exv10w5






Exhibit 10.5




SECURITY AND PLEDGE AGREEMENT





	 	 	THIS SECURITY AND PLEDGE AGREEMENT (this “Agreement”) is entered into as of April 1, 2011
among the parties identified as “Obligors” on the signature pages hereto and such other parties
that may become Obligors hereunder after the date hereof (each individually an “Obligor” and
collectively the “Obligors”), and BANK OF AMERICA, N.A., in its capacity as administrative agent
(in such capacity, the “Administrative Agent”) for the holders of the Secured Obligations (defined
below).





RECITALS




     WHEREAS, pursuant to the Credit Agreement (as amended, modified, supplemented, increased,
extended, restated, refinanced and replaced from time to time, the “Credit Agreement”) dated as of
the date hereof among Acadia Healthcare Company, LLC, a Delaware limited liability company, the
Guarantors identified therein, the Lenders identified therein and the Administrative Agent, the
Lenders have agreed to make Loans and issue Letters of Credit upon the terms and subject to the
conditions set forth therein; and



     WHEREAS, this Agreement is required by the terms of the Credit Agreement.



     NOW, THEREFORE, in consideration of these premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:



     1. Definitions.



     (a) Capitalized terms used and not otherwise defined herein shall have the meanings ascribed
to such terms in the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect from time to time in the State of New York except as such terms may be
used in connection with the perfection of the Collateral and then the applicable jurisdiction with
respect to such affected Collateral shall apply (the “UCC”): Accession, Account, Adverse Claim,
As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Consumer Goods, Deposit Account,
Document, Electronic Chattel Paper, Equipment, Farm Products, Financial Asset, Fixtures, General
Intangible, Goods, Instrument, Inventory, Investment Company Security, Investment Property,
Letter-of-Credit Right, Manufactured Home, Proceeds, Securities Account, Security Entitlement,
Security, Software, Supporting Obligation and Tangible Chattel Paper.



     (b) In addition, the following terms shall have the meanings set
forth below:

         “Collateral” has the meaning provided in Section 2
hereof.




     “Copyright License” means any written agreement, naming any Obligor as
licensor, granting any right under any Copyright.




     “Copyrights” means (a) all registered United States copyrights in all Works, now
existing or hereafter created or acquired, all registrations and recordings thereof, and
all applications in connection therewith, including, without limitation, registrations,
recordings and applications in the United States Copyright Office, and (b) all renewals
thereof.




     “Patent License” means any agreement, whether written or oral, providing for the grant
by or to a Obligor of any right to manufacture, use or sell any invention covered by a
Patent.



 









 






     “Patents” means (a) all letters patent of the United States or any other country and
all reissues and extensions thereof, and (b) all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof.




     “Pledged Equity” means, with respect to each Obligor, (i) 100% of the issued and
outstanding Equity Interests of each Domestic Subsidiary that is directly owned by such
Obligor and (ii) 65% (or such greater percentage that, due to a change in an applicable Law
after the date hereof, (A) could not reasonably be expected to cause the undistributed
earnings of such Foreign Subsidiary as determined for United States federal income tax
purposes to be treated as a deemed dividend to such Foreign Subsidiary’s United States
parent and (B) could not reasonably be expected to cause any material adverse tax
consequences) of the issued and outstanding Equity Interests entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity
Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in
each Foreign Subsidiary that is directly owned by such Obligor, including the Equity
Interests of the Subsidiaries owned by such Obligor as set forth on Schedule 1
hereto, in each case together with the certificates (or other agreements or instruments), if
any, representing such Equity Interests, and all options and other rights, contractual or
otherwise, with respect thereto, including, but not limited to, the following:




     (1) all Equity Interests representing a dividend thereon, or representing a
distribution or return of capital upon or in respect thereof, or resulting from a
stock split, revision, reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the holder thereof, or
otherwise in respect thereof; and




     (2) in the event of any consolidation or merger involving the issuer thereof
and in which such issuer is not the surviving Person, all shares of each class of
the Equity Interests of the successor Person formed by or resulting from such
consolidation or merger, to the extent that such successor Person is a direct
Subsidiary of an Obligor.




     “Secured Obligations” means, without duplication, (a) all Obligations and (b)
all costs and expenses incurred in connection with enforcement and collection of the
Obligations, including the fees, charges and disbursements of counsel in accordance with
Section 11.04(a) of the Credit Agreement.




     “Trademark License” means any agreement, written or oral, providing for the
grant by or to an Obligor of any right to use any Trademark.




     “Trademarks” means (a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos and other
source or business identifiers, and the goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any state thereof or any
other country or any political subdivision thereof, or otherwise and (b) all renewals
thereof.




     “Work” means any work that is subject to copyright protection pursuant to Title 17 of
the United States Code.



     2. Grant of Security Interest in the Collateral. To secure the prompt payment in
full when due,
whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Secured
Obligations, each Obligor hereby grants to the Administrative Agent, for the benefit of the holders
of the Secured Obligations, a



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continuing security interest in, and a right to set off against, any and all right, title and
interest of such Obligor in and to all of the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the “Collateral”): (a) all Accounts; (b) all cash and
currency; (c) all Chattel Paper; (d) those certain Commercial Tort Claims set forth on Schedule
2 hereto; (e) all Copyrights; (f) all Copyright Licenses; (g) all Deposit Accounts; (h) all
Documents; (i) all Equipment; (j) all Fixtures; (k) all General Intangibles; (1) all Instruments;
(m) all Inventory; (n) all Investment Property; (o) all Letter-of-Credit Rights; (p) all Patents;
(q) all Patent Licenses; (r) all Pledged Equity; (s) all Software; (t) all Supporting Obligations;
(u) all Trademarks; (v) all Trademark Licenses; and (w) all Accessions and all Proceeds of any and
all of the foregoing.




     Notwithstanding anything to the contrary contained herein, the security interests granted
under this Agreement shall not extend to (a) any Excluded Account, (b) any vehicles or rolling
stock, (c) unless requested by the Administrative Agent or the Required Lenders, any IP Rights for
which a perfected Lien thereon is not effected either by filing of a Uniform Commercial Code
financing statement or by appropriate evidence of such Lien being filed in either the United States
Copyright Office or the United States Patent and Trademark Office, (d) the Equity Interests of any
Foreign Subsidiary to the extent not required to be pledged to secure the Obligations pursuant to
Section 7.13(a) of the Credit Agreement, (e) any property which, subject to the terms of Section
8.09 of the Credit Agreement, is subject to a Lien of the type described in Section 8.01(i) of the
Credit Agreement pursuant to documents which prohibit such Obligor from granting any other Liens in
such property and (f) any rights or interest in any lease, license, contract or other agreement of
any Obligor if the grant of a security interest in such lease, license, contract or other agreement
in the manner contemplated by this Agreement is prohibited under the terms of such lease, license,
contract or other agreement or under applicable Law or would result in default thereunder, the
termination thereof or give the other parties thereto the right to terminate, accelerate or
otherwise alter such Obligor’s rights, titles and interests thereunder (including upon the giving
of notice or the lapse of time or both), in each case except to the extent that (i) such
prohibition could not be rendered ineffective pursuant to the applicable Uniform Commercial Code or
any other applicable Law (including Debtor Relief Laws) or principles of equity and (ii) such
prohibition has not been waived, terminated or eliminated (after the Borrower has used commercially
reasonable efforts to obtain such consent upon the request of the Administrative Agent).



     The Obligors and the Administrative Agent, on behalf of the holders of the Secured
Obligations, hereby acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured Obligations,
whether now existing or hereafter arising and (ii) is not to be construed as an assignment of any
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses.



     3. Representations and Warranties. Each Obligor hereby represents and warrants to
the
Administrative Agent, for the benefit of the holders of the Secured Obligations, that:




     (a) Ownership. Each Obligor is the legal and beneficial owner of its Collateral
or has other requisite rights in its Collateral and has the right to pledge, sell, assign or
transfer the same. There exists no Adverse Claim with respect to the Pledged Equity of such
Obligor.




     (b) Security Interest/Priority. This Agreement creates a valid security
interest in favor of the Administrative Agent, for the benefit of the holders of the Secured
Obligations, in the Collateral of such Obligor and, when properly perfected by filing, shall
constitute a valid and perfected, first priority security interest in such Collateral
(including all uncertificated Pledged Equity consisting of partnership or limited liability
company interests that do not constitute Securities), to the extent such security interest
can be perfected by filing under the UCC, free and clear of all Liens except for Permitted
Liens. The taking possession by the Administrative Agent



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of the certificated securities (if any) evidencing the Pledged Equity and all other
Instruments constituting Collateral will perfect and establish the first priority
of the Administrative Agent’s security interest in all the Pledged Equity evidenced
by such certificated securities and such Instruments. With respect to any
Collateral consisting of a Deposit Account, Security Entitlement or held in a
Securities Account, upon execution and delivery by the applicable Obligor, the
applicable Securities Intermediary and the Administrative Agent of an agreement
granting control to the Administrative Agent over such Collateral, the
Administrative Agent shall have a valid and perfected, first priority security
interest in such Collateral.





     (c) Types of Collateral. None of the Collateral consists of, or is the
Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured
Homes or standing timber.




     (d) Equipment and Inventory. With respect to any Equipment and/or
Inventory of an Obligor, each such Obligor has exclusive possession and control of
such Equipment and Inventory of such Obligor except for (i) Equipment leased by such
Obligor as a lessee, (ii) Equipment or Inventory in transit with common carriers or
(iii) Equipment absent for repair or refurbishment or absent for other bona fide
business purposes. No Inventory of an Obligor is held by a Person other than an
Obligor pursuant to consignment, sale or return, sale on approval or similar
arrangement.




     (e) Authorization of Pledged Equity. All Pledged Equity is duly
authorized and validly issued, is fully paid and, to the extent applicable,
nonassessable and is not subject to the preemptive rights, warrants, options or other
rights to purchase of any Person, or equityholder, voting trust or similar agreements
outstanding with respect to, or property that is convertible, into, or that requires
the issuance and sale of, any of the Pledged Equity, except to the extent expressly
permitted under the Loan Documents.




     (f)
No Other Equity Interests, Instruments, Etc. As of the Closing Date,
no Obligor owns any certificated Equity Interests in any Subsidiary that are required
to be pledged and delivered to the Administrative Agent hereunder other than as set
forth on Schedule 1 hereto, and all such certificated Equity Interests have
been delivered to the Administrative Agent.




     (g) Partnership and Limited Liability Company Interests. Except as
previously disclosed to the Administrative Agent in writing, none of the Collateral
consisting of an interest in a partnership or a limited liability company (i) is
dealt in or traded on a securities exchange or in a securities market, (ii) by its
terms expressly provides that it is a Security governed by Article 8 of the UCC,
(iii) is an Investment Company Security, (iv) is held in a Securities Account or (v)
constitutes a Security or a Financial Asset.




     (h)
Contracts; Agreements; Licenses. The Obligors have no material
contracts, agreements or licenses which constitute Collateral which prevent the
granting of a security interest therein.




     (i) Consents; Etc. There are no restrictions in any Organization
Document governing
any Pledged Equity or any other document related thereto which would limit or
restrict (i) the grant of a Lien pursuant to this Agreement on such Pledged Equity,
(ii) the perfection of such Lien or (iii) the exercise of remedies in respect of
such perfected Lien in the Pledged Equity as contemplated by this Agreement. Except
for (i) the filing or recording of UCC financing statements, (ii) the filing of
appropriate notices with the United States Patent and Trademark Office and the
United States Copyright Office, (iii) obtaining control to perfect
the Liens created by this Agreement (to the extent required under Section 4(a)
hereof), (iv) such actions as may be required by Laws affecting the offering and
sale of securities, (v) such actions as may be required by applicable foreign Laws



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affecting the pledge of the Pledged Equity of Foreign Subsidiaries and (vi) consents,
authorizations, filings or other actions which have been obtained or made, no consent or
authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental
Authority and no consent of any other Person (including, without limitation, any stockholder,
member or creditor of such Obligor), is required for (A) the grant by such Obligor of the security
interest in the Collateral granted hereby or for the execution, delivery or performance of this
Agreement by such Obligor, (B) the perfection of such security interest (to the extent such
security interest can be perfected by filing under the UCC, the granting of control (to the extent
required under Section 4(a) hereof) or by filing an appropriate notice with the United States
Patent and Trademark Office or the United States Copyright Office) or (C) the exercise by the
Administrative Agent or the holders of the Secured Obligations of the rights and remedies provided
for in this Agreement.




     (j) Commercial Tort Claims. As of the Closing Date, no Obligor has any
Commercial Tort Claims seeking damages in excess of $100,000 other than as set forth on
Schedule 2 hereto.




4. Covenants. Each Obligor covenants that until Satisfaction in Full, such Obligor shall:




     (a) Instruments/Chattel Paper/Pledged Equity/Control.




     (i) If any amount in excess of $100,000 payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, or if
any property constituting Collateral shall be stored or shipped subject to a Document,
ensure that such Instrument, Tangible Chattel Paper or Document is either in the possession
of such Obligor at all times or, if requested by the Administrative Agent to perfect its
security interest in such Collateral, is delivered to the Administrative Agent duly
endorsed in a manner satisfactory to the Administrative Agent. Such Obligor shall ensure
that any Collateral consisting of Tangible Chattel Paper is marked with a legend acceptable
to the Administrative Agent indicating the Administrative Agent’s security interest in such
Tangible Chattel Paper.




     (ii) Deliver to the Administrative Agent promptly upon the receipt thereof by or on
behalf of an Obligor, all certificates and instruments constituting Pledged Equity. Prior
to delivery to the Administrative Agent, all such certificates constituting Pledged Equity
shall be held in trust by such Obligor for the benefit of the Administrative Agent pursuant
hereto. All such certificates representing Pledged Equity shall be delivered in suitable
form for transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in Exhibit 4(a)
hereto.




     (iii) Execute and deliver, and use commercially reasonable efforts to cause third
parties (if necessary) to execute and deliver all agreements, assignments, instruments or
other documents as reasonably requested by the Administrative Agent for the purpose of
obtaining and maintaining control with respect to any Collateral consisting of (i) Deposit
Accounts, (ii) Investment Property, (iii) Letter-of-Credit Rights and (iv) Electronic
Chattel Paper.




     (b)
Filing of Financing Statements, Notices, etc. Each Obligor shall execute and
deliver to the Administrative Agent such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of existing
documents, as the Administrative Agent may reasonably request) and do all such other things as
the Administrative Agent may reasonably deem necessary or appropriate (i) to assure to the
Administrative Agent its



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security interests hereunder, including (A) such instruments as the Administrative Agent may from
time to time reasonably request in order to perfect and maintain the security interests granted
hereunder in accordance with the UCC, (B) with regard to Copyrights, a Notice of Grant of Security
Interest in Copyrights in the form of Exhibit 4(c)(i), (C) with regard to Patents, a Notice
of Grant of Security Interest in Patents for filing with the United States Patent and Trademark
Office in the form of Exhibit 4(c)(ii) hereto and (D) with regard to Trademarks, a Notice of Grant
of Security Interest in Trademarks for filing with the United States Patent and Trademark Office in
the form of Exhibit 4(c)(iii) hereto, (ii) to consummate the transactions contemplated
hereby and (iii) to otherwise protect and assure the Administrative Agent of its rights and
interests hereunder. Furthermore, each Obligor also hereby irrevocably, until Satisfaction in Full,
makes, constitutes and appoints the Administrative Agent, its nominee or any other person whom the
Administrative Agent may designate, as such Obligor’s attorney in fact with full power and for the
limited purpose to sign in the name of such Obligor any financing statements, or amendments and
supplements to financing statements, renewal financing statements, notices or any similar documents
which in the Administrative Agent’s reasonable discretion would be necessary or appropriate in
order to perfect and maintain perfection of the security interests granted hereunder, such power,
being coupled with an interest, being and remaining irrevocable until Satisfaction in Full. Each
Obligor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any
such financing statement is sufficient for filing as a financing statement by the Administrative
Agent without notice thereof to such Obligor wherever the Administrative Agent may in its sole
discretion desire to file the same.




     (c) Collateral Held by Warehouseman, Bailee, etc. If any Collateral is at any time in
the possession or control of a warehouseman, bailee or any agent or processor of such Obligor and
the Administrative Agent so requests (i) notify such Person in writing of the Administrative
Agent’s security interest therein, (ii) instruct such Person to hold all such Collateral for the
Administrative Agent’s account and subject to the Administrative Agent’s instructions and (iii) use
commercially reasonable efforts to obtain a written acknowledgment from such Person that it is
holding such Collateral for the benefit of the Administrative Agent.




     (d)
Commercial Tort Claims. (i) Within ten (10) business days, promptly forward to the
Administrative Agent an updated Schedule 2 listing any and all Commercial Tort Claims by or
in favor of such Obligor seeking damages in excess of $100,000 and (ii) execute and deliver such
statements, documents and notices and do and cause to be done all such things as may be reasonably
required by the Administrative Agent, or required by Law to create, preserve, perfect and maintain
the Administrative Agent’s security interest in any Commercial Tort Claims initiated by or in favor
of any Obligor.




     (e) Books and Records. Mark its books and records (and shall cause the issuer of the
Pledged Equity of such Obligor to mark its books and records) to reflect the security interest
granted pursuant to this Agreement.




     (f) Nature of Collateral. At all times maintain the Collateral as personal property
and not affix any of the Collateral to any real property in a manner which would change its nature
from personal property to real property or a Fixture to real property, unless the Administrative
Agent shall have a perfected Lien on such Fixture or real property.




     (g) Issuance or Acquisition of Equity Interests in Partnership or Limited Liability
Company. Not without executing and delivering, or causing to be executed and delivered, to the
Administrative Agent such agreements, documents and instruments as the Administrative Agent may
reasonably require, issue or acquire any Pledged Equity consisting of an interest in a partnership
or a limited liability company that (i) is dealt in or traded on a securities exchange or



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in a securities market, (ii) by its terms expressly provides that it is a Security
governed by Article 8 of the UCC, (iii) is an Investment Company Security, (iv) is held in
a Securities Account or (v) constitutes a Security or a Financial Asset.



     5. Authorization to File Financing Statements. Each Obligor hereby authorizes
the Administrative Agent to prepare and file such financing statements (including continuation
statements) or amendments thereof or supplements thereto or other instruments as the Administrative
Agent may from time to time deem necessary in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC (including authorization to describe the Collateral as
“all personal property”, “all assets” or words of similar meaning).



     6. Advances. On failure of any Obligor to perform any of the covenants and
agreements contained herein, the Administrative Agent may, at its sole option and in its sole
discretion, after five (5) days written notice to the Obligors, perform the same and in so doing
may expend such sums as the Administrative Agent may reasonably deem advisable in the performance
thereof, including, without limitation, the payment of any insurance premiums, the payment of any
taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending
against any adverse claim and all other expenditures which the Administrative Agent may make for
the protection of the security hereof or which may be compelled to make by operation of Law. All
such sums and amounts so expended shall be repayable by the Obligors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are expended at the Default Rate. No
such performance of any covenant or agreement by the Administrative Agent on behalf of any Obligor,
and no such advance or expenditure therefor, shall relieve the Obligors of any Default or Event of
Default. The Administrative Agent may make any payment hereby authorized in accordance with any
bill, statement or estimate procured from the appropriate public office or holder of the claim to
be discharged without inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by an Obligor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with GAAP.



     7. Remedies.



     (a) General Remedies. During the continuation of an Event of Default, the
Administrative Agent shall have, in addition to the rights and remedies provided herein, in the
Loan Documents, in any other documents relating to the Secured Obligations, or by Law (including,
but not limited to, levy of attachment, garnishment and the rights and remedies set forth in the
UCC of the jurisdiction applicable to the affected Collateral), the rights and remedies of a
secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where
the rights and remedies are asserted and regardless of whether the UCC applies to the affected
Collateral), and further, the Administrative Agent may, with or without judicial process or the
aid and assistance of others, (i) enter on any premises on which any of the Collateral may be
located and, without resistance or interference by the Obligors, take possession of the
Collateral, (ii) dispose of any Collateral on any such premises, (iii) require the Obligors to
assemble and make available to the Administrative Agent at the expense of the Obligors any
Collateral at any place and time designated by the Administrative Agent which is reasonably
convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of
effecting sale or other disposition thereof, and/or (v) without demand and without advertisement,
notice, hearing or process of law, all of which each of the Obligors hereby waives to the fullest
extent permitted by Law, at any place and time or times, sell and deliver any or all Collateral
held by or for it at public or private sale (which in the case of a private sale of Pledged
Equity, shall be to a restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not with a view to
the distribution or resale thereof), at any exchange or broker’s board or elsewhere, by one or
more contracts, in one or more parcels, for cash,



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upon credit or otherwise, at such prices and upon such terms as the Administrative Agent deems
advisable, in its sole discretion (subject to any and all mandatory legal requirements).
Each Obligor acknowledges that any such private sale may be at prices and on terms less
favorable to the seller than the prices and other terms which might have been obtained at
a public sale and, notwithstanding the foregoing, agrees that such private sale shall be
deemed to have been made in a commercially reasonable manner and, in the case of a sale
of Pledged Equity, that the Administrative Agent shall have no obligation to delay sale of
any such securities for the period of time necessary to permit the issuer of such securities
to register such securities for public sale under the Securities Act of 1933. Neither the
Administrative Agent’s compliance with applicable Law nor its disclaimer of warranties
relating to the Collateral shall be considered to adversely affect the commercial
reasonableness of any sale. To the extent the rights of notice cannot
be legally waived hereunder, each Obligor agrees that any requirement of reasonable notice shall be met if such
notice, specifying the place of any public sale or the time after which any private sale
is to be made, is personally served on or mailed, postage prepaid, to the Obligors in
accordance with the notice provisions of Section 11.02 of the Credit Agreement at
least 10 days before the time of sale or other event giving rise to the requirement of such notice.
The Administrative Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Obligor further
acknowledges and agrees that any offer to sell any Pledged Equity which has been (i)
publicly advertised on a bona fide basis in a newspaper or other publication of general
circulation in the financial community of New York, New York (to the extent that such
offer may be advertised without prior registration under the Securities Act of 1933), or
(ii) made privately in the manner described above shall be deemed to involve a “public sale”
under the UCC, notwithstanding that such sale may not constitute a “public offering” under the
Securities Act of 1933, and the Administrative Agent may, in such event, bid for the
purchase of such securities. The Administrative Agent shall not be obligated to make any
sale or other disposition of the Collateral regardless of notice having been given. To
the extent permitted by applicable Law, any holder of Secured Obligations may be a
purchaser at any such sale. To the extent permitted by applicable Law, each of the
Obligors hereby waives all of its rights of redemption with respect to any such sale. Subject
to the provisions of applicable Law, the Administrative Agent may postpone or cause the
postponement of the sale of all or any portion of the Collateral by announcement at the
time and place of such sale, and such sale may, without further notice, to the extent
permitted by Law, be made at the time and place to which the sale was postponed, or the
Administrative Agent may further postpone such sale by announcement made at such time and place.




     (b) Remedies relating to Accounts. During the continuation of an Event
of Default, whether or not the Administrative Agent has exercised any or all of its
rights and remedies hereunder, (i) each Obligor will promptly upon request of the
Administrative Agent instruct all account debtors to remit all payments in respect
of Accounts to a mailing location selected by the Administrative Agent and (ii) the
Administrative Agent shall have the right to enforce any Obligor’s rights against
its customers and account debtors, and the Administrative Agent or its designee may
notify any Obligor’s customers and account debtors that the Accounts of such
Obligor have been assigned to the Administrative Agent or of the Administrative
Agent’s security interest therein, and may (either in its own name or in the name
of an Obligor or both) demand, collect (including without limitation by way of a
lockbox arrangement), receive, take receipt for, sell, sue for, compound, settle,
compromise and give acquittance for any and all amounts due or to become due on any
Account, and, in the Administrative Agent’s discretion, file any claim or take any
other action or proceeding to protect and realize upon the security interest of the
holders of the Secured Obligations in the Accounts. Each Obligor acknowledges and
agrees that the Proceeds of its Accounts remitted to or on behalf of the
Administrative Agent in accordance with the provisions hereof shall be solely for
the Administrative Agent’s own convenience and that such Obligor shall not have any
right, title or interest in such Accounts or in any such other amounts except as
expressly provided herein. Neither the Administrative Agent nor the holders of the
Secured Obligations shall have any liability or responsibility to any Obligor for
acceptance of a check, draft or other order for payment of money bearing the
legend “payment in full” or words of similar import or any other restrictive
legend or endorsement or be responsible for determining the correctness of any



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remittance. Furthermore, during the continuation of an Event of Default, (i) the Administrative
Agent shall have the right, but not the obligation, to make test verifications of the Accounts in
any manner and through any medium that it reasonably considers advisable, and the Obligors shall
furnish all such assistance and information as the Administrative Agent may require in connection
with such test verifications, (ii) upon the Administrative Agent’s request and at the expense of
the Obligors, the Obligors shall cause independent public accountants or others satisfactory to
the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations,
aging and test verifications of, and trial balances for, the Accounts and (iii) the Administrative
Agent in its own name or in the name of others may communicate with account debtors on the
Accounts to verify with them to the Administrative Agent’s satisfaction the existence, amount and
terms of any Accounts.




     (c) Deposit Accounts. Upon the occurrence of an Event of Default and during
continuation thereof, the Administrative Agent may prevent withdrawals or other dispositions of
funds in Deposit Accounts maintained with the Administrative Agent.



     (d) Access. In addition to the rights and remedies hereunder, during the
continuation of an Event of Default, the Administrative Agent shall have the right to enter and
remain upon the various premises of the Obligors without cost or charge to the Administrative
Agent, and use the same, together with materials, supplies, books and records of the Obligors for
the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting
the sale of the Collateral, whether by foreclosure, auction or otherwise. In addition, the
Administrative Agent may remove Collateral, or any part thereof, from such premises and/or any
records with respect thereto, in order to effectively collect or liquidate such Collateral.



     (e) Nonexclusive Nature of Remedies. Failure by the Administrative Agent or the
holders of the Secured Obligations to exercise any right, remedy or option under this Agreement,
any other Loan Document, any other document relating to the Secured Obligations, or as provided by
Law, or any delay by the Administrative Agent or the holders of the Secured Obligations in
exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver
hereunder shall be effective unless it is in writing, signed by the party against whom such waiver
is sought to be enforced and then only to the extent specifically stated, which in the case of the
Administrative Agent or the holders of the Secured Obligations shall only be granted as provided
herein. To the extent permitted by Law, neither the Administrative Agent, the holders of the
Secured Obligations, nor any party acting as attorney for the Administrative Agent or the holders
of the Secured Obligations, shall be liable hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence or willful misconduct
hereunder. The rights and remedies of the Administrative Agent and the holders of the Secured
Obligations under this Agreement shall be cumulative and not exclusive of any other right or remedy
which the Administrative Agent or the holders of the Secured Obligations may have.



     (f) Retention
of Collateral. In addition to the rights and remedies hereunder, the
Administrative Agent may, in compliance with Sections 9-620 and 9-621 of the UCC or otherwise
complying with the requirements of applicable Law of the relevant jurisdiction, accept or retain
the Collateral in satisfaction of the Secured Obligations. Unless and until the Administrative
Agent shall have provided such notices, however, the Administrative Agent shall not be deemed to
have retained any Collateral in satisfaction of any Secured Obligations for any reason.



     (g) Deficiency. In the event that the proceeds of any sale, collection or realization
are insufficient to pay all amounts to which the Administrative Agent or the holders of the Secured
Obligations are legally entitled, the Obligors shall be jointly and severally liable for the
deficiency, together with interest thereon at the Default Rate, together with the costs of
collection and the fees, charges and disbursements of counsel. Any surplus remaining after the full
payment and satisfaction of the Secured Obligations shall be returned to the Obligors or to
whomsoever a court of competent jurisdiction shall determine to be entitled



9









 




thereto. Notwithstanding any provision to the contrary contained herein, in any other of the Loan
Documents or in any other documents relating to the Secured Obligations, the obligations of each
Obligor under the Credit Agreement and the other Loan Documents shall be limited to an aggregate
amount equal to the largest amount that would not render such obligations subject to avoidance
under Section 548 of the Bankruptcy Code of the United States or any other applicable Debtor Relief
Law (including any comparable provisions of any applicable state Law).




     8. Rights of the Administrative Agent.



     (a) Power of Attorney. In addition to other powers of attorney contained herein, each
Obligor hereby designates and appoints the Administrative Agent, on behalf of the holders of the
Secured Obligations, and each of its designees or agents, as attorney-in-fact of such Obligor,
irrevocably until Satisfaction in Full and with power of substitution, with authority to take any
or all of the following actions during the continuance of an Event of Default:




     (i) to demand, collect, settle, compromise, adjust, give discharges and releases, all
as the Administrative Agent may reasonably determine;




     (ii) to commence and prosecute any actions at any court for the purposes of collecting
any Collateral and enforcing any other right in respect thereof;




     (iii) to defend, settle or compromise any action brought and, in connection therewith,
give such discharge or release as the Administrative Agent may deem reasonably appropriate;




     (iv) receive, open and dispose of mail addressed to an Obligor and endorse checks,
notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or storage of the goods giving rise
to the Collateral of such Obligor on behalf of and in the name of such Obligor, or
securing, or relating to such Collateral;




     (v) sell, assign, transfer, make any agreement in respect of, or otherwise deal with
or exercise rights in respect of, any Collateral or the goods or services which have given
rise thereto, as fully and completely as though the Administrative Agent were the absolute
owner thereof for all purposes;




     (vi) adjust and settle claims under any insurance policy relating thereto;




     (vii) execute and deliver all assignments, conveyances, statements, financing
statements, renewal financing statements, security agreements, affidavits, notices and
other agreements, instruments and documents that the Administrative Agent may determine
necessary in order to perfect and maintain the security interests and liens granted in this
Agreement and in order to fully consummate all of the transactions contemplated therein;




     (viii) institute any foreclosure proceedings that the Administrative Agent may deem
appropriate;




     (ix) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Collateral;




     (x) to exchange any of the Pledged Equity or other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment of the issuer thereof
and, in connection therewith, deposit any of the Pledged Equity with any committee,
depository, transfer



10









 





agent, registrar or other designated agency upon such terms as the Administrative Agent may
reasonably deem appropriate;




     (xi) to vote for a shareholder resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Equity into the name of the
Administrative Agent or one or more of the holders of the Secured Obligations or into the
name of any transferee to whom the Pledged Equity or any part thereof may be sold pursuant
to Section 7 hereof;




     (xii) to pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Collateral;




     (xiii) to direct any parties liable for any payment in connection with any of the
Collateral to make payment of any and all monies due and to become due thereunder directly
to the Administrative Agent or as the Administrative Agent shall direct;




     (xiv) to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any Collateral;
and




     (xv) do and perform all such other acts and things as the Administrative Agent may
reasonably deem to be necessary, proper or convenient in connection with the Collateral.




	     This power of attorney is a power coupled with an interest and shall be irrevocable until
Satisfaction in Full. The Administrative Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or implicitly granted to
the Administrative Agent in this Agreement, and shall not be liable for any failure to do so or
any delay in doing so. The Administrative Agent shall not be liable for any act or omission or for
any error of judgment or any mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Administrative Agent solely to protect,
preserve and realize upon its security interest in the Collateral.





     (b) Assignment by the Administrative Agent. The Administrative Agent may from time to
time assign the Secured Obligations to a successor Administrative Agent appointed in accordance
with the Credit Agreement, and such successor shall be entitled to all of the rights and remedies
of the Administrative Agent under this Agreement in relation thereto.



     (c) The Administrative Agent’s Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Collateral while being held by the Administrative Agent
hereunder, the Administrative Agent shall have no duty or liability to preserve rights pertaining
thereto, it being understood and agreed that the Obligors shall be responsible for preservation of
all rights in the Collateral, and the Administrative Agent shall be relieved of all responsibility
for the Collateral upon surrendering it or tendering the surrender of it to the Obligors. The
Administrative Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its own property, which shall be
no less than the treatment employed by a reasonable and prudent agent in the industry, it being
understood that the Administrative Agent shall not have responsibility for taking any necessary
steps to preserve rights against any parties with respect to any of the Collateral. In the event of
a public or private sale of Collateral pursuant to Section 7 hereof, the Administrative Agent shall
have no responsibility for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the
Administrative Agent has or is deemed to have knowledge of such matters, or (ii) taking any steps
to clean, repair or otherwise prepare the Collateral for sale.






11









 





     (d) Liability with Respect to Accounts. Anything herein to the contrary notwithstanding,
each of the Obligors shall remain liable under each of the Accounts to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in accordance with
the terms of any agreement giving rise to each such Account. Neither the Administrative Agent nor
any holder of Secured Obligations shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any holder of Secured Obligations of any payment relating to such Account
pursuant hereto, nor shall the Administrative Agent or any holder of Secured Obligations be
obligated in any manner to perform any of the obligations of an Obligor under or pursuant to any
Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency of any performance
by any party under any Account (or any agreement giving rise thereto), to present or file any
claim, to take any action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or times.




(e) Voting and Payment Rights in Respect of the Pledged Equity.




     (i) So long as no Event of Default shall exist, each Obligor may (A) exercise any and
all voting and other consensual rights pertaining to the Pledged Equity of such Obligor or
any part thereof for any purpose not inconsistent with the terms of this Agreement or the
Credit Agreement and (B) receive and retain any and all dividends (other than stock
dividends and other dividends constituting Collateral which are addressed hereinabove),
principal or interest paid in respect of the Pledged Equity to the extent they are allowed
under the Credit Agreement; and




     (ii) During the continuance of an Event of Default after delivery of written notice
from the Administrative Agent, (A) all rights of an Obligor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise pursuant to clause
(i)(A) above shall cease and all such rights shall thereupon become vested in the
Administrative Agent which shall then have the sole right to exercise such voting and other
consensual rights, (B) all rights of an Obligor to receive the dividends, principal and
interest payments which it would otherwise be authorized to receive and retain pursuant to
clause (i)(B) above shall cease and all such rights shall thereupon be vested in the
Administrative Agent which shall then have the sole right to receive and hold as Collateral
such dividends, principal and interest payments, and (C) all dividends, principal and
interest payments which are received by an Obligor contrary to the provisions of clause
(ii)(B) above shall be received in trust for the benefit of the Administrative Agent, shall
be segregated from other property or funds of such Obligor, and shall be forthwith paid
over to the Administrative Agent as Collateral in the exact form received, to be held by
the Administrative Agent as Collateral and as further collateral security for the Secured
Obligations.



     (f) Releases of Collateral. (i) If any Collateral shall be sold, transferred or
otherwise disposed of by any Obligor in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such Obligor, shall promptly execute and
deliver to such Obligor all releases and other documents, and take such other action, reasonably
necessary for the release of the Liens created hereby or by any other Collateral Document on such
Collateral. (ii) The Administrative Agent may release any of the Pledged Equity from this Agreement
or may substitute any of the Pledged Equity for other Pledged Equity without altering, varying or
diminishing in any way the force, effect, lien, pledge or security interest of this Agreement as to
any Pledged Equity not expressly released or substituted, and this Agreement shall continue as a
first priority lien on all Pledged Equity not expressly released or substituted.



     9. Application of Proceeds. Upon the acceleration of the Obligations pursuant to
Section 9.02
of the Credit Agreement, any payments in respect of the Secured Obligations and any proceeds of the
Collateral, when received by the Administrative Agent or any holder of the Secured Obligations in
cash or its



12









 




equivalent, will be applied in reduction of the Secured Obligations in the order set forth in
Section 9.03 of the Credit Agreement.




     10. Continuing Agreement.



     (a) This Agreement shall remain in full force and effect until Satisfaction in Full, at which
time this Agreement and the liens and security interests granted herein shall be automatically
terminated and the Administrative Agent shall, upon the request and at the expense of the Obligors,
forthwith provide evidence of the release all of its liens and security interests hereunder and
shall execute and deliver all UCC termination statements and/or other documents reasonably
requested by the Obligors evidencing such termination.



     (b) This Agreement shall be automatically reinstated if at any time payment, in whole or in
part, of any of the Satisfaction in Full is rescinded or must otherwise be restored or returned by
the Administrative Agent or any holder of the Secured Obligations as a preference, fraudulent
conveyance or otherwise under any Debtor Relief Law, all as though such payment had not been made;
provided that in the event payment of all or any part of the Satisfaction in Full is rescinded or
must be restored or returned, all reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Administrative Agent or any holder of the
Secured Obligations in defending and enforcing such reinstatement shall be deemed to be included as
a part of the Secured Obligations.



     11. Amendments; Waivers; Modifications, etc. This Agreement and the provisions hereof
may not be amended, waived, modified, changed, discharged or terminated except as set forth in
Section 11.01 of the Credit Agreement; provided that any update or revision to Schedule
2 hereof delivered by any Obligor shall not constitute an amendment for purposes of this
Section 11 or Section 11.01 of the Credit Agreement.



     12. Successors in Interest. This Agreement shall be binding upon each Obligor, its
successors and assigns and shall inure, together with the rights and remedies of the Administrative
Agent and the holders of the Secured Obligations hereunder, to the benefit of the Administrative
Agent and the holders of the Secured Obligations and their successors and permitted assigns.



     13. Notices. All notices required or permitted to be given under this Agreement
shall be in conformance with Section 11.02 of the Credit Agreement.



     14. Counterparts. This Agreement may be executed in any number of counterparts (and
by different parties hereto in different counterparts), each of which where so executed and
delivered shall be an original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account for more than one
such counterpart. Delivery of an executed counterpart of a signature page of this Agreement by
telecopy or other electronic imaging means shall be effective as delivery of a manually executed
counterpart of this Agreement.



     15. Headings. The headings of the sections hereof are provided for convenience only
and shall not in any way affect the interpretation of any provision of this Agreement.



     16. Governing
Law: Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL. The
terms of Sections 11.14 and 11.15 of the Credit Agreement with respect to governing law,
submission to jurisdiction, venue and waiver of jury trial are incorporated herein by reference,
mutatis mutandis, and the parties hereto agree to such terms.






13









 





     17. Severability. If any provision of this Agreement is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed without giving effect to the illegal,
invalid or unenforceable provisions.



     18. Entirety. This Agreement, the other Loan Documents and the other documents
relating to the Secured Obligations represent the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral or written, if any, including
any commitment letters or correspondence relating to the Loan Documents, any other documents
relating to the Secured Obligations, or the transactions contemplated herein and therein.



     19. Other Security. To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Collateral (including, without limitation, real
property and securities owned by an Obligor), or by a guarantee, endorsement or property of any
other Person, then the Administrative Agent shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of Default, and the
Administrative Agent shall have the right, in its sole discretion, to determine which rights,
security, liens, security interests or remedies the Administrative Agent shall at any time pursue,
relinquish, subordinate, modify or take with respect thereto, without in any way modifying or
affecting any of them or the Secured Obligations or any of the rights of the Administrative Agent
or the holders of the Secured Obligations under this Agreement, under any other of the Loan
Documents or under any other document relating to the Secured Obligations.



     20. Joinder. At any time after the date of this Agreement, one or more additional
Persons may become party hereto by executing and delivering to the Administrative Agent a Joinder
Agreement. Immediately upon such execution and delivery of such Joinder Agreement (and without any
further action), each such additional Person will become a party to this Agreement as an “Obligor”
and have all of the rights and obligations of an Obligor hereunder and this Agreement and the
schedules hereto shall be deemed amended by such Joinder Agreement.



     21. Rights of Required Lenders. All rights of the Administrative Agent hereunder, if
not exercised by the Administrative Agent, may be exercised by the Required Lenders.



[SIGNATURE PAGES FOLLOW]





14









 







Each of the parties hereto has caused a counterpart of this Security and Pledge Agreement to
be duly executed and delivered as of the date first above written.




	 	 	 	 	 	 
	 	 	 	 	 	 
	OBLIGORS:	 	ACADIA HEALTHCARE
COMPANY, LLC,	 
	 	 	a Delaware limited liability company	 
	 	 	ACADIA HEALTHCARE HOLDINGS, LLC,	 
	 	 	a Delaware limited liability company	 
	 	 	ACADIA MANAGEMENT COMPANY, INC., a Delaware corporation	 
	 
	 	 	 	 	 
	 

	 	By:	 	/s/ Joey A. Jacobs	 
	 

	 	Name:
	 	 
 Joey
A. Jacobs	 
	 

	 	Title:
	 	Chief Executive Officer	 






	 	 	 

	 

	 	ACADIA-YFCS HOLDINGS, INC., a Delaware corporation
	 

	 	YOUTH & FAMILY CENTERED SERVICES, INC., a Georgia corporation
	 

	 	ACADIA HOSPITAL OF LONGVIEW, LLC,
	 

	 	a Delaware limited liability company
	 

	 	KIDS BEHAVIORAL HEALTH OF MONTANA, INC., a Montana corporation
	 

	 	ACADIA VILLAGE, LLC, a Delaware limited liability company
	 

	 	LAKEVIEW BEHAVIORAL HEALTH SYSTEM LLC,
	 

	 	a Delaware limited liability company
	 

	 	ACADIA RIVERWOODS, LLC, a Delaware limited liability company
	 

	 	ACADIA LOUISIANA, LLC, a Delaware limited liability company
	 

	 	ACADIA ABILENE, LLC, a Delaware limited liability company
	 

	 	ACADIA HOSPITAL OF LAFAYETTE, LLC,
	 

	 	a Delaware limited liability company
	 

	 	YFCS MANAGEMENT, INC., a Georgia corporation
	 

	 	YFCS HOLDINGS-GEORGIA, INC., a Georgia corporation
	 

	 	OPTIONS COMMUNITY BASED SERVICES, INC., an Indiana corporation
	 

	 	OPTIONS TREATMENT CENTER ACQUISITION CORPORATION,
	 

	 	an Indiana corporation
	 

	 	RESOLUTE ACQUISITION CORPORATION, an Indiana corporation
	 

	 	RESOURCE COMMUNITY BASED SERVICES, INC., an Indiana corporation
	 

	 	RTC RESOURCE ACQUISITION CORPORATION, an Indiana corporation
	 

	 	SUCCESS ACQUISITION CORPORATION, an Indiana corporation
	 

	 	ASCENT ACQUISITION CORPORATION, an Arkansas corporation
	 

	 	SOUTHWOOD PSYCHIATRIC HOSPITAL, INC., a Pennsylvania corporation
	 

	 	MEMORIAL HOSPITAL ACQUISITION CORPORATION,
	 

	 	a New Mexico corporation
	 

	 	MILLCREEK MANAGEMENT CORPORATION, a Georgia corporation
	 

	 	REHABILITATION CENTERS, INC., a Mississippi corporation
	 

	 	LAKELAND HOSPITAL ACQUISITION CORPORATION,
	 

	 	a Georgia corporation
	 

	 	PSYCHSOLUTIONS ACQUISITION CORPORATION, a Florida corporation






	 	 	 	 	 	 	 

	 

	 	By:	 	/s/ Joey A. Jacobs	 	 
	 

	 	Name:
	 	 

Joey A. Jacobs
	 	 
	 

	 	Title:
	 	President	 	 






[SIGNATURE PAGES CONTINUE]







 









 








	 	 	 

	 

	 	YOUTH AND FAMILY CENTERED SERVICES OF NEW MEXICO, INC., a
	 

	 	New Mexico corporation
	 

	 	SOUTHWESTERN CHILDREN’S HEALTH SERVICES, INC.,
	 

	 	an Arizona corporation
	 

	 	YOUTH AND FAMILY CENTERED SERVICES OF FLORIDA, INC.,
	 

	 	a Florida corporation
	 

	 	PEDIATRIC SPECIALTY CARE, INC., an Arkansas corporation
	 

	 	CHILD & YOUTH PEDIATRIC DAY CLINICS, INC, an Arkansas corporation
	 

	 	MED PROPERTIES, INC., an Arkansas corporation
	 

	 	ASCENT ACQUISITION CORPORATION-CYPDC, an Arkansas corporation
	 

	 	ASCENT ACQUISITION CORPORATION-PSC, an Arkansas corporation
	 

	 	MEDUCARE TRANSPORT, L.L.C., an Arkansas limited liability company
	 

	 	PEDIATRIC SPECIALTY CARE PROPERTIES, LLC,
	 

	 	an Arkansas limited liability company
	 

	 	CHILDRENS MEDICAL TRANSPORTATION SERVICES, LLC,
	 

	 	an Arkansas limited liability company
	 

	 	MILLCREEK SCHOOLS INC., a Mississippi corporation
	 

	 	HABILITATION CENTER, INC., an Arkansas corporation
	 

	 	MILLCREEK SCHOOL OF ARKANSAS, INC., an Arkansas corporation
	 

	 	PSYCHSOLUTIONS, INC., a Florida corporation






	 	 	 	 	 	 	 

	 

	 	By:	 	/s/ Joey A. Jacobs	 	 
	 

	 	Name:
	 	 

 Joey A. Jacobs
	 	 
	 

	 	Title:
	 	President	 	 






[Signature Page to Security and Pledge Agreement]





 









 








	 	 	 	 	 

	Accepted and agreed to as of the date first above written.	 	 
	 
	BANK OF AMERICA, NA., as Administrative Agent	 	 






	 	 	 	 	 

	By:	 	/s/ Robert Salazar	 	 
	Name:
	 	 

Robert Salazar
	 	 
	Title:
	 	Vice President	 	 






 









 






SCHEDULE 1


PLEDGED EQUITY


	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Number of	 	Certificate	 	Percentage
	Obligor	 	Name of Subsidiary	 	Shares	 	Number	 	Ownership
	Acadia Healthcare Holdings, LLC

	 	Acadia Healthcare Company, LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Acadia-YFCS Holdings, Inc.
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadiac-YFCS Holdings, Inc.

	 	Youth and Family Centered Services,
Inc.
	 	 	100	 	 	 	2011-1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Acadia Management Company, Inc.
	 	 	1,000	 	 	 	C-2	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Acadia Hospital of Longview, LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Kids Behavioral Health of Montana, Inc.
	 	 	1,000	 	 	 	7	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Acadia Village, LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Lakeview Behavioral Health System LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Acadia Riverwoods, LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Acadia Louisiana, LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Acadia Abilene, LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Acadia Healthcare Company, LLC

	 	Acadia Hospital of Lafayette, LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	YFCS Management, Inc.
	 	 	1,000	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	YFCS Holdings-Georgia, Inc.
	 	 	1,000	 	 	 	3	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Options Community Based Services, Inc.
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Options Treatment Center Acquisition
Corporation
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Resolute Acquisition Corporation
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Resource Community Based Services,
Inc.
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	RTC Resource Acquisition Corporation
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Success Acquisition Corporation
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Ascent Acquisition Corporation
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Southwood Psychiatric Hospital, Inc.
	 	 	100	 	 	 	4	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Memorial Hospital Acquisition

Corporation
	 	 	1,000	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and Family Centered Services,
Inc.

	 	Millcreek Management Corporation
	 	 	1,000 1,900	 	 	 	1

2	 	 	 	100	%






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Number of	 	Certificate	 	Percentage
	Obligor	 	Name of Subsidiary	 	Shares	 	Number	 	Ownership
	Youth and
Family Centered
Services, Inc.

	 	Rehabilitation Centers, Inc.
	 	 	10	 	 	 	18	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and
Family Centered
Services, Inc.

	 	Lakeland Hospital Acquisition

Corporation
	 	 	1,000	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Youth and
Family Centered
Services, Inc.

	 	PsychSolutions Acquisition

Corporation
	 	 	100	 	 	 	01	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	YFCS
Holdings-Georgia,
Inc.

	 	Youth And Family Centered Services of New
Mexico, Inc.
	 	 	1,000	 	 	 	4	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	YFCS
Holdings-Georgia,
Inc.

	 	Southwestern Children’s Health Services,
Inc.
	 	 	100	 	 	 	3	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	YFCS
Holdings-Georgia,
Inc.

	 	Youth And Family Centered Services Of
Florida, Inc.
	 	 	1,000	 	 	 	4	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ascent
Acquisition
Corporation

	 	Pediatrc Specialty Care, Inc.
	 	 	10,000	 	 	 	9	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ascent
Acquisition
Corporation

	 	Child & Youth Pediatric Day Clinics,
Inc
	 	 	400	 	 	 	5	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ascent
Acquisition
Corporation

	 	Med Properties, Inc.
	 	 	10,000	 	 	 	7	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ascent
Acquisition
Corporation

	 	Ascent Acquisition Corporation-CYPDC
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ascent
Acquisition
Corporation

	 	Ascent Acquisition Corporation-PSC
	 	 	100	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ascent
Acquisition
Corporation

	 	Meducare Transport, L.L.C.
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ascent
Acquisition
Corporation

	 	Pediatric Specialty Care Properties,
LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ascent
Acquisition
Corporation

	 	Childrens Medical Transportation
Services, LLC
	 	 	N/A	 	 	 	N/A	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rehabilitation
Centers, Inc.

	 	Millcreek Schools Inc.
	 	 	1,000	 	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rehabilitation
Centers, Inc.

	 	Habilitation Center, Inc.
	 	 	100	 	 	 	2	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rehabilitation
Centers, Inc.

	 	Millcreek School of Arkansas, Inc.
	 	 	100	 	 	 	2	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PsychSolutions
Acquisition
Corporation

	 	PsychSolutions, Inc.
	 	 	600	 	 	 	8	 	 	 	100	%






 









 






SCHEDULE 2




COMMERCIAL TORT CLAIMS




None.




 









 









EXHIBIT 4(a)




IRREVOCABLE STOCK POWER




     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to


the
following equity interests of                     , a                      corporation:




	 	 	 

	No. of Shares
	 	Certificate No.





and irrevocably appoints                      its agent and attorney-in-fact to
transfer all or any part of such equity interests and to take all necessary and appropriate action
to effect any such transfer. The agent and attorney-in-fact may substitute and appoint one or more
persons to act for him.




	 	 	 	 	 

	 

	 	By:	 	 
	 

	 	Name:
	 	 
 
	 

	 	Title:	 	 






 









 






EXHIBIT 4(c)(i)




NOTICE



OF


GRANT OF SECURITY INTEREST



IN COPYRIGHTS



United States Copyright Office




Ladies and Gentlemen:




     Please be advised that pursuant to the Security and Pledge Agreement dated as of April 1,
2011 (as the same may be amended, modified, extended or restated from time to time, the
“Agreement”) by and among the Obligors party thereto (each an “Obligor” and collectively, the
“Obligors”) and Bank of America, N.A., as administrative agent (the “Administrative Agent”) for
the holders of the Secured Obligations referenced therein, the undersigned Obligor has granted a
continuing security interest in and continuing lien upon the copyrights and copyright applications
set forth on Schedule 1 hereto to the Administrative Agent for the ratable benefit of the holders
of the Secured Obligations.



     The undersigned Obligor and the Administrative Agent, on behalf of the holders of the
Secured Obligations, hereby acknowledge and agree that the security interest in the foregoing
copyrights and copyright applications (i) may only be terminated in accordance with the terms of
the Agreement and (ii) is not to be construed as an assignment of any copyright or copyright
application.



	 	 	 	 	 

	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	[Obligor]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	Name:
	 	 
 
	 

	 	Title:	 	 






Acknowledged and Accepted:



BANK OF AMERICA, N.A., as Administrative Agent




	 	 	 	 	 

	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 






 









 






EXHIBIT 4(c)(ii)




NOTICE




OF GRANT OF SECURITY INTEREST



IN



PATENTS



United States Patent and Trademark Office




Ladies and Gentlemen:




     Please be advised that pursuant to the Security and Pledge Agreement dated as of April 1, 2011
(as the same may be amended, modified, extended or restated from time to time, the “Agreement”) by
and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Bank
of America, N.A., as administrative agent (the “Administrative Agent”) for the holders of the
Secured Obligations referenced therein, the undersigned Obligor has granted a continuing security
interest in and continuing lien upon the patents and patent applications set forth on Schedule 1
hereto to the Administrative Agent for the ratable benefit of the holders of the Secured
Obligations.



     The undersigned Obligor and the Administrative Agent, on behalf of the holders of the Secured
Obligations, hereby acknowledge and agree that the security interest in the foregoing patents and
patent applications (i) may only be terminated in accordance with the terms of the Agreement and
(ii) is not to be construed as an assignment of any patent or patent application.



	 	 	 	 	 

	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	[Obligor]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	Name:
	 	 
 
	 

	 	Title:	 	 






Acknowledged and Accepted:




BANK OF AMERICA, N.A., as Administrative Agent




	 	 	 	 	 

	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 






 









 






EXHIBIT 4(c)(iii)




NOTICE




OF GRANT OF SECURITY INTEREST



IN



TRADEMARKS



United States Patent and Trademark Office




Ladies and Gentlemen:




     Please be advised that pursuant to the Security and Pledge Agreement dated as of April 1, 2011
(as the same may be amended, modified, extended or restated from time to time, the “Agreement”) by
and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Bank
of America, N.A., as Administrative Agent (the “Administrative Agent”) for the holders of the
Secured Obligations referenced therein, the undersigned Obligor has granted a continuing security
interest in and continuing lien upon the trademarks and trademark applications set forth on
Schedule 1 hereto to the Administrative Agent for the ratable benefit of the holders of the Secured
Obligations.



     The undersigned Obligor and the Administrative Agent, on behalf of the holders of the Secured
Obligations, hereby acknowledge and agree that the security interest in the foregoing trademarks
and trademark applications (i) may only be terminated in accordance with the terms of the
Agreement and (ii) is not to be construed as an assignment of any trademark or trademark
application.



	 	 	 	 	 

	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	[Obligor]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	Name:
	 	 
 
	 

	 	Title:	 	 






Acknowledged and Accepted:




BANK OF AMERICA, N.A., as Administrative Agent




	 	 	 	 	 

	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title: