
to this Section 2.09(c) shall be paid by MSCP IV in cash.


                                      20
<PAGE>


     (d) If any Management Investor voluntarily terminates his or her
employment with the Issuer other than for Good Reason or is terminated by the
Issuer for Cause and, prior to June 1, 2003, such Management Investor engages
in any Competitive Activity, then the Issuer shall have the right, exercisable
as set forth in Section 2.09(e), to purchase from such Management Investor (and
his or her Permitted Transferees) any and all shares of capital stock or other
equity securities of the Issuer then owned by such Management Investor (and his
or her Permitted Transferees) for a purchase price in cash for such share or
other security equal to the Cost thereof. The Issuer may, at its discretion and
with the consent of the Compensation Committee, assign its repurchase right
under this Section 2.09(d) to the other Management Investor(s). A Management
Investor shall be deemed to engaged in "Competitive Activity" for purposes of
this Agreement if such Management Investor shall, directly or indirectly,
personally or through its Affiliates, own any interest or invest in, operate,
join, control, or participate as a partner, director, principal, officer, or
agent of, enter into the employment of, act as a consultant to, or perform any
services for, any Person (other than the Issuer and/or one or more of its
Subsidiaries) that is engaged in the acquisition, ownership, operation, and/or
management of any hospital, hospital system or hospital management company,
other than ownership of not more than 5% of the outstanding voting securities
of any public corporation or working as a certified public accountant or an
attorney for an accounting or law firm.

     (e) If the Issuer elects (or, pursuant to Section 2.09(c) or this Section
2.09(e), is directed to elect) to exercise any of its rights set forth in
Sections 2.09(a) through (d), the Issuer shall deliver written notice to such
effect to the relevant Management Investor(s) and his or her Permitted
Transferee(s) (each, a "Management Seller") promptly, but in no event later
than 90 days, following the occurrence of the event giving rise to such
repurchase right. Such notice shall set forth the number of Common Shares,
Options and/or other equity securities of the Issuer that the Issuer has
elected to purchase from such Management Seller and the total consideration to
be paid pursuant to the sale of such Common Shares, Options, and/or other
equity securities of the Issuer, as the case may be. Each Management Seller
shall deliver to the Issuer, within 10 days of the applicable notice, the
certificate or certificates representing the number of Common Shares required
to be sold by such Management Seller(s) Duly Endorsed, together with all other
documents required to be executed by such Management Seller(s) in connection
with such transaction, including without limitation copies of executed option
agreements relating to the Options, if applicable. If any such Management
Seller(s) fails to deliver such certificates or documents to the Issuer, the
Issuer shall cause the books and records of the Issuer to show that such
securities are bound by the provisions of this Section 2.09 and that such
securities shall be transferred only to the Issuer upon surrender for Transfer
by such Management Seller(s). Notwithstanding anything herein to the contrary,
MSCP IV may, by delivery of written notice to the Issuer, require the Issuer to
exercise any of its repurchase rights set forth in this Section 2.09 in respect
of securities owned by any Executive Manager.


                                      21
<PAGE>


                                   ARTICLE 3
                              REGISTRATION RIGHTS

     SECTION 3.01. Definitions. The following terms, as used in this Article 3,
have the following meanings:

     "Registering Holders" means Holders whose Registrable Common Shares are
covered by or offered pursuant to a registration statement filed pursuant to
this Article 3.

     "Registrable Common Shares" means all Common Shares of the Issuer owned by
the Holders. Registrable Common Shares shall cease to be Registrable Common
Shares when (i) a registration statement with respect to the sale of such
Common Shares shall have become effective under the Securities Act and such
Common Shares shall have been disposed of pursuant to such registration
statement, or (ii) such Common Shares shall have ceased to be outstanding.

     "Registration Expenses" means all (i) registration, qualification and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of a qualified independent
underwriter, if any, counsel in connection therewith and the reasonable fees
and disbursements of counsel in connection with blue sky qualifications of the
Registrable Common Shares), (iii) printing expenses, (iv) internal expenses of
the Issuer (including, without limitation, all salaries and expenses of
officers and employees performing legal or accounting duties), (v) fees and
disbursements of counsel for the Issuer, (vi) customary fees and expenses for
independent certified public accountants retained by the Issuer (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort
letters), (vii) fees and expenses of any special experts retained by the Issuer
in connection with such registration, (viii) reasonable fees and expenses of
one separate firm of attorneys for the Registering Holders (which counsel shall
be selected by the Holders selling securities constituting a majority of all
securities to be included in such registration in the case of any registration
pursuant to the exercise of its right under Section 3.02) and (ix) fees and
expenses of listing the Registrable Common Shares on a securities exchange; but
shall not include any out-of-pocket expenses of the Registering Holders,
transfer taxes, fees and expenses of underwriter's counsel, underwriting fees
or discounts or commissions attributable to the sale of Registrable Common
Shares.

     "Requesting Holder" means either (i) the MSCP Funds collectively or (ii)
other Holders owning more than 15% of the Registrable Common Shares outstanding
at such time.

     SECTION 3.02. Demand Registration Rights. (a) Registration on Request. If
a Requesting Holder desires to effect the registration under the Securities Act
of outstanding Registrable Common Shares, such Requesting Holder may make a
written


                                      22
<PAGE>


request that the Issuer effect such registration; provided that (A) such
registration is expected to result in an aggregate price to the public of not
less than $50 million, (B) if such Requesting Holder is the MSCP Funds, such
request is made after the earlier of (x) June 1, 2001 and (y) the first day
after the expiration of any "lock-up" period required by the underwriters in
connection with the IPO and (C) if such Requesting Holder consists of Holders
other than the MSCP Funds, such request is made after the first day after the
expiration of any "lock-up" period required by the underwriters in connection
with the IPO. Each such request will specify the number of shares of
Registrable Common Shares proposed to be sold and will also specify the
intended method of disposition thereof; provided that the Issuer shall not be
obligated to effect any shelf registration of Registrable Common Shares
pursuant to Rule 415 under the Securities Act. The Issuer will promptly give
written notice of such requested registration to all other Holders of
Registrable Common Shares, and thereupon will use its best efforts to effect,
as promptly as practicable, the registration under the Securities Act of:

          (ii) the Registrable Common Shares which the Issuer has been so
     requested to register by such Requesting Holder pursuant to this Section
     3.02; and

          (iii) the Registrable Common Shares which the Issuer has been
     requested to register by all Holders (other than such Requesting Holder)
     pursuant to Section 3.03 by written request given to the Issuer within 20
     days after the giving of such written notice by the Issuer (which request
     shall specify the intended method of disposition of such Registrable
     Common Shares);

all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Common Shares so to
be registered; provided that:

          (x) the Issuer shall not be obligated to file a registration
     statement relating to a registration request pursuant to this Section 3.02
     at any time during the six-month period immediately following the
     effective date of another registration statement filed pursuant to this
     Section 3.02;

          (y) the Issuer shall not be obligated to file more than (i) four
     registration statements on Form S-1 or S-2 pursuant to this Section 3.02
     on behalf of a Requesting Holder consisting of the MSCP Funds (it being
     understood that the Issuer shall be obligated to file an unlimited number
     of registration statements on Form S-3 (or any successor form) if
     requested by a Requesting Holder consisting of the MSCP Funds pursuant to
     the provisions of this Section 3.02) and (ii) two registration statements
     pursuant to this Section 3.02 on behalf of a Requesting Holder consisting
     of Holders other than the MSCP Funds; and


                                      23
<PAGE>


          (z) at the time of any request to register Registrable Common Shares
     pursuant to this Section 3.02, if the Board of Directors determines in its
     good faith reasonable judgment that the Issuer should not file any
     registration statement otherwise required to be filed pursuant to Section
     3.02(a) because the Issuer is engaged in or in good faith plans to engage
     in any financing, acquisition or other material transaction which would be
     adversely affected by the filing of a registration statement otherwise
     required to be filed pursuant to this Section 3.02 (a "Disadvantageous
     Condition"), the Issuer shall be entitled to postpone for the shortest
     reasonable period of time (but not exceeding 120 days from the date of the
     request), the filing of such registration statement and shall promptly
     give the Requesting Holder written notice of such determination,
     containing a general statement of the reasons for such postponement and an
     approximation of the anticipated delay. If the Issuer shall so postpone
     the filing of the registration statement, the Requesting Holder shall have
     the right to withdraw the request for registration by giving written
     notice to the Issuer within 30 days after receipt of the notice of
     postponement. Such right to delay a request for registration pursuant to
     this Section 3.02 may not be exercised more than once in any 1-year
     period.

     Promptly after the expiration of the 20-day period referred to in clause
(ii) above, the Issuer shall notify each holder of Registrable Common Shares to
be included in the registration of the other Holders requesting Registrable
Common Shares to be included therein and the number of Registrable Common
Shares requested to be included therein. The Requesting Holder may, at any time
prior to the effective date of the registration statement relating to such
registration, revoke such request, without liability to any other Holder
holding Registrable Common Shares requested to be registered pursuant to clause
(ii) above, by providing a written notice to the Issuer revoking such request;
provided that, if as a result thereof such registration is abandoned, all
Registration Expenses and all other fees and expenses reasonably incurred by
other Holders including Registrable Common Shares in such registration shall be
borne by the Requesting Holder revoking such registration. If the Issuer
determines to take any action pursuant to clause (z) above, the Issuer shall
deliver a notice to the Requesting Holder and to any other Holder selling
Registrable Common Shares pursuant to an effective registration statement to
such effect. Upon the receipt of any such notice, such Holders shall forthwith
discontinue use of the prospectus contained in such registration statement and,
if so directed by the Issuer, shall deliver to the Issuer all copies of the
prospectus then covering such Registrable Common Shares current at the time of
receipt of such notice (or, if no registration statement has yet been filed,
all drafts of the prospectus covering such Registrable Common Shares). If any
Disadvantageous Condition shall cease to exist, the Issuer shall promptly
notify the Requesting Holder (and any other Holder who shall have ceased
selling securities pursuant to an effective registration statement as a result
of such Disadvantageous


                                      24
<PAGE>


Condition) to such effect. If so requested by the Requesting Holder, the Issuer
shall, if any registration statement shall have been withdrawn, at such time as
it is possible or, if earlier, at the end of the 120-day period following such
withdrawal, file a new registration statement covering the Registrable Common
Shares that were covered by such withdrawn registration statement, and the
effectiveness of such registration statement shall be maintained for such time
as may be necessary so that the period of effectiveness of such new
registration statement, when aggregated with the period during which such
withdrawn registration statement was effective, if any, shall be such time as
may be otherwise required by this Agreement.

     (b) Priority Participation in Requested Registrations. If a registration
pursuant to this Section 3.02 involves a Public Offering and the managing
underwriter shall advise the Issuer that, in its view, the number or proposed
mix of securities requested to be included in such registration (including
securities which the Issuer requests to be included which are not Registrable
Common Shares) exceeds the largest number of securities which can be sold
without having a material adverse effect on such offering (the "Maximum
Offering Size"), including the price at which such securities can be sold, the
Issuer will include in such registration:

          (i) first, the Registrable Common Shares requested to be included in
     such registration pursuant to Section 3.02(a)(i) or (ii) by all Holders,
     allocated (if necessary) pro rata among such Holders on the basis of the
     relative number of Registrable Common Shares each such Holder has
     requested to be included in such registration; and

          (ii) second, Common Shares to be sold for the account of other
     Persons (including the Issuer), with such priorities among them as the
     Issuer shall determine.

     (c) Registration Statement Form. Registrations under this Section 3.02
shall be on such appropriate registration form of the Commission (i) as shall
be selected by the Issuer, subject to Section 3.02(a), and as shall be
reasonably acceptable to the Requesting Holder and (ii) as shall permit the
disposition of such Registrable Common Shares in accordance with the method or
methods of disposition intended on the part of the Requesting Holder.
Notwithstanding anything herein to the contrary, if, pursuant to a registration
request under this Section 3.02, the Issuer proposes to effect registration by
filing of a registration statement on Form S-3 (or any successor or similar
short-form registration statement) and any managing underwriter shall advise
the Issuer in writing that, in its opinion, the use of another form of
registration statement is of material importance to the success of such
proposed offering, then such registration shall be effected on such other form.


                                      25
<PAGE>


     (d) Expenses. Except as specifically provided herein, the Issuer will pay
promptly all Registration Expenses in connection with the registration requests
made pursuant to this Section 3.02. The Requesting Holder shall pay all
out-of-pocket expenses of the Requesting Holder, transfer taxes, fees and
expenses of underwriter's counsel and underwriting discounts and commissions,
if any, relating to the sale or disposition of such Requesting Holder's
Registrable Common Shares pursuant to a registration statement requested
pursuant to this Section 3.02.

     (e) Effective Registration Statement. A registration requested pursuant to
this Section shall not be deemed to have been effected until the registration
statement has been effective (and not subject to any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason) for a period of 120 days following the date on which such
registration statement was declared effective or such shorter period which will
terminate when all Registrable Common Shares covered by such registration
statement have been sold.

     (f) Underwriters. The managing underwriter or underwriters of any Public
Offering effected pursuant to this Section 3.02 shall be selected by the
Registering Holders whose securities constitute a majority of all securities to
be included in such registration and the price, terms and provisions of the
offering shall be subject to the approval of the Requesting Holder. Any
Affiliate of a Registering Holder may be selected to serve, on an arm's-length
basis, as underwriter for an underwritten offering effected pursuant to this
Section 3.02. The Issuer will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Common Shares.

     (g) Transferability of Rights. Notwithstanding anything herein to the
contrary, each of the MSCP Funds and the Management Investors shall have the
right to Transfer any of its rights under this Section 3.02 in respect of any
Registrable Common Shares held by it to any Permitted Transferee of any of the
Registrable Common Shares of such Holder. Following any such Transfer, such
Permitted Transferee shall possess the same rights under this Section 3.02 in
respect of the Registrable Common Shares then owned by it as the transferring
Holder had possessed in respect of such securities prior to the Transfer.

     SECTION 3.03. Piggy-Back Registration Rights. (a) Right to Include
Registrable Common Shares. If the Issuer at any time proposes to register any
of its equity securities ("Priority Securities") under the Securities Act
(other than (i) by a registration on Form S-4, Form S-8 or any successor or
similar form, (ii) in connection with a direct acquisition by the Issuer of
another Person, or (iii) pursuant to a shelf registration of securities
pursuant to Rule 415 under the Securities Act), in each case whether or not for
sale for its own account or as a result of a demand from a security


                                      26
<PAGE>


holder, it will at each such time give prompt written notice at least 30 days
prior to the anticipated filing date of the registration statement relating to
such registration to all Holders of Registrable Common Shares of its intention
to do so and of such Holders' rights under this Section 3.03. The parties
hereto agree that Priority Securities shall not include any convertible debt
securities or debt securities issued with attached warrants. Any such notice
shall offer all such Holders the opportunity to include in such registration
such number of Registrable Common Shares as each such Holder may request;
provided that any Holder owning less than 1% of the outstanding Common Shares
and who is entitled to sell all of the Registrable Common Shares owned by such
Holder at such time pursuant to Rule 144 or Rule 145 of the Securities Act
shall not be entitled to such notice or to include any Registrable Common
Shares in such registration unless on the date of determination the average
daily trading volume of the Common Shares during the 30 trading days prior to
such date is less than the total number of Common Shares owned by such Holder.
Upon the written request of any Holder made within 20 days after the receipt of
any such notice (which request shall specify the number of Registrable Common
Shares intended to be disposed of by such Holder), the Issuer will use its best
efforts to effect the registration with the Commission under the Securities Act
and any related qualification or other compliance of all Registrable Common
Shares which the Issuer has been so requested to register, to the extent
required to permit the disposition of the Registrable Common Shares to be so
registered; provided that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Issuer
shall determine for any reason not to register or to delay registration of such
securities, the Issuer shall give written notice of such determination to each
Holder and, thereupon, (x) in the case of a determination not to register,
shall be relieved of its obligation to register any Registrable Common Shares
in connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith), without prejudice, however, to
the rights of any Holder entitled to do so, to request that such registration
be effected as a registration under Section 3.02, and (y) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Common Shares, for the same period as the delay in registering such
other securities. If a registration pursuant to this Section 3.03 involves a
Public Offering, each Holder holding Registrable Common Shares requesting to be
included in such registration may elect, in writing not less than 5 Business
Days prior to the effective date of the registration statement filed in
connection with such registration, not to register such securities in
connection with such registration. No registration effected under this Section
3.03 shall relieve the Issuer of its obligation to effect any registration upon
request under Section 3.02. The Issuer will pay promptly all Registration
Expenses in connection with each registration of Registrable Common Shares
requested pursuant to this Section 3.03 and each such Holder shall pay all
out-of-pocket expenses of such Holder, transfer taxes and underwriting
discounts and commissions, if any, relating to the sale or disposition of


                                      27
<PAGE>


such Holder's Registrable Common Shares pursuant to a registration statement
effected pursuant to this Section 3.03.

     (b) Priority in Incidental Registrations. If a registration pursuant to
this Section 3.03 involves a Public Offering and the managing underwriter (or,
in the case of the IPO and if an Affiliate of MSCP IV is a managing
underwriter, a majority in number of the managing underwriters) shall advise
the Issuer that, in its view, the number or mix of securities (including all
Registrable Common Shares) which the Issuer, the Holders and any other Persons
intend to include in such registration exceeds the Maximum Offering Size, the
Issuer will include in such registration, in the priority listed below,
securities up to the Maximum Offering Size:

          (i) first, Priority Securities to be sold for the Issuer's own
     account; and

          (ii) second, Registrable Common Shares or Common Shares requested to
     be included in such registration pursuant to Section 3.02 or 3.03 or
     otherwise by all other Persons (including the Holders), allocated (if
     necessary) pro rata among such Persons on the basis of the relative number
     of securities each such Person has requested to be included in such
     registration.

     (c) Transferability of Rights. Notwithstanding anything herein to the
contrary, each Holder shall have the right to Transfer any of its rights under
this Section 3.03 to any Permitted Transferee of any of the Registrable Common
Shares of such Holder. Following any such Transfer, such Permitted Transferee
shall possess the same rights under this Section 3.03 in respect of the
Registrable Common Shares then owned by it as the transferring Holder had
possessed in respect of such securities prior to the Transfer.

     SECTION 3.04. Registration Procedures. If the Issuer is required to use
its reasonable best efforts to effect the registration of any Registrable
Common Shares under the Securities Act as provided in Section 3.02 or 3.03, the
Issuer will, as promptly as possible:

     (a) prepare and file with the Commission a registration statement on an
appropriate form (subject to 3.02(c)), and thereafter use its best efforts to
cause such registration statement to become effective and to remain effective
for the period specified in Section 3.02(e) and prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period specified in Section 3.02(e)
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until such
time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the Registering Holders thereof set forth in


                                      28
<PAGE>


such registration statement; provided that the Issuer will, at least 5 Business
Days prior to filing a registration statement or prospectus or any amendment or
supplement thereto, furnish to each Registering Holder copies of such
registration statement or prospectus (or amendment or supplement) as proposed
to be filed (including, upon the request of such Holder, documents to be
incorporated by reference therein) which documents will be subject to the
reasonable review and comments of such Holder (and its attorneys) during such
5-Business-Day period and the Issuer will not file any registration statement,
any prospectus or any amendment or supplement thereto (or any such documents
incorporated by reference) containing any statements with respect to such
Holder to which such Holder shall reasonably object in writing;

     (b) furnish to each Registering Holder and to any underwriter such number
of conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 or
Rule 430A under the Securities Act, in conformity with the requirements of the
Securities Act, documents incorporated by reference in such registration
statement, amendment, supplement or prospectus and such other documents (in
each case including all exhibits), as a Registering Holder or underwriter may
reasonably request;

     (c) after the filing of the registration statement, promptly notify each
Registering Holder of the effectiveness thereof and of any stop order issued or
threatened by the Commission and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered and promptly
notify such Registering Holder of such lifting or withdrawal of such order;

     (d) use its reasonable best efforts to register or qualify all Registrable
Common Shares and other securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as the Registering
Holders holding a majority of the Registrable Common Shares to be included in
such registration or the underwriter shall reasonably request, to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and take any other action which may be reasonably
necessary or advisable to enable the Registering Holders to consummate the
disposition in such jurisdictions of the securities owned by such Registering
Holders, except that the Issuer shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this Section 3.04(d) be
obligated to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction;

     (e) use its reasonable best efforts to cause all Registrable Common Shares
covered by such registration statement to be registered with or approved by
such other


                                      29
<PAGE>


governmental agencies or authorities as may be necessary to enable the
Registering Holders to consummate the disposition of such Registrable Common
Shares;

     (f) furnish to each Registering Holder and to each underwriter, if any, a
signed counterpart of: (i) an opinion of counsel for the Issuer addressed to
such Holder and underwriter on which opinion both such Holder and such
underwriter are entitled to rely and (ii) a "comfort" letter signed by the
independent public accountants who have certified the Issuer's financial
statements included in such registration statement, each in customary form and
covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Registering Holders holding a majority of
the Registrable Common Shares included in such registration or the managing
underwriter therefor reasonably request. The Issuer will use its best efforts
to have such comfort letters addressed to each Registering Holder;

     (g) immediately notify each Registering Holder at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made, and promptly prepare and furnish to such Registering Holder a reasonable
number of copies of any supplement to or amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make statements therein not misleading in the light of the
circumstances under which they were made;

     (h) make available for inspection by any Registering Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
such Holder or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Issuer
(collectively, the "Records") as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and shall cause (i) the
Issuer's officers, directors and employees to supply all information reasonably
requested by any Inspectors and (ii) the senior management of the Issuer and
its Subsidiaries to participate in any "road show" presentations to investors,
in each case in connection with such registration statement. Each such Holder
agrees that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuer or its Affiliates unless and until
such information is made generally available to the public. Each such Holder
further agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Issuer and


                                      30
<PAGE>


allow the Issuer, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;

     (i) use its reasonable best efforts to list all Registrable Common Shares
covered by such registration statement on any securities exchange or quotation
system on which any of the Registrable Common Shares is then listed or traded;
and

     (j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 12(a) of the
Securities Act and Rule 158 thereunder.

     The Issuer may require each Registering Holder to promptly furnish to the
Issuer, as a condition precedent to including such Registering Holder's
Registrable Common Shares in any registration, such information regarding such
Registering Holder and the distribution of such securities as the Issuer may
from time to time reasonably request in writing.

     Each Holder agrees that upon receipt of any notice from the Issuer of the
happening of any event of the kind described in Section 3.04(g), such Holder
will forthwith discontinue such Holder's disposition of Registrable Common
Shares pursuant to the registration statement relating to such Registrable
Common Shares until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.04(g) and, if so directed by the
Issuer, will deliver to the Issuer (at the Issuer's expense) all copies, other
than permanent file copies, then in such Holder's possession, of the prospectus
and any amendments or supplements thereto relating to such Registrable Common
Shares current at the time of receipt of such notice. In the event the Issuer
shall give such notice, the Issuer shall extend the period during which the
effectiveness of such registration statement shall be maintained (including the
period referred to in Section 3.02(e) hereof) by the number of days during the
period from and including the date of the giving of notice pursuant to Section
3.04(g) to the date when the Issuer shall make available to the Holders a
prospectus supplemented or amended to conform with the requirements of Section
3.04(g).

     SECTION 3.05. Participation in Underwritten Registrations. No Person may
participate in any Public Offering pursuant to Section 3.02 or 3.03 unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.


                                      31
<PAGE>


     SECTION 3.06. Holdback Agreements. (a) If any registration or offering of
Registrable Common Shares shall be in connection with a Public Offering, each
Holder holding Registrable Common Shares agrees not to effect any public sale
or distribution of any Registrable Common Shares or any securities convertible
into or exchangeable or exercisable for Registrable Common Shares (in each case
other than as part of such Public Offering), if and to the extent requested by
the managing underwriter during the 14 days prior to, and during (x) the
180-day period if such Public Offering is the IPO or (y) the 90-day period if
such Public Offering is not the IPO, in either case beginning on, the effective
date of such registration statement without the written consent of such
managing underwriter; provided that each such Holder has received written
notice of such registration at least 5 Business Days prior to the anticipated
beginning of the 14-day period referred to above.

     (b) If any registration or offering of Registrable Common Shares shall be
in connection with a Public Offering, the Issuer agrees (i) that, if and to the
extent requested by the managing underwriter, neither it nor any of its
Affiliates will effect any public sale or distribution of any of its equity
securities or of any security convertible into or exchangeable or exercisable
for any equity security of the Issuer during the 14 days prior to, and during
(x) the 180-day period if such Public Offering is the IPO or (y) the 90-day
period if such Public Offering is not the IPO, in either case beginning on, the
effective date of such registration statement (except as part of such Public
Offering) without the written consent of such managing underwriter and (ii)
that any agreement entered into after the date of this Agreement pursuant to
which the Issuer issues or agrees to issue any privately placed securities
shall contain a provision under which holders of such securities agree not to
effect any public sale or distribution of any such securities during the
periods described in (i) above (except as part of any such registration, if
permitted).

     SECTION 3.07. Indemnification. (a) Indemnification by the Issuer. The
Issuer agrees to indemnify and hold harmless each Registering Holder, its
officers, directors and agents and each Person, if any, who controls such
Registering Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities or expenses caused by any untrue statement or alleged
untrue statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Common Shares (as amended or
supplemented if the Issuer shall have furnished any amendments or supplements
thereto) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Issuer will reimburse such Registering Holders
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending such loss, claim, damage, liability or expense,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the


                                      32
<PAGE>


Issuer by such Registering Holder or on such Registering Holder's behalf
expressly for use therein; provided that with respect to any untrue statement
or omission or alleged untrue statement or omission made in any preliminary
prospectus, or in any prospectus, as the case may be, the indemnity agreement
contained in this paragraph shall not apply to the extent that any such loss,
claim, damage, liability or expense results from the fact that a current copy
of the prospectus (or the amended or supplemented prospectus, as the case may
be) was not sent or given to the Person asserting any such loss, claim, damage,
liability or expense at or prior to the written confirmation of the sale of the
Registrable Common Shares concerned to such Person if it is determined that the
Issuer has provided such prospectus (or amended or supplemented prospectus) and
it was the responsibility of such Registering Holder to provide such Person
with a current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the prospectus (or
such amended or supplemented prospectus, as the case may be) would have cured
the defect giving rise to such loss, claim, damage, liability or expense. The
Issuer also agrees to indemnify any underwriters of the Registrable Common
Shares, their officers and directors and each Person who controls such
underwriters on substantially the same basis as that of the indemnification of
the Registering Holders provided in this Section 3.07(a).

     (b) Indemnification by the Registering Holders. Each Registering Holder
agrees, severally but not jointly, to indemnify and hold harmless the Issuer,
its officers, directors and agents and each Person, if any, who controls the
Issuer within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Issuer to such Registering Holder, but only (i) with respect to information
furnished in writing by such Registering Holder or on such Registering Holder's
behalf expressly for use in any registration statement or prospectus relating
to the Registrable Common Shares, or any amendment or supplement thereto, or
any preliminary prospectus or (ii) to the extent that any loss, claim, damage,
liability or expense described in Section 3.07(a) results from the fact that a
current copy of the prospectus (or the amended or supplemented prospectus, as
the case may be) was not sent or given to the Person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation of
the sale of the Registrable Common Shares concerned to such Person if it is
determined that it was the responsibility of such Registering Holder to provide
such Person with a current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense. Each such Registering Holder also agrees to indemnify and hold
harmless the underwriters of the Registrable Common Shares, their officers and
directors and each Person who controls such underwriters on substantially the
same basis as that of the indemnification of the Issuer provided in this
Section 3.07(b). Each Registering Holder's obligation to indemnify pursuant to
this Section is several in the


                                      33
<PAGE>


proportion that the proceeds of the offering received by such Holder bears to
the total proceeds of the offering received by all the Holders and not joint.

     (c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Section
3.07, such Person (an "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying Party") in writing
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any
such proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in
the reasonable judgment of such Indemnified Party representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the
Indemnified Party that had the largest number of Registrable Common Shares
included in such registration. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Party is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such
proceeding.

     (d) Contribution. If the indemnification provided for in this Section 3.07
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (i) as between the Issuer and the Registering Holders on
the one hand and the underwriters on the other, in such


                                      34
<PAGE>


proportion as is appropriate to reflect the relative benefits received by the
Issuer and such Registering Holders on the one hand and the underwriters on the
other, from the offering of the Registrable Common Shares, or if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Issuer and such Registering Holders on the one hand and of such
underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Issuer on the one
hand and each such Registering Holder on the other, in such proportion as is
appropriate to reflect the relative fault of the Issuer and of each such
Registering Holder in connection with such statements or omissions, as well as
any other relevant equitable considerations. The relative benefits received by
the Issuer and such Registering Holders on the one hand and such underwriters
on the other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Issuer and such Registering Holders bear to
the total underwriting discounts and commissions received by such underwriters,
in each case as set forth in the table on the cover page of the prospectus. The
relative fault of the Issuer and such Registering Holders on the one hand and
of such underwriters on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer and such Registering Holders or by such
underwriters. The relative fault of the Issuer on the one hand and of each such
Registering Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

     The Issuer and the Holders agree that it would not be just and equitable
if contribution pursuant to this Section 3.07 were determined by pro rata
allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, 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 3.07, no underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Common Shares underwritten by it and
distributed to the public were offered to the public exceeds the aggregate
amount of any damages which such underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission, and no Holder shall be required to

                                      35
<PAGE>


contribute any amount in excess of the amount by which the total price at which
the Registrable Common Shares of such Holder were offered to the public exceeds
the amount of any damages which such Holder has otherwise been required to pay
by reason of such 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. Each such
Holder's obligation to contribute pursuant to this Section 3.07 is several in
the proportion that the proceeds of the offering received by such Holder bears
to the total proceeds of the offering received by all such Holders and not
joint.

                                   ARTICLE 4
                        CORPORATE GOVERNANCE; COVENANTS

     SECTION 4.01. Board of Directors. (a) The Board of Directors shall consist
of such number of members as may be necessary from time to time in order to
give effect to the provisions of this Section 4.01, and nominations shall be
made, and vacancies shall be filled, such that the composition of the Board of
Directors shall at all times be in accordance herewith.

     (b) On and after the date hereof the Board of Directors shall initially
consist of eight members, of which five initially shall be nominated by
Management Investors owning a majority of all Common Shares owned by all
Management Investors and one of which shall be nominated by MSCP III and two of
which shall be nominated by MSCP IV or their respective Permitted Transferees;
provided that the MSCP Funds shall have at all times the right to nominate four
members of the Board of Directors, in which event, the Management Investors
shall cause one of their five members to resign from the Board of Directors;
provided further that if the MSCP Funds deliver a Section 2.05(f) Compelled
Sale Offer notice pursuant to Section 2.05(f), the MSCP Funds shall have the
right thereafter to nominate a majority of the members of the Board of
Directors, in which event the Management Investors shall cause two of their
five members to resign from the Board of Directors. Charles N. Martin, Jr.
shall initially be the Chairman of the Board of Directors. From time to time
following the date hereof, the size of the Board of Directors may be increased
or decreased, in each case with the prior written consent of MSCP IV (not to be
unreasonably withheld); provided that in such event the MSCP Funds shall be
entitled to nominate 50% or, if applicable because the MSCP Funds have
delivered a Section 2.05(f) Compelled Sale Offer notice, a majority of the
members of the Board of Directors. If reasonably necessary in order to protect
(x) the investments of the MSCP Funds in the Issuer and its Subsidiaries or (y)
the rights granted to the MSCP Funds under this Agreement, each of MSCP III and
MSCP IV shall be entitled to designate one non-voting observer to the board of
directors of any Material Subsidiary, which observer shall have the right to
prior notice of all meetings and actions by written consent of any such board
of directors and the right to attend any such meetings and participate in
discussions. The Issuer shall use its


                                      36
<PAGE>


best efforts to promptly notify each such observer of any agreement, contract,
arrangement, transaction or other matter (each, a "Matter") which it is
contemplated will be brought before any such board of directors (whether
pursuant to a meeting, action by written consent or otherwise) and will, as to
each Matter as to which an observer in his or her discretion so requests,
distribute to such observer all documentation, analyses and other information
that is distributed to the members of any such board of directors in connection
with their consideration of such Matter.

     (c) For so long as MSCP IV or any of its Affiliates owns any Common
Shares, MSCP IV or its Permitted Transferees shall have the right to appoint
one member to each committee of the Board of Directors. The Holders and the
Issuer agree to use their best efforts to take all actions necessary to appoint
each such committee member.

     (d) Each Holder and the Issuer agrees, immediately upon request of MSCP
IV, to execute a shareholder consent with respect to the Issuer, or vote its
Common Shares at, or nominate persons to be directors in connection with, any
annual or special meeting of shareholders where action with respect to the
election of directors is to be taken, or to cause the directors of the Issuer
to execute a consent with respect to a Subsidiary of the Issuer or to vote the
shares of such Subsidiary, in each case so as to give effect to the provisions
of this Section.

     (e) The Persons entitled under this Section to nominate members of the
Board of Directors or any committee thereof, or an observer to the board of
directors of any Material Subsidiary of the Issuer, may at any time revoke the
nomination as to a particular individual, in which case the Holders will take
all actions contemplated pursuant to Section 4.01(d) to effect the immediate
removal of such individual from the Board of Directors, such committee, or as
observer to the board of directors of such Material Subsidiary, as the case may
be. If as a result of death, disability, retirement, resignation, removal or
otherwise, there shall exist or occur any vacancy on the Board of Directors,
any committee thereof, or as to the observer position on the board of directors
of any Material Subsidiary of the Issuer, the Persons entitled under this
Section to nominate such individual whose death, disability, retirement,
resignation or removal resulted in such vacancy may, in accordance with the
terms of this Section nominate another individual to fill such capacity and
serve as a director, committee member or observer, as the case may be.

     (f) Each Holder agrees that if, at any time, it is then entitled to vote
for the removal of directors of the Issuer, it will not vote any of its Common
Shares in favor of the removal of any director who shall have been nominated
pursuant to Section 4.01(b) unless the Holder(s) entitled to nominate such
director shall have consented to such removal in writing.


                                      37
<PAGE>


     (g) The Board of Directors shall have general authority to administer the
terms of this Agreement and the Surviving Shareholders Agreement.

     SECTION 4.02. Actions Requiring Consent of MSCP. (a) Subject to Section
4.02(b), the Issuer shall not, and shall not permit any of its Subsidiaries to,
and the Holders shall not cause the Issuer or any of its Subsidiaries to, take
any of the following actions without the prior written consent of MSCP IV;
provided that if MSCP IV fails to deliver prior written consent with respect to
the taking of any such action, such prior written consent shall be deemed
received if MSCP IV has not objected to the taking of such action within 10
Business Days following receipt from the Issuer of a written notice proposing
such action and describing in reasonable detail the material terms and
conditions thereof:

          (i) Charter and Bylaws. Alter, repeal, amend or adopt any provision
     of the certificate of incorporation, by-laws or other constituent
     documents of the Issuer or any Material Subsidiary of the Issuer, other
     than any wholly owned Material Subsidiary;

          (ii) Debt. (A) (x) Incur, assume, or otherwise become liable with
     respect to, any Debt (other than pursuant to the $168 Million Credit
     Agreement dated as of February 1, 2000 between the Issuer and Morgan
     Stanley Senior Funding Inc., as Administrative Agent, as the same may be
     amended from time to time, or pursuant to any credit agreement which is
     the successor to said Credit Agreement provided the total commitments of
     the lenders under such successor credit agreement do not exceed $180
     million) in excess of 10% of Total Assets, (y) refinance or renew any Debt
     or (z) discharge, repay (other than pursuant to regularly scheduled
     payments thereof) or cancel any Debt, other than in the case of (y) and
     (z), refinancings, renewals, discharges, repayments and cancellations of
     Debt not to exceed 10% of Total Assets or (B) enter into credit facilities
     or other financing arrangements other than those specifically permitted
     pursuant to this Section 4.02(a)(ii);

          (iii) Other Business. Make any change in the nature, long-term
     business strategy, or geographic or market scope of the business of the
     Issuer and its Subsidiaries, taken as a whole;

          (iv) Accounting; Tax. (w) Make any change in the financial accounting
     principles or the accounting or tax policies (including changing any
     annual tax accounting period) of the Issuer or its Subsidiaries which
     change is material either to the Issuer and its Subsidiaries, taken as a
     whole, or to any of the Holders from those in effect on June 1, 1998,
     except for changes required by generally accepted accounting principles or
     applicable law or regulation, (x)


                                      38
<PAGE>


     appoint auditors of the Issuer or its Subsidiaries if other than a "big
     six" firm, or (y) remove the auditors of the Issuer or its Subsidiaries;

          (v) Business Combination. Effect any merger, consolidation or any
     other business combination, or any reorganization, recapitalization,
     reclassification, spin-off, partial or complete liquidation, extraordinary
     dividend, split-up, distribution to shareholders or combination of the
     securities of the Issuer or any Subsidiary of the Issuer or any other
     change in capital structure of the Issuer or any Subsidiary of the Issuer
     other than changes specifically permitted pursuant to Sections
     4.02(a)(ii), 4.02(a)(vi), 4.02(a)(vii) or 4.02(a)(viii);

          (vi) Sale of Assets. Sell, assign, lease, exchange, transfer or
     dispose of assets of the Issuer or its Subsidiaries (including any stock
     of any Subsidiary) during any twelve-month period, in one transaction or a
     series of transactions, having a fair market value in the good faith
     determination of the Board of Directors in excess of 10% of Total Assets,
     other than (x) sales of inventory, (y) leases of office space and
     equipment to physicians and (z) sales of goods and services between the
     Issuer and its Subsidiaries or two Subsidiaries of the Issuer, in the case
     of clauses (x) through (z) in the ordinary course of business; provided
     that the parties agree that no sale, assignment, lease, exchange or
     transfer of assets needs to be submitted to the Board of Directors for
     such good faith determination unless the assets being sold in a single
     transaction or a series of related transactions have a fair market value
     in excess of $1,000,000;

          (vii) Acquisitions. Purchase or acquire for its own account any
     ownership interest in any Person or business, whether effected as a
     merger, a purchase, an acquisition of assets or a purchase, pooling or
     acquisition of capital stock or otherwise, other than any such purchase or
     acquisition (x) having a fair market value less than 10% of Total Assets,
     (y) of inventory and supplies in the ordinary course of business or (z)
     specifically permitted or otherwise approved pursuant to the terms of this
     Section 4.02;

          (viii) Dissolution. (u) Dissolve or liquidate, or adopt any plan of
     dissolution or liquidation, (v) consent to or commence any suit,
     proceeding or other action or file a petition or consent to a petition
     under any existing or future law of any jurisdiction relating to
     bankruptcy, insolvency, reorganization of relief of debtors, seeking to
     have an order for relief entered with respect to it, or seeking to
     adjudicate it a bankrupt or insolvent, or seeking reorganization,
     arrangement, adjustment, winding up, liquidation, dissolution, composition
     or other relief with respect to it, or seeking appointment of a receiver,
     liquidator, assignee, trustee, custodian or other similar official for it
     or all or any substantial part of its assets, or (w) make any assignment
     for the benefit of


                                      39
<PAGE>


     creditors, or (x) admit in writing its inability to pay its debts
     generally as they become due, or (y) voluntarily dissolve itself or (z)
     take any corporate action in furtherance of any such action other than, in
     the case of clauses (u) through (y) above, in respect of Subsidiaries of
     the Issuer with a net worth, individually or in the aggregate, not more
     than $1,000,000;

          (ix) Transactions with Affiliates. Except as expressly contemplated
     by this Agreement or as set forth on Schedule 4.02(a)(ix), directly or
     indirectly do any of the following: lease, sell or transfer any property
     or services to or lease or purchase any property or services from, make
     any investment in, make any loan or advance to, or receive any loan,
     advance or investment from, incur or suffer any lien, liability, or
     obligation to, or guaranty, extend credit for, or suffer any liability for
     any obligation of, or modify the terms of any existing transaction or
     arrangement with, or engage in any other transaction or arrangement with,
     or commit to such a transaction or arrangement with, any Affiliate of the
     Issuer or any Management Investor or Affiliate of any Management Investor;
     provided that the foregoing provisions of this Section 4.02(a)(ix) shall
     not prohibit (v) the Issuer or any Subsidiary of the Issuer from declaring
     or paying any lawful dividend, share repurchase or redemption or reduction
     in share capital otherwise permitted to be made, (w) any transaction or
     arrangement between the Issuer and any wholly-owned Subsidiary of the
     Issuer, (x) the Issuer from assessing its Subsidiaries any standard
     intercompany charge or allocation for shared services or obligations in
     the ordinary course of business, (y) any Ancillary Agreement (as defined
     in the Subscription Agreement) or (z) any standard employee benefits made
     generally available to all employees of the Issuer;

          (x) Stock Issuance and Repurchase. Issue, sell, dividend, redeem,
     convert, exchange, repurchase, cancel, retire or otherwise dispose of any
     shares of its capital stock, phantom equity or similar rights or interests
     or any warrants, options or other rights to purchase, substitute for or
     acquire shares of capital stock, phantom equity or similar rights or
     interests or securities convertible into or exchangeable for any shares of
     capital stock, phantom equity or similar rights or interests of the Issuer
     or any of its Subsidiaries, except (w) as otherwise contemplated by any
     Transaction Agreement, (x) Options issued under any Option Plan adopted by
     the Issuer on June 1, 1998 or on the date hereof to purchase Common Shares
     and Common Shares issued upon exercise of any such Options, (y) securities
     issued by a Subsidiary to the Issuer or by one Subsidiary to another
     Subsidiary or (z) issuances of capital stock or other equity securities of
     any Subsidiary of the Issuer to physicians or other healthcare providers
     (or their respective Affiliates) in connection with bona fide joint
     ventures with such Persons.


                                      40
<PAGE>


          (xi) Management. (x) Appoint or remove the Issuer's chief executive
     officer or any individual serving in a like capacity or (y) authorize
     changes to the aggregate cash and equity compensation of the Executive
     Managers.

          (xii) Litigation. Institute, terminate or settle any litigation,
     arbitration, proceeding, dispute or claim asserting claims for damages in
     excess of $1,000,000;

          (xiii) Capital Expenditures. Make or commit to make (x) any
     individual capital expenditure project (regardless of duration) in excess
     of 5% of Total Assets (excluding any capital expenditures previously
     approved as part of any annual budget pursuant to Section 4.02(a)(xvi)) or
     (y) capital expenditures during any fiscal year in excess of an aggregate
     of 5% of Total Assets per annum (excluding any capital expenditures
     previously approved as part of an annual budget pursuant to Section
     4.02(a)(xvi));

          (xiv) Material Contracts. Enter into or amend in any way adverse to
     the Issuer any contract, agreement or obligation (x) which creates a
     liability or involves payments (or is reasonably expected to create a
     liability or involve payments) in excess of 5% of Total Assets, in the
     case of contracts, agreements or obligations for the purchase or sale of
     inventory in the ordinary course of business or 5% of Total Assets, in the
     case of any other contract, agreement or obligation or (y) is otherwise
     material to the Issuer and its Subsidiaries, taken as a whole;

          (xv) Dividends. (x) Pay or declare dividends or distributions on, or
     make any share repurchase or redemption of, or reduction in, the capital
     stock of the Issuer or any of its less-than-wholly owned Material
     Subsidiaries, other than any dividends or distributions on, share
     repurchases or redemptions of, or reductions in, the capital stock of any
     such Subsidiary on a pro rata basis to all equity owners thereof or (y)
     establish or modify policies with respect to the foregoing;

          (xvi) Annual Budget. (x) Adopt or materially modify any annual budget
     or business plan of the Issuer or any long-term strategic plan of the
     Issuer or (y) take any of the actions or make any of the expenditures
     contemplated by any such adoption or material modification not otherwise
     approved by MSCP IV;

          (xvii) Retention of Certain Professionals. Employ or retain on behalf
     of the Issuer or any Subsidiary any investment banker, financial advisor,
     or Person serving in a similar capacity, other than an investment banker,
     advisor or Person approved by MSCP III or MSCP IV prior to or after June
     1, 1998;


                                      41
<PAGE>


          (xviii) Other Transactions. Enter into any other agreement,
     arrangement or transaction which is material to the Issuer and its
     Subsidiaries, taken as a whole, other than agreements, arrangements or
     transactions which (x) pursuant to the terms hereof are specifically
     permitted without prior approval pursuant to this Section 4.02 or (y)
     previously have been approved pursuant to this Section 4.02; or

          (xix) agree or commit to do any of the foregoing.

     (b) The provisions of this Section 4.02 shall terminate on the date on
which the MSCP Funds and their Permitted Transferees cease to own at least 15%
of the number of outstanding Common Shares.

     (c) If MSCP IV does not consent to any adoption or material modification
of a proposed budget or business plan for any fiscal year pursuant to Section
4.02(a)(xvi), the budget or business plan most recently approved by MSCP IV
shall remain in effect as the budget or business plan for such fiscal year
until the next proposed budget, business plan, or material modification is so
approved.

     SECTION 4.03. Financial Information. (a) The Issuer shall cause to be
prepared and delivered to MSCP IV and each other Holder no later than 120 days
after the end of each fiscal year of the Issuer, the following audited
financial statements, prepared in accordance with generally accepted accounting
principles consistently applied and accompanied by the report thereon of the
independent accountants for the Issuer: a consolidated balance sheet of the
Issuer as at the end of such fiscal year and consolidated statements of income
and cash flows for such fiscal year, in each case setting forth in comparative
form the figures for the previous fiscal year and the budgeted figures for such
fiscal year.

     (b) The Issuer shall cause to be prepared and submitted to MSCP IV and
each Holder (other than a MSCP Entity) owning more than 5% of the outstanding
Common Shares (i) within 30 days after the end of each fiscal year of the
Issuer, an annual budget with detail provided to the hospital level and (ii)
within 30 days after the end of each fiscal month of the Issuer, the following
financial statements, prepared in accordance with generally accepted accounting
principles consistently applied (without the need to prepare any notes
thereto): a consolidated balance sheet of the Issuer as at the end of such
fiscal month and the related consolidated statements of income and cash flows
for such fiscal month and for the elapsed portion of the fiscal year ended with
the last day of such month, in each case setting forth in comparative form the
figures for the corresponding periods in the previous fiscal year and budgeted
figures for the periods in such fiscal year.


                                      42
<PAGE>


     (c) The parties hereto agree that MSCP IV may distribute any information
received pursuant to this Section 4.03 to any Holder that is a MSCP Entity.

                                   ARTICLE 5
                                 MISCELLANEOUS

     SECTION 5.01. Headings. The headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning or construction
of any provisions hereof.

     SECTION 5.02. No Inconsistent Agreements; Conflicting Charter or Bylaw
Provision. (a) The Issuer will not hereafter enter into any agreement with
respect to its securities which is inconsistent with or grant rights superior
to the rights granted to the Holders of Registrable Common Shares in this
Agreement. The Issuer has not previously entered into any agreement (currently
in effect) with respect to any of its debt or equity securities granting any
registration rights to any Person.

     (b) Each Holder shall vote its Common Shares or execute written consents,
as the case may be, and take all other actions necessary, to ensure that the
certificate of incorporation, bylaws and other constituent documents of the
Issuer and each Subsidiary (i) facilitate and do not at any time conflict with
any provision of this Agreement and (ii) permit each Holder to receive the
benefits to which each such Holder is entitled under this Agreement.

     SECTION 5.03. Entire Agreement. The Transaction Agreements constitute the
entire agreement and understanding of the parties hereto and thereto in respect
of the subject matter contained herein and therein, and there are no
restrictions, promises, representations, warranties, covenants, or undertakings
with respect to the subject matter hereof or thereof, other than those
expressly set forth or referred to herein or therein. The Transaction
Agreements supersede all prior agreements and understandings between the
parties hereto and thereto with respect to the subject matter hereof and
thereof, including without limitation the letter of intent among the Issuer,
the Executive Managers and Morgan Stanley Capital Partners III, Inc. dated
April 2, 1998.

     SECTION 5.04. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopier) and shall be
deemed to have been duly given or made if sent by telecopy, delivered
personally or sent by registered or certified mail (postage prepaid, return
receipt requested) to such party at its address or telecopier number set forth
on the signature pages hereof, or such other address or telecopier number as
such party may hereinafter specify for the purpose to the party giving such
notice provided notices to the MSCP Entities must also be sent to the following
counsel for the MSCP Entities: Davis Polk & Wardwell, 450 Lexington Avenue, New
York, NY 10017, phone (212) 450-4000, fax (212)450-4800, Attention: John Bick,
Esq. All such notices, requests and other communications shall be deemed


                                      43
<PAGE>


received on the date of receipt by the recipient thereof if received prior to
5:00 p.m. in the place of receipt and such day is a Business Day in the place
of receipt. Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding Business Day in the
place of receipt.

     SECTION 5.05. Applicable Law; Submission to Jurisdiction. This Agreement
shall be construed in accordance with and governed by the laws of the State of
Delaware, without regard to the conflicts of law rules of such state. Each of
the parties hereto hereby consents to the exclusive jurisdiction of the United
States District Court for the District of Delaware and the Chancery Court of
the State of Delaware (and of the appropriate appellate courts therefrom) over
any suit, action or proceeding arising out of or relating to this Agreement.
Each party hereto irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue in any
such court or that any such proceeding which is brought in accordance with this
Section has been brought in an inconvenient forum. Subject to applicable law,
process in any such proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing and subject to applicable law, each party agrees that
service of process on such party as provided in Section 5.04 shall be deemed
effective service of process on such party. Nothing herein shall affect the
right of any party to serve legal process in any other manner permitted by law
or at equity or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction. WITH RESPECT TO A PROCEEDING IN ANY
SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE OTHER
ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY
IN ANY SUCH PROCEEDING.

     SECTION 5.06. Severability. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

     SECTION 5.07. Successors, Assigns, Transferees. The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, executors, administrators, successors and permitted
assigns. Notwithstanding the foregoing, neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Issuer or any Holder, except (i) as specifically provided
pursuant to the terms hereof, (ii) in connection with a Transfer of securities
of the Issuer pursuant to the terms hereof, in which case any Person acquiring
Common Shares who is required by the terms of this Agreement to become a party
hereto shall thenceforth be a "Holder" and (iii) that the


                                      44
<PAGE>


MSCP Funds may assign any of their rights, remedies, obligations or liabilities
hereunder to (or exercise any of the foregoing jointly with) an Affiliate of
the MSCP Funds without the consent of the other parties hereto. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto, and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.

     SECTION 5.08. Amendments; Waivers. (a) No failure or delay on the part of
any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

     (b) Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by the Holders of a majority (or, prior to the issuance of all
Common Shares set forth on Schedule 2.01(b) and Schedule 2.01(c) to the
Subscription Agreement, at least 75%) of the number of outstanding Common
Shares owned by all Holders at such time, or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that no amendment
that would, in any material respect, adversely or uniquely affect such Holder
shall be effective without the prior written consent of such Holder.

     SECTION 5.09. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original with the same effect as if
the signatures thereto and hereto were upon the same instrument.

     SECTION 5.10. Recapitalization, etc. In the event that any capital stock
or other securities are issued in respect of, in exchange for, or in
substitution of, any Common Shares by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Common Shares or any other change in capital
structure of the Issuer, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.

     SECTION 5.11. Remedies. The parties hereto acknowledge and agree that in
the event of any breach of this Agreement, the parties would be irreparably
harmed and could not be made whole by monetary damages. Each party hereto
accordingly agrees (i) not to assert by way of defense or otherwise that a
remedy at law would be adequate, and (ii) that the parties agree, in addition
to any other remedy to which they may be


                                      45
<PAGE>


entitled, that the remedy of specific performance of this Agreement is
appropriate in any action in court.

     SECTION 5.12. Fees and Expenses. Unless otherwise provided herein or in
the other Transaction Agreements, all costs and expenses incurred in connection
with the transactions contemplated by the Transaction Agreements shall be paid
by the party incurring such costs and expenses.

     (b) Notwithstanding anything herein to the contrary, the Issuer shall (i)
bear all the costs and expenses relating to any acquisition by the Issuer or
its Subsidiaries of a hospital, hospital system, healthcare facility or related
assets and (ii) reimburse the MSCP Funds and their Affiliates for the
reasonable fees and expenses incurred by any of them or on their behalf in
connection with any such acquisition; provided that MSCP IV shall, upon the
request of the Issuer, promptly provide an estimate of such reimbursable
expenses.

     SECTION 5.13. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, the Issuer and each of the Holders will use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary or desirable under applicable laws and
regulations to give effect to the terms and conditions of the Transaction
Agreements.

     SECTION 5.14. Restriction on Certain Issuances. Notwithstanding anything
in any Transaction Agreement to the contrary, prior to the purchase by the MSCP
Funds of all of the Common Shares listed opposite the name of the MSCP Funds on
Schedule 2.01(b) and 2.01(c) to the Subscription Agreement, without the consent
of MSCP IV, neither the Issuer nor any of its Subsidiaries shall seek or obtain
any equity or equity-linked financing from, or issue any Common Shares or other
capital stock to, any Person, other than (i) to the owner of a hospital,
hospital system or hospital foundation solely as consideration for the
acquisition by the Issuer of (x) assets owned by such hospital, hospital system
or foundation or (y) capital stock of, or other equity interests in, a Person
owning the assets of such hospital, hospital system or hospital foundation,
(ii) issuances of capital stock or other equity securities of a wholly owned
Subsidiary of the Issuer to the Issuer or another wholly owned Subsidiary of
the Issuer, (iii) issuances of capital stock or other equity securities of any
Subsidiary of the Issuer to physicians or other healthcare providers (or their
respective Affiliates) in connection with bona fide joint ventures with such
Person and (iv) to the Investors pursuant to the terms of the Subscription
Agreement.

     SECTION 5.15. Termination of This Agreement. Upon the consummation of a
Liquidity Event, this Agreement shall terminate and become void and of no
effect with no liability on the part of any party hereto; provided that (i)
nothing in this Section 5.15 shall relieve any party to this Agreement of
liability for a breach prior to such


                                      46
<PAGE>


termination of any of its covenants or agreements contained in this Agreement,
(ii) Sections 5.03, 5.05, 5.11 and 5.12 shall survive any termination of this
Agreement, (iii) Sections 2.01, 2.02, 2.03 and 2.09 (other than Section
2.09(d)) shall survive any termination of this Agreement for so long as is
necessary in order to enable the exercise of any repurchase rights pursuant to
the terms of Section 2.09 (other than Section 2.09(d)) and the consummation of
any such repurchase thereunder and (iv) Section 2.08 shall survive any
termination of this Agreement until the forfeiture of all Common Shares
required to be forfeited pursuant to the terms of such Section.

     SECTION 5.16. Approval of New Option Plan. The Holders, being all of the
shareholders of the Issuer as of the date hereof, hereby approve the Issuer's
adoption of the Vanguard Health Systems, Inc. 2000 Stock Option Plan, in the
form of Exhibit B hereto.

     SECTION 5.17. Amendment to Carry Option Plan. The Holders, being all of
the shareholders of the Issuer as of the date hereof, hereby approve the
amendment to the Carry Option Plan which results from the deletion of Keith
Pitts from Annex III to this Agreement which, in turn, results in Mr. Pitts no
longer being a "Designated Holder" under the Carry Option Plan. Such deletion
results in a reduction in the maximum number of Common Shares reserved for the
grant of awards under the Carry Option Plan by 30 from 29,852 to 29,822. Thus,
the Issuer and the Holders (which include MSCP III and Persons having in excess
of 50% of the Options granted under the Carry Option Plan) hereby amend the
Carry Option Plan by changing the number found on the second line of Section 9
of the Carry Option Plan from "29,852" to "29,822".

     SECTION 5.18. Amendments to 1998 Stock Option Plan. The Holders, being all
of the shareholders of the Issuer as of the date hereof, hereby approve the
Board of Directors amending the Vanguard Health Systems, Inc. 1998 Stock Option
Plan in the following manner:

     (a) The definition of "Subscription Agreement" set forth in Section 2
thereof is deleted in its entirety and replaced with the following new
definition:

     ""Subscription Agreement" means the Amended and Restated Subscription
Agreement dated as of June 1, 2000 among the Company and the investors party
thereto, as it exists on the date hereof."

     (b) The first sentence of Section 5 thereof entitled "Stock" is deleted in
its entirety and replaced with the following new first sentence:

          "The maximum number of shares of Common Stock reserved for the grant
     of Options under the Plan (the "Maximum Share Number") shall be 13,306
     shares of Common Stock; provided, however, that in no event shall the


                                      47
<PAGE>


     number of shares of Common Stock with respect to which Options are granted
     hereunder exceed 50% of the number of shares of Common Stock authorized as
     of the effective date of this Plan."

     SECTION 5.19 Amendments to Voting Proxy; Joinder to Voting Proxy. (a) The
Issuer and the Holders (which include the Proxyholder (as defined in the Voting
Proxy), each Designated Shareholder (as defined in the Voting Proxy) and MSCPP
III) hereby amend the Voting Proxy to delete in Section 1.01(a) the definition
of "Shareholders Agreement" and put in its place the following new definition:

          ""Shareholders Agreement" means the Amended and Restated Shareholders
     Agreement among the Company and the other parties thereto dated as of June
     1, 2000."

     (b) The following Holders, by their execution of a signature page hereto,
join as parties to the Voting Proxy and agree that each of them shall be bound
as a "Designated Shareholder" by all of the provisions of the Voting Proxy:

                                  Mark Brenzel
                                David Culberson
                                 Roger Faculak
                                   Art Layne
                                  Brian Lemon
                          The Gail A. McGuinness Trust

     SECTION 5.20 Amendments to Surviving Shareholders Agreement; Joinder to
Surviving Shareholders Agreement. (a) The definition of "Executive Managers"
set forth in Section 1.01 of the Surviving Shareholders Agreement is deleted in
its entirety and replaced with the following new definition:

     "Executive Managers" means collectively Charles N. Martin, Jr., W.
Lawrence Hough, Joseph D. Moore, Keith B. Pitts and Ronald P. Soltman."

     (b) The following new Section 2.04(c) is added to the Surviving
Shareholders Agreement:

          "(c) No Executive Manager may sell pursuant to Rule 144 (other than
     pursuant to the provisions of paragraph (k) of Rule 144) more than 10% of
     the total number of Common Shares purchased by such Executive Manager
     prior to such time. The provisions of this Section 2.04(c) shall terminate
     once the MSCP Funds own in the aggregate less than 10% of the outstanding
     Common Shares."


                                      48
<PAGE>


     (c) The following new Section 4.16 is added to the Surviving Shareholders
Agreement:

          "Section 4.16. Board of Directors. (a) The Board of Directors shall
     consist of such number of members as may be necessary from time to time in
     order to give effect to the provisions of this Section 4.16, and
     nominations shall be made, and vacancies shall be filled, such that the
     composition of the Board of Directors shall at all times be in accordance
     herewith.

          (b) At all times MSCP III or its Permitted Transferees shall have the
     right to nominate one member of the Board of Directors and Morgan Stanley
     Dean Witter Capital Partners IV, L.P. ("MSCP IV") or its Permitted
     Transferees shall have the right to nominate a second member of the Board
     of Directors.

          (c) MSCP IV or its Permitted Transferees shall have the right to
     appoint one member to each committee of the Board of Directors. The
     Holders and the Issuer agree to use their best efforts to take all actions
     necessary to appoint each such committee member.

          (d) Each Holder and the Issuer agrees, immediately upon request of
     MSCP III or MSCP IV, to execute a shareholder consent with respect to the
     Issuer, or vote its Common Shares at, or nominate persons to be directors
     in connection with, any annual or special meeting of shareholders where
     action with respect to the election of directors is to be taken, in each
     case so as to give effect to the provisions of this Section.

          (e) The Persons entitled under this Section to nominate members of
     the Board of Directors or any committee thereof may at any time revoke the
     nomination as to a particular individual, in which case the Holders will
     take all actions contemplated pursuant to Section 4.16(d) to effect the
     immediate removal of such individual from the Board of Directors, or such
     committee, as the case may be. If as a result of death, disability,
     retirement, resignation, removal or otherwise, there shall exist or occur
     any vacancy on the Board of Directors, or any committee thereof, the
     Persons entitled under this Section to nominate such individual whose
     death, disability, retirement, resignation or removal resulted in such
     vacancy may, in accordance with the terms of this Section, nominate
     another individual to fill such capacity and serve as a director or
     committee member, as the case may be.


                                      49
<PAGE>


          (f) Each Holder agrees that if, at any time, it is then entitled to
     vote for the removal of directors of the Issuer, it will not vote any of
     its Common Shares in favor of the removal of any director who shall have
     been nominated pursuant to Section 4.16 unless the Holder(s) entitled to
     nominate such director shall have consented to such removal in writing.

          (g) The Board of Directors shall have general authority to administer
     the terms of the Surviving Shareholders Agreement.

          (h) The provisions of this Section 4.16 shall terminate once the MSCP
     Funds beneficially own in the aggregate less than 5% of the outstanding
     Common Shares."

     (d) The following Holders, by their execution of a signature page hereto,
join as parties to the Surviving Shareholders Agreement and agree that each of
them shall be bound as a "Holder" by all of the provisions thereof:

                                  Mark Brenzel
                                David Culberson
                                 Roger Faculak
                                   Art Layne
                                  Brian Lemon
                          The Gail A. McGuinness Trust

     SECTION 5.21 Joinder to Letter Agreement. The following Holders, by their
execution of a signature page hereto, join as parties to the Letter Agreement
dated as of June 1, 1998, among the Issuer and the Persons set forth on the
signature pages thereto and agree that each of them shall be bound as an
"Investor" by all of the provisions of said Letter Agreement:

                                  Mark Brenzel
                                David Culberson
                                 Roger Faculak
                                   Art Layne
                                  Brian Lemon
                          The Gail A. McGuinness Trust

     SECTION 5.22 Effectiveness. This Amended and Restated Shareholders
Agreement shall become effective when both of the following have occurred: (1)
this instrument has been executed by the Holders of at least 75% of the number
of outstanding Common Shares owned by all Holders as of the date hereof and (2)
the Subscription Agreement has been executed by the Issuer, Morgan Stanley
Capital Partners III, L.P. and Investors (other than Morgan Stanley Capital
Partners III, L.P.,


                                      50
<PAGE>


its Affiliates and their Permitted Transferees) owning at least 50% of the
Common Shares owned by such Investors as of the date hereof.




                                      51
<PAGE>


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

                              MORGAN STANLEY CAPITAL PARTNERS III, L.P.
                              MORGAN STANLEY CAPITAL INVESTORS, L.P.
                              MSCP III 892 INVESTORS, L.P.

                              By: MSCP III, LLC,
                                  as General Partner of each of the limited
                                  partnerships named above

                              By: Morgan Stanley Capital Partners III, Inc.,
                                  as Member


                              By: /s/
                                 ----------------------------------------------
                                 Alan Fitzpatrick
                                 Address:   1221 Avenue of the Americas
                                            33rd Floor
                                            New York, New York 10017
                                 Telephone: (212) 762-6000
                                 Telecopy:  (212) 762-7951


                              MORGAN STANLEY DEAN WITTER CAPITAL
                              PARTNERS IV, L.P.
                              MORGAN STANLEY DEAN WITTER CAPITAL INVESTORS IV,
                              L.P.
                              MSDW IV 892 INVESTORS, L.P.


                              By: MSDW Capital Partners IV, LLC,
                                  as General Partner of each of the limited
                                  partnerships named above


                              By: MSDW Capital Partners IV, Inc.,
                                  as Member


                              By: /s/
                                 ----------------------------------------------
                                 Alan Fitzpatrick
                                 Address:   1221 Avenue of the Americas
                                            33rd Floor
                                            New York, New York 10017
                                 Telephone: (212) 762-6000
                                 Telecopy:  (212) 762-7951


                                      52
<PAGE>


                              VANGUARD HEALTH SYSTEMS, INC.


                              By: /s/
                                 ----------------------------------------------
                                 Name:      Charles N. Martin, Jr.
                                 Title:     Chairman, President and Chief
                                            Executive Officer
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      Charles N. Martin, Jr.
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      W. Lawrence Hough
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      Joseph D. Moore
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      Keith B. Pitts
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                      53
<PAGE>


                                 /s/
                                 ----------------------------------------------
                                 Name:      Ronald P. Soltman
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      Mark Brenzel
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      Bruce Chafin
                                 Address:   1400 New York Avenue, N.W.
                                            Suite 400
                                            District of Columbia 20005
                                 Telephone: (202) 393-3920
                                 Telecopy:  (202) 393-4130


                                 /s/
                                 ----------------------------------------------
                                 Name:      David Culberson
                                 Address:   3033 West Orange Avenue
                                            Anaheim, CA  92804
                                 Telephone: (714) 229-4000
                                 Telecopy:  (714) 229-6813


                                 /s/
                                 ----------------------------------------------
                                 Name:      Roger Faculak
                                 Address:   7856 East Camino Real
                                            Scottsdale, AZ  85255
                                 Telephone: (480) 419-5737
                                 Telecopy:  (480) 419-5738


                                      54
<PAGE>


                                 /s/
                                 ----------------------------------------------
                                 Name:      Robert E. Galloway
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      John M. Geer
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      Dennis Jacobs
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      James Johnston
                                 Address:   20 Burton Hills Blvd.
                                            Suite 100
                                            Nashville, Tennessee 37215
                                 Telephone: (615) 665-6000
                                 Telecopy:  (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:      Art Layne
                                 Address:   5102 West Campbell Avenue
                                            Phoenix, AZ  85031
                                 Telephone: (623) 848-5100
                                 Telecopy:  (623) 848-5553


                                      55
<PAGE>


                                 /s/
                                 ----------------------------------------------
                                 Name:         Brian Lemon
                                 Address:      3249 South Oak Park Avenue
                                               Berwyn, IL 60402
                                 Telephone:    (708) 783-3001
                                 Telecopy:     (708) 783-3489


                                 THE GAIL A. McGUINNESS TRUST,
                                 as Restated on April 26, 1999


                                 By: /s/
                                    -------------------------------------------
                                    Name:      John Luke McGuinness, Jr.,
                                               Co-Trustee


                                 By: /s/
                                    -------------------------------------------
                                    Name:      Gail A. McGuinness, Co-Trustee
                                    Address:   3249 South Oak Park Avenue
                                               Berwyn, IL 60402
                                    Telephone: (708) 783-3001
                                    Telecopy:  (708) 783-3489


                                 /s/
                                 ----------------------------------------------
                                 Name:         Phillip W. Roe
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:         Anne L. Sanford
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6197


                                      56
<PAGE>


                                 /s/
                                 ----------------------------------------------
                                 Name:         Tony W. Simpson
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:         James H. Spalding
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:         Alan G. Thomas
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:         Thomas M. Ways
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6197


                                 /s/
                                 ----------------------------------------------
                                 Name:         Clifford Adlerz
                                 Address:      3401 West End Avenue
                                               Suite 760
                                               Nashville, Tennessee 37203
                                 Telephone:    (615) 460-1681
                                 Telecopy:     (615) 460-1690


                                 /s/
                                 ----------------------------------------------
                                 Name:         Ray Denson
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6449


                                      57
<PAGE>


                                 /s/
                                 ----------------------------------------------
                                 Name:         Paula Y. Eleazar
                                 Address:      c/o Dwane Johansen
                                               558 John's Pass Ave.
                                               Maderia Beach, FL 33708
                                 Telephone:    (727) 393-0701
                                 Telecopy:     (615) 740-1157


                                 /s/
                                 ----------------------------------------------
                                 Name:         Jerry M. Eyler
                                 Address:      3401 West End Avenue
                                               Suite 760
                                               Nashville, Tennessee 37205
                                 Telephone:    (615) 234-5908
                                 Telecopy:     (615) 234-5999


                                 /s/
                                 ----------------------------------------------
                                 Name:         Richard Francis
                                 Address:      3401 West End Avenue
                                               Suite 760
                                               Nashville, Tennessee 37203
                                 Telephone:    (615) 460-1682
                                 Telecopy:     (615) 460-1690


                                 /s/
                                 ----------------------------------------------
                                 Name:         Anthony C. Krayer
                                 Address:      340 West Tropical Way
                                               Plantation, Florida 33317
                                 Telephone:    (954) 985-3451
                                 Telecopy:     (954) 985-6193


                                 /s/
                                 ----------------------------------------------
                                 Name:         Carol A. Murdock
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6499


                                      58
<PAGE>


                              MPSW PARTNERS


                              By: /s/
                                 ----------------------------------------------
                                 Name:         Morton Pierce
                                 Title:        Managing Partner
                                 Address:      1301 Avenue of the Americas
                                               New York, New York  10019
                                 Telephone:    (212) 259-8000
                                 Telecopy:     (212) 259-6333


                                 /s/
                                 ----------------------------------------------
                                 Name:         Carl F. Chafin
                                 Address:      10801 Ramshorn Rd.
                                               Midlothian, Virginia 23113
                                 Telephone:    (804) 330-4383
                                 Telecopy:     (202) 393-4130


                                 /s/
                                 ----------------------------------------------
                                 Name:         Mark Price
                                 Address:      20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                 Telephone:    (615) 665-6000
                                 Telecopy:     (615) 665-6399


                                 /s/
                                 ----------------------------------------------
                                 Name:         William V.B. Webb
                                 Address:      3401 West End Avenue
                                               Suite 760
                                               Nashville, Tennessee 37205
                                 Telephone:    (615) 234-5905
                                 Telecopy:     (615) 234-5999


                                 /s/
                                 ----------------------------------------------
                                 Name:         Harold H. Pilgrim, Jr.
                                 Address:      2503 Lakeview Drive
                                               Decatur, AL 35601
                                 Telephone:    (205) 355-6394
                                 Telecopy:     (205) 355-4674


                                      59
<PAGE>


                                 WILLIAM LAWRENCE HOUGH
                                 GRANTOR RETAINED ANNUITY TRUST


                                 By: /s/
                                    -------------------------------------------
                                    Name:      Leslie J. Hough
                                    Title:     Trustee
                                    Address:   20 Burton Hills Blvd.
                                               Suite 100
                                               Nashville, Tennessee 37215
                                    Telephone: (615) 665-6000
                                    Telecopy:  (615) 665-6197


                                      60
<PAGE>


                                                                     EXHIBIT A

                         FORM OF AGREEMENT TO BE BOUND

                                     [Date]

       To the Parties to the Amended and Restated Shareholders Agreement
       dated as of June 1, 2000 and the Surviving Shareholders Agreement,
       dated as of June 1, 1998

Ladies and Gentlemen:

     Reference is made to (i) the Amended and Restated Shareholders Agreement
dated as of June 1, 2000 (the "Shareholders Agreement") among Vanguard Health
Systems, Inc., Morgan Stanley Capital Partners III, L.P., MSCP III 892
Investors, Morgan Stanley Capital Investors, L.P., L.P., Morgan Stanley Dean
Witter Capital Partners IV, L.P., Morgan Stanley Dean Witter Capital Investors
IV, L.P., MSDW 892 Investors, L.P., the other Persons listed on the signature
pages thereof and each other Person who has or shall become a party to the
Shareholders Agreement as provided therein and (ii) the Surviving Shareholders
Agreement dated as of June 1, 1998 (the "Surviving Shareholders Agreement")
among each of the parties to the Shareholders Agreement. Capitalized terms used
herein and not defined have the meanings ascribed to them in the Shareholders
Agreement.

     In consideration of the covenants and agreements contained in the
Shareholders Agreement and the Surviving Shareholders Agreement, the
undersigned hereby confirms and agrees that it shall be bound as a "Holder" by
all of the provisions of the Shareholders Agreement and of the Surviving
Shareholders Agreement.

     This letter shall be construed and enforced in accordance with the
internal laws of the State of Delaware.

                                            Very truly yours,


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


                                      A-1
<PAGE>


                                                                        ANNEX I

               Allocation of Initial Shares and Initial Options


<TABLE>
                                         Initial Shares                          Initial Options
                               -------------------------------         ---------------------------------
   Management Investor         No. of Shares        % of Total         No. of Options     Aggregate Cost
   -------------------         -------------        ----------         --------------     --------------
<S>                             <C>                 <C>                   <C>               <C>
Martin....................        9,151              37.834%                 587          $  898,733.39
Hough Trust...............        3,659              15.128%                   0                   0.00
Hough.....................            0               0.000%                 359             549,651.26
Moore.....................        3,659              15.128%                 310             474,629.22
Soltman...................        3,136              12.966%                 228             349,082.14
Thomas....................          654               2.704%                 146             223,535.05
Chafin....................          654               2.704%                 163             249,563.11
Roe.......................          654               2.704%                 163             249,563.11
Johnston..................          654               2.704%                 146             223,535.05
Galloway..................          654               2.704%                 146             223,535.05
Simpson...................          328               1.356%                  97             148,513.01
Spalding..................          328               1.356%                  97             148,513.01
Sanford...................          328               1.356%                  97             148,513.01
Geer......................          328               1.356%                  81             124,016.02
Ways......................            0               0.000%                 695                   0.00
Jacobs....................            0               0.000%                  81             124,016.02
Pitts.....................            0               0.000%                   0                   0.00
McGuinness................            0               0.000%                   0                   0.00
Lemon.....................            0               0.000%                   0                   0.00
Culberson.................            0               0.000%                   0                   0.00
Brenzel...................            0               0.000%                   0                   0.00
Layne.....................            0               0.000%                   0                   0.00
Faculak...................            0               0.000%                   0                   0.00
                              -------------------------------------------------------------------------
     Total................       24,187             100.000%               3,396          $4,135,398.45
                                 ======             ========               =====          =============
</TABLE>



<PAGE>


                                                                       ANNEX II


                          Forfeiture of Initial Shares

                                                         Percentage of
                                                 Initial Shares to be Forfeited
Annual Revenues for the 12 Months Immediately          by Each Management
  Preceding the Date of Determination ($MM)                 Investor
---------------------------------------------    ------------------------------




                           [See Separate Attachment]


<PAGE>


                                                                      ANNEX III


                          Initial Designated Holders
                          ==========================
                                  Cliff Adlerz
                                 Carl F. Chafin
                                 Raymond Denson
                                Paula Y. Eleazer
                                 Jerry M. Eyler
                                Richard Francis
                               Anthony C. Krayer
                                 MPSW Partners
                                 Carol Murdock
                             Harold H. Pilgrim, Jr.
                                   Mark Price
                               William V.B. Webb