Ex-4.1 - Purchase Agreement



 





Exhibit 4.1




EXECUTION COPY




PSYCHIATRIC SOLUTIONS, INC.




$250,000,000




73/4% Senior Subordinated Notes Due 2015




Purchase Agreement




May 24, 2007




Citigroup Global Markets Inc.

Merrill Lynch, Pierce Fenner & Smith

      Incorporated

As Representatives of the Initial Purchasers

c/o Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013




Ladies and Gentlemen:




     Psychiatric Solutions, Inc., a corporation organized under the laws of Delaware (the
“Company”), proposes to issue and sell to the several parties named in Schedule I hereto (the
“Initial Purchasers”), for whom you (the “Representatives”) are acting as Representatives,
$250,000,000 aggregate principal amount of its 73/4% Senior Subordinated Notes Due 2015 (the “Notes”,
and together with the Guarantees (as defined below), the “Securities”). The Securities are to be
issued under the seventeenth supplemental indenture (the “Supplemental Indenture”), to be dated as
of the Closing Date, to the indenture (the “Indenture”), dated as of July 6, 2005, among the
Company, each of the Guarantors (as defined below) and U.S. Bank National Association, as successor
to Wachovia Bank, National Association, as trustee (the “Trustee”). The Securities will have the
benefit of a registration rights agreement (the “Registration Rights Agreement”), to be dated as of
the Closing Date, among the Company, each of the Guarantors and the Initial Purchasers, pursuant to
which the Company and the Guarantors will agree to register notes (the “Exchange Notes”) and
related guarantees (the “Exchange Guarantees,” and, together with the Exchange Notes, the “Exchange
Securities”) under the Act (as defined in Section 18) subject to the terms and conditions therein
specified. Pursuant to the Registration Rights Agreement, the Exchange Securities will be offered
in exchange for the Securities. The Notes will be fully and unconditionally guaranteed
(the “Guarantees”) by each of the Company’s direct and indirect domestic subsidiaries set forth on
Schedule II hereto (collectively, the “PSI Guarantors”) and, as of the closing date of the
Acquisition (as defined below), by each of the additional subsidiaries as set forth on Schedule III
hereto (collectively, the “Additional Guarantors,” and together with the PSI Guarantors, the
“Guarantors”). To the extent there are no additional parties listed on Schedule I other than you,
the term Representatives as used herein shall mean you as the Initial Purchasers, and the terms
Representatives and Initial Purchasers shall mean either the singular or plural as the context
requires. The use of the neuter in this Agreement shall include the feminine and masculine
wherever appropriate. Certain terms used herein are defined in Section 18 hereof.



 









 





          The sale of the Notes to the Initial Purchasers will be made without registration of the Notes
under the Act in reliance upon exemptions from the registration requirements of the Act.




          In connection with the offering of the Notes, the Company and the Guarantors will consummate
the transactions contemplated by the agreement and plan of merger, dated as of December 20, 2006
(the “Merger Agreement”), relating to the acquisition by the Company of all of the outstanding
capital stock of Horizon Health Corporation for approximately $426.0 million (the “Acquisition”),
to be funded partially by borrowings under an incremental add-on facility of $225,000,000 under the
Company’s senior secured credit facilities, dated as of July 1, 2005 (as amended and supplemented
to date), among the Company, the guarantors parties thereto, Citicorp North America, Inc., as
administrative agent, Citigroup Global Markets Inc., as syndication agent and documentation agent,
and the lenders thereto (the “Amendment,” and together with the Merger Agreement, the “Related
Documents”). The Acquisition will be effective (the “Effective Time”) as of 11:59 p.m. on the
Closing Date (as defined below). The net proceeds from the sale of the Notes will be applied as
described in the “Use of Proceeds” section of the Disclosure Package (as defined below) and the
Final Offering Memorandum (as defined below). The Acquisition, the entering into of the Amendment
and the offering of the Notes are collectively referred to herein as the “Transactions.” In this
Agreement (including, without limitation, for purposes of the representations and warranties given
on the Closing Date), unless otherwise indicated, all references to the Company and its
subsidiaries or the Company and the Guarantors give effect to the consummation of the Acquisition.




     In connection with the offer and sale of the Notes (the “Offering”), the Company has prepared
a preliminary offering memorandum, dated May 21, 2007 (as amended or supplemented at the date
thereof, including any and all exhibits thereto and any information incorporated by reference
therein, the “Preliminary Offering Memorandum”), as supplemented by the Pricing Supplement, dated
May 24, 2007 (the “Pricing Supplement”), and promptly after the Execution Time will prepare a final
offering memorandum, dated May 24, 2007 (as amended and supplemented through the date hereof,
including any and all exhibits thereto and any information incorporated by reference therein, the
“Final Offering Memorandum”). Each of the Disclosure Package, the Preliminary Offering Memorandum
and the Final Offering Memorandum sets forth or will set forth certain information concerning the
Company and the Notes. “Disclosure Package” shall mean (i) the Preliminary Offering Memorandum, as
amended or supplemented at the Execution Time, including by the Pricing Supplement, and (ii) any
Issuer Written Information. The Company hereby confirms that it has authorized the use of the
Disclosure Package, the Preliminary Offering Memorandum, the Pricing Supplement and the Final
Offering Memorandum, and any amendment or supplement thereto, in connection with the offer and sale
of the Notes by the Initial Purchasers.



          1. Representations, Warranties and Agreements of the Company and the Guarantors. The
Company and the Guarantors, jointly and severally, represent and warrant to each Initial Purchaser
as set forth below in this Section 1.




          (a) The Preliminary Offering Memorandum, at the date thereof, did not contain any untrue
statement of a material fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading. At the
Execution Time and on the Closing Date, the Final Offering Memorandum did not and will not (and any
amendment or supplement thereto, at the date thereof and on the Closing Date, will not) contain any
untrue statement of a material fact or omit to state any





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material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company and
the Guarantors make no representation or warranty as to the information contained in or omitted
from the Preliminary Offering Memorandum or the Final Offering Memorandum, or any amendment or
supplement thereto, in reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of the Initial Purchasers through the Representatives specifically for
inclusion therein, it being understood and agreed that the only such information furnished by or on
behalf of any Initial Purchaser consists of the information described as such in Section 8(b)
hereof.




     (b) The Disclosure Package, as of the Execution Time, does not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. Each
electronic road show, when taken together as a whole with the Disclosure Package did not, as of the
Execution Time, contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The preceding sentences do not apply to statements in or omissions
from the Disclosure Package based upon and in conformity with written information furnished to the
Company by any Initial Purchaser through the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by or on behalf of any Initial
Purchasers consists of the information described as such in Section 8(b) hereof.



     (c) Assuming the accuracy of the representations and warranties of the Initial Purchasers
contained in Section 4 and their compliance with the agreements set forth therein, none of the
Company, the Guarantors, any of their respective Affiliates, or any person acting on its or their
behalf has, directly or indirectly, made offers or sales of any security, or solicited offers to
buy any security under circumstances that would require the registration of the Securities under
the Act.



     (d) Assuming the accuracy of the representations and warranties of the Initial Purchasers
contained in Section 4 and their compliance with the agreements set forth therein, none of the
Company, the Guarantors, any of their respective Affiliates, or any person acting on its or their
behalf has offered or sold the Notes by means of any general solicitation or general advertising
(within the meaning of Rule 502(c) under the Act) or engaged in any directed selling efforts within
the meaning of Rule 902 under the Act with respect to the Notes, and the Company, the Guarantors
and any person acting on its or their behalf have complied with and will implement the offering
restrictions within the meaning of such Rule 902.



     (e) The Notes satisfy the eligibility requirements of Rule 144A(d)(3) under the Act.



     (f) Assuming the accuracy of the representations and warranties of the Initial Purchasers
contained in Section 4 and their compliance with the agreements set forth therein, no registration
under the Act of the Notes is required for the offer and sale of the Notes to or by the Initial
Purchasers in the manner contemplated herein and in the Disclosure Package and the Final Offering
Memorandum and no qualification of the Indenture is required under the Trust Indenture Act of 1939,
as amended (the “Trust Indenture Act”) in connection with the offer and sale of the Notes to the
Initial Purchasers.



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     (g) None of the Company, the Guarantors or any of its or their respective subsidiaries has
paid or agreed to pay to any person any compensation for soliciting another to purchase the Notes
(except as contemplated by this Agreement or as described in or contemplated by the Disclosure
Package and the Final Offering Memorandum).



     (h) None of the Company, the Guarantors or any of its or their respective subsidiaries has,
directly or indirectly, taken any action designed to cause or which has constituted or which might
reasonably be expected to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the Company to facilitate the sale or
resale of the Notes.



     (i) Each of the Company, the Guarantors and its or their respective subsidiaries has been duly
incorporated, organized or formed and is validly existing as a corporation, limited liability
company or partnership in good standing under the laws of its jurisdiction of organization, is duly
qualified to own or lease, as the case may be, and to operate its properties and to conduct its
business as described in the Disclosure Package and the Final Offering Memorandum and is duly
qualified to do business as a foreign corporation, limited liability company or partnership and is
in good standing under the laws of each jurisdiction in which its ownership or lease of property or
the conduct of its business requires such qualification, except such failures to be qualified or in
good standing as would not, either individually or in the aggregate, have a material adverse effect
on the condition (financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole.



     (j) None of the Company, the Guarantors or any of its or their respective subsidiaries (i) is
in violation of its charter or by-laws, (ii) is in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the due performance or
observance of any term, covenant, condition or other obligation contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is subject, except for such
violations or defaults that (a) could not reasonably be expected to have a material adverse effect
on the performance of this Agreement, the Supplemental Indenture, the Registration Rights Agreement
or the Related Documents, or the consummation of any of the transactions contemplated hereby and
thereby, or (b) could not reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the Company, the
Guarantors and their respective subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business (clauses (a) and (b) collectively, a “Material
Adverse Effect”), or (iii) is in violation of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject or has failed to obtain or
maintain any license, permit, certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct of its business, except, with respect
to clauses (ii) and (iii), for such violations or defaults that do not have a Material Adverse
Effect.



     (k) The Company has an authorized capitalization as set forth in the Disclosure Package and
the Final Offering Memorandum. All of the issued shares of capital stock of the Company and the
Guarantors have been duly authorized and validly issued and are fully paid and non-assessable; and
all of the issued shares of capital stock of each Guarantor are owned directly or indirectly by the
Company or the Guarantors, free and clear of all liens, encumbrances, equities or claims, other
than liens, encumbrances, equities or claims under or permitted by the Company’s existing senior
secured credit facilities.



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     (l) Each of the Company and the Guarantors has all requisite corporate, limited liability
company or partnership power and authority to enter into this Agreement. This Agreement has been
duly authorized, executed and delivered by the Company and each of PSI Guarantors and at the
Effective Time will be duly authorized, executed and delivered by each of the Additional
Guarantors.



     (m) The Supplemental Indenture has been duly authorized by the Company and each of the PSI
Guarantors, and at the Effective Time will be duly authorized by, the Additional Guarantors, and,
assuming due authorization, execution and delivery thereof by the Trustee, when executed and
delivered by the Company and each of the Guarantors, will constitute a legal, valid and binding
instrument enforceable against the Company and each of the Guarantors in accordance with its terms
(subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance, preference or other laws affecting creditors’ rights generally
from time to time in effect and to general principles of equity).



     (n) The Notes have been duly authorized by the Company and the Guarantees have been duly
authorized by the PSI Guarantors, and at the Effective Time will be duly authorized by, the
Additional Guarantors, and when duly executed by the Company and each of the Guarantors and
authenticated by the Trustee in accordance with the provisions of the Supplemental Indenture and
the Indenture and delivered to, and paid for, by the Initial Purchasers in accordance with the
terms of this Agreement, the Notes and the Guarantees will constitute legal, valid, binding and
enforceable obligations of the Company and each of the Guarantors, respectively, entitled to the
benefits of the Indenture (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent conveyance, preference or other laws affecting
creditors’ rights generally from time to time in effect and to general principles of equity).



     (o) The Exchange Notes have been duly authorized by the Company and the Exchange Guarantees
have been duly authorized by the PSI Guarantors, and at the Effective Time will be duly authorized
by, the Additional Guarantors, and when executed and authenticated in accordance with the
provisions of the Supplemental Indenture and the Indenture and issued and delivered to the holders
of the Securities in exchange therefor as contemplated by the Registration Rights Agreement, the
Supplemental Indenture and the Indenture, will have been duly executed and delivered by the Company
and the Guarantors and will constitute legal, valid and binding obligations of the Company and the
Guarantors, entitled to the benefits of the Indenture (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance, preference
or other laws affecting creditors’ rights generally from time to time in effect and to general
principles of equity).



     (p) The Registration Rights Agreement has been duly authorized by the Company and each of the
PSI Guarantors , and at the Effective Time will be duly authorized by, the Additional Guarantors,
and, assuming due authorization, execution and delivery thereof by the Initial Purchasers, when
executed and delivered by the Company and each of the Guarantors, will constitute a legal, valid,
binding and enforceable instrument of the Company and each of the Guarantors (subject, as to the
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, preference or other laws affecting creditors’ rights generally from time to
time in effect and to general principles of equity), provided that no representation is made with
respect to Section 5 thereof.



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     (q) No consent, approval, authorization, filing with or order of any court or governmental
agency or body is required in connection with the transactions contemplated herein, in the
Supplemental Indenture, the Registration Rights Agreement or the Guarantor Joinder Agreement,
except such as may be required under the blue sky laws of any jurisdiction in which the Notes are
offered and sold and, in the case of the Registration Rights Agreement, such as will be obtained
under the Act and the Trust Indenture Act.



     (r) None of the execution, delivery and performance of this Agreement, the Supplemental
Indenture, the Registration Rights Agreement, the Guarantor Joinder Agreement, the Related
Documents, the issuance and sale of the Securities, or the consummation of any of the transactions
contemplated hereby or thereby, or the performance by the Company or any Guarantors of its
obligations hereunder or thereunder (i) will conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which the Company, the Guarantors
or any of its or their respective subsidiaries is a party or by which the Company, the Guarantors
or any of its or their respective subsidiaries is bound or to which any of the property or assets
of the Company, the Guarantors or any of its or their respective subsidiaries is subject, except
for such conflicts, breaches, violations or defaults that do not have a Material Adverse Effect or
for which a waiver or consent has been or will be obtained, (ii) will result in any violation of
the provisions of the charter or by-laws of the Company, the Guarantors or any of its or their
respective subsidiaries or (iii) will violate any applicable statute, order, rule or regulation of
any court or governmental agency or body having jurisdiction over the Company, the Guarantors or
any of its or their respective subsidiaries or any of their properties or assets, except, with
respect to clauses (i) and (iii), for such conflicts, breaches, violations or defaults that do not
have a Material Adverse Effect.



     (s) The historical financial statements of the Company (including the related notes and
supporting schedules) included in or incorporated by reference in the Disclosure Package and the
Final Offering Memorandum present fairly in all material respects the financial condition and
results of operations of the entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved.



     (t) The historical financial statements of Horizon Health Corporation (“Horizon Health”)
(including the related notes and supporting schedules) included or incorporated by reference in the
Disclosure Package and the Final Offering Memorandum present fairly in all material respects the
financial condition and results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods involved.



     (u) The historical financial statements of Alternative Behavioral Services, Inc. (“ABS”)
(including the related notes and supporting schedules) included in the Disclosure Package and the
Final Offering Memorandum present fairly in all material respects the financial condition and
results of operations of the entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved.



     (v) The selected financial data set forth under the caption “Selected Consolidated Financial
and Operating Data” in the Disclosure Package and the Final Offering



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Memorandum fairly present in all material respects, on the basis stated in the Disclosure
Package and the Final Offering Memorandum, the information included therein; the pro forma
financial statements included in the Disclosure Package and the Final Offering Memorandum include
assumptions that provide a reasonable basis for presenting the significant effects directly
attributable to the transactions and events described therein, the related pro forma adjustments
give appropriate effect to those assumptions, the pro forma adjustments reflect the proper
application of those adjustments to the historical financial statement amounts in the pro forma
financial statements included in the Disclosure Package and the Final Offering Memorandum, the pro
forma financial statements included in the Disclosure Package and the Final Offering Memorandum
comply as to form with the applicable accounting requirements of Regulation S-X under the Act and
the pro forma adjustments have been properly applied to the historical amounts in the compilation
of those statements.



     (w) The other financial data, operating data and statistical information and data of the
Company included in or incorporated by reference in the Disclosure Package and the Final Offering
Memorandum is presented fairly in all material respects and, to the extent derived therefrom, has
been prepared on a basis consistent with such financial statements and the books and records of the
Company and its subsidiaries.



     (x) Ernst & Young LLP, who has certified certain historical financial statements of the
Company, whose reports are incorporated by reference in the Disclosure Package and the Final
Offering Memorandum and who (a) has delivered the initial letter referred to in Section 6(d)(i)
hereof and (b) will deliver on the Closing Date the bring-down letter referred to in Section
6(e)(i) hereof, is an independent registered public accounting firm as required by the Act and the
Public Company Accounting Oversight Board during the periods covered by the financial statements on
which it reported that were or are incorporated by reference in the Disclosure Package and the
Final Offering Memorandum.



     (y) PricewaterhouseCoopers LLP, who has certified certain historical financial statements of
both of Horizon and ABS, whose reports are included and/or incorporated by reference in the
Disclosure Package and the Final Offering Memorandum and who (a) has delivered the initial letters
referred to in Section 6(d)(ii) hereof, and (b) will deliver on the Closing Date the bring-down
letters referred to in Section 6(e)(ii) hereof, is an independent registered public accounting firm
with respect to Horizon and ABS, as applicable, as required by the Act and the Public Company
Accounting Oversight Board during the periods covered by the financial statements on which it
reported that were or are incorporated by reference in the Disclosure Package and the Final
Offering Memorandum.



     (z) There are no legal or governmental proceedings pending to which the Company, the
Guarantors or any of its or their respective subsidiaries is a party or of which any property or
assets of the Company, the Guarantors or any of its or their respective subsidiaries is the subject
that, if determined adversely to the Company, the Guarantors or any of its or their respective
subsidiaries, would reasonably be likely to have a material adverse effect on the performance of
this Agreement or the consummation of any of the transactions contemplated hereby or would
reasonably be likely to have a Material Adverse Effect, and to the best of the Company’s knowledge,
no such proceedings are threatened or contemplated by governmental authorities or threatened by
others.



     (aa) Except as would not have a Material Adverse Effect, the Company, the Guarantors or each
of their respective subsidiaries own or possess adequate rights to use all



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material patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the conduct of their respective
businesses will conflict with, and have not received any notice of any claim of conflict with, any
such rights of others.



     (bb) The Company, the Guarantors or each of their respective subsidiaries have good and
marketable title to all real property and good title to all personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except such as are described or
incorporated by reference in the Disclosure Package and the Final Offering Memorandum (exclusive of
any amendment or supplement thereto) and such as do not materially affect the value of the property
of the Company, the Guarantors or any of its or their respective subsidiaries taken as a whole and
do not materially interfere with the use made and proposed to be made of such property by the
Company, the Guarantors or any of its or their respective subsidiaries; and all real property and
buildings held under lease by the Company, the Guarantors or any of its or their respective
subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions
as are not material and do not interfere with the use made and proposed to be made of such property
and buildings by the Company, the Guarantors or any of its or their respective subsidiaries in each
case except as disclosed in the Disclosure Package or the Final Offering Memorandum.



     (cc) There are no stamp or other issuance or transfer taxes or duties or other similar fees or
charges required to be paid in connection with the execution and delivery of this Agreement or the
issuance or sale by the Company and the Guarantors of the Securities.



     (dd) Neither the Company nor any of the Guarantors is currently prohibited, directly or
indirectly, from paying any dividends to the Company or the Guarantors, from making any other
distribution on such subsidiary’s capital stock, from repaying to the Company or the Guarantors any
loans or advances to such subsidiary from the Company or the Guarantors or from transferring any of
such subsidiary’s property or assets to the Company or the Guarantors or any other subsidiary of
the Company or the Guarantors, except as described in or contemplated in the Disclosure Package and
the Final Offering Memorandum (exclusive of any amendment or supplement thereto).



     (ee) Except as set forth in or contemplated in the Disclosure Package and the Final Offering
Memorandum (exclusive of any amendment or supplement thereto) and except as would not have a
Material Adverse Effect, the Company and the Guarantors and its or their respective subsidiaries
possess all licenses, certificates, permits and other authorizations issued by the appropriate U.S.
federal, state or non-U.S. regulatory authorities necessary to conduct their respective businesses,
and, subject to the foregoing exceptions, neither the Company, the Guarantors nor any of its or
their respective subsidiaries has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.



     (ff) The Company, the Guarantors and its and their respective subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific



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authorization; and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.



     (gg) Each of the Company, the Guarantors or its or their respective subsidiaries has filed all
federal, state and local income and franchise tax returns required to be filed through the date
hereof (except in any case in which the failure to do so would not have a Material Adverse Effect)
and has paid all taxes due thereon, except with respect to any assessment that is currently being
contested in good faith or as would not have a Material Adverse Effect, and no tax deficiency has
been determined adversely to the Company, the Guarantors or any of its or their respective
subsidiaries that has had (nor does the Company, the Guarantors or any of its or their respective
subsidiaries have any knowledge of any tax deficiency that, if determined adversely to the Company,
the Guarantors or any of its or their respective subsidiaries, might have) a Material Adverse
Effect.



     (hh) To the extent not self-insured, the Company, the Guarantors and each of their
subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as is
customary for companies engaged in similar businesses in similar industries; and to the extent the
Company or any of its subsidiaries is self-insured, such entity is self-insured against losses in a
manner that such entity believes is commercially reasonable.



     (ii) No labor disturbance by the employees of the Company, the Guarantors or any of its or
their respective subsidiaries exists or, to the knowledge of the Company, the Guarantors or any of
its or their respective subsidiaries, is imminent that could reasonably be expected to have a
Material Adverse Effect.



     (jj) Each of the Company and the Guarantors is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder (“ERISA”); no “reportable event”
(as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for
which the Company, the Guarantors or any of its or their respective subsidiaries would have any
liability; neither the Company, the Guarantors or any of its or their respective subsidiaries has
incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to the
termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published interpretations
thereunder (the “Code”); and each “pension plan” for which the Company, the Guarantors or any of
its or their respective subsidiaries would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would reasonably be expected to cause the loss of
such qualification.



     (kk) Neither the Company or any of the Guarantors has taken any action or omitted to take any
action (such as issuing any press release relating to any Securities without an appropriate legend)
which may result in the loss by any of the Initial Purchasers of the ability to rely on any
stabilization safe harbor provided by the Financial Services Authority under the Financial Services
and Markets Act 2000 (the “FSMA”). The Company and each of the Guarantors have been informed of
the guidance relating to stabilization provided by the Financial Services Authority, in particular
in Section MAR 2 Annex 2G of the Financial Services Handbook.



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     (ll) Set forth on Exhibit A hereto is a list of each employee pension or benefit plan with
respect to which the Company or any corporation considered an affiliate of the Company within the
meaning of Section 407(d)(7) of ERISA is a party in interest or disqualified person.



     (mm) Except for such matters as would not, individually or in the aggregate, either result in
a Material Adverse Effect or require disclosure in the Disclosure Package and the Final Offering
Memorandum, the Company, the Guarantors and its or their respective subsidiaries (or, to the
knowledge of the Company, any of their predecessors in interest) (1) are conducting and have
conducted their businesses, operations and facilities in compliance with Environmental Law (as
defined below); (2) possess, and are in compliance with, any and all permits, licenses or
registrations required under Environmental Law (“Environmental Permits”); (3) will not require
material expenditures to maintain such compliance with Environmental Law or their Environmental
Permits or to remediate, clean up, abate or remove any Hazardous Substance (as defined below); and
(4) are not subject to any pending or, to the best knowledge of the Company, the Guarantors or any
of its or their respective subsidiaries, threatened claim or other legal proceeding under any
Environmental Laws against the Company, the Guarantors or any of its or their respective
subsidiaries, and have not been named as a “potentially responsible party” under or pursuant to any
Environmental Law. As used in this paragraph, “Environmental Law” means any and all applicable
federal, state, local and foreign laws, ordinances, regulations and common law, or any
administrative or judicial order, consent, decree or judgment thereof, relating to pollution or the
protection of human health or the environment, including, without limitation, those related to (i)
emissions, discharges, releases or threatened releases of, or exposure to, Hazardous Substances,
(ii) the generation, manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances, or (iii) the investigation, remediation or cleanup
of any Hazardous Substances. As used in this paragraph, “Hazardous Substances” means pollutants,
contaminants or hazardous, dangerous, toxic, biohazardous or infectious substances, materials or
wastes or any other chemical substance regulated under Environmental Laws.



     (nn) Except as set forth or incorporated by reference in the Disclosure Package and the Final
Offering Memorandum (exclusive of any amendment or supplement thereto), neither the Company, the
Guarantors or any of its or their respective subsidiaries nor, to the knowledge of the Company, any
other person who has a direct or indirect ownership or control interest in the Company, the
Guarantors or any of its or their respective subsidiaries or who is an officer, director, agent or
managing employee of the Company or any of its subsidiaries (1) has engaged in any activities which
are prohibited, or are cause for criminal or civil penalties and/or mandatory or permissive
exclusion from Medicare or Medicaid, under Section 1320a-7, 1320a-7a, 1320a-7b, or 1395nn of Title
42 of the United States Code, the federal TRICARE program and corresponding regulations, the
Federal False Claims Act 31 U.S.C. §3729-3733, or the regulations promulgated pursuant to such
statutes or regulations or related state or local statutes or by generally recognized professional
standards of care or conduct, except for such activities as would not, individually or in the
aggregate, result in a Material Adverse Effect; (2) has had a civil monetary penalty assessed
against it under Section 1128A of the Social Security Act (“SSA”); (3) is currently excluded from
participation under the Medicare program or a Federal Health Care Program (as that term is defined
in SSA Section 1128(B)(f)); or (4) has been convicted (as that term is defined in 42 C.F.R.
§1001.2) of any of the categories of offenses described in SSA Section 1128(a) and (b)(1), (2) and
(3).



10









 





     (oo) None of the Company, the Guarantors or any of their respective subsidiaries is, or after
giving effect to the offering and sale of the Notes and the application of the proceeds thereof as
described in the Disclosure Package and the Final Offering Memorandum will be required to register
as an “investment company” as defined in the Investment Company Act of 1940, as amended.



     (pp) The minute books and records of the Company relating to proceedings of its stockholders,
board of directors and committees of its board of directors made available to Weil, Gotshal &
Manges LLP, counsel for the Initial Purchasers, are the original minute books and records or are
true, correct and complete copies thereof, with respect to all proceedings of said stockholders,
board of directors and committees since July 5, 2005, through the date hereof. In the event that
definitive minutes have not been prepared with respect to any proceedings of such stockholders,
board of directors or committees, the Company has provided Weil, Gotshal & Manges LLP with
originals or true, correct and complete copies of draft minutes or written agendas relating
thereto, which drafts and agendas, if any, reflect all events that occurred in connection with such
proceedings.



     (qq) The statements contained or incorporated by reference in (i) the Disclosure Package and
the Final Offering Memorandum under the captions “Description of the Notes”, “Description of Other
Indebtedness”, “Notice to Investors”, “Plan of Distribution” and “Material U.S. Federal Income Tax
Considerations” and (ii) Item 1 of Part I of the Company’s Annual Report of Form 10-K for the
fiscal year ended December 31, 2006 under the caption “Regulation and Other Factors”, in each case
as amended and supplemented by statements contained in the Disclosure Package and the Final
Offering Memorandum or documents incorporated by reference in the Disclosure Package and the Final
Offering Memorandum (exclusive in each case of any amendment or supplement thereto) insofar as it
purports to constitute a summary of the terms of the Securities, legal matters, agreements,
documents or proceedings discussed therein are accurate in all material aspects.



     (rr) The Company is subject to and in compliance in all material respects with the reporting
requirements of Section 13 or 15(d) of the Exchange Act. All reports filed by the Company with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act comply as to form in all material
respects with the Exchange Act.



     (ss) The Company has established and maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15 under the Exchange Act), which (i) are designed to ensure that
information required to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported and is made known to the Company’s
principal executive officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under the Exchange Act are
being prepared; (ii) have been evaluated for effectiveness as of the end of the last fiscal
quarter; and (iii) are effective in all material respects to perform the functions for which they
were established.



     (tt) Except as set forth in the Disclosure Package or the Final Offering Memorandum with
respect to ABS, based on the most recent evaluation of its disclosure controls and procedures, the
Company is not aware of (i) any significant deficiency in the design or operation of internal
controls which could adversely affect the Company’s ability to record, process, summarize and
report financial data or any material weaknesses in internal controls; or



11









 




(ii) any fraud, whether or not material, that involves management or other employees who have
a significant role in the Company’s internal controls.




     (uu) Since the date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.



     (vv) There is and has been no failure on the part of the Company and any of the Company’s
directors or officers, in their capacities as such, to comply in all material respects with any
provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection
therewith (the “Sarbanes Oxley Act”), including Section 402 related to loans and Sections 302 and
906 related to certifications.



     (ww) Except as disclosed or incorporated by reference in the Disclosure Package and the Final
Offering Memorandum (exclusive of any amendment or supplement thereto), there are no contracts,
agreements or understandings between the Company and any person that would give rise to a valid
claim against the Company or any Initial Purchaser for a brokerage commission, finder’s fee or
other like payment in connection with this offering.



     (xx) The market-related and industry data included or incorporated by reference in the
Disclosure Package and the Final Offering Memorandum are based upon estimates by the Company
derived from sources that the Company believes to be reliable and accurate.



     (yy) The operations of the Company, the Guarantors or any of their respective subsidiaries are
and have been conducted at all times in material compliance with applicable financial recordkeeping
and reporting requirements and money laundering statutes and the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or any arbitrator
involving the Company, the Guarantors or any of their respective subsidiaries with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.



     (zz) None of the Company, the Guarantors or any of their respective subsidiaries or, to the
knowledge of the Company, any director, officer, agent, employee or Affiliate of the Company, the
Guarantors or any of their respective subsidiaries is currently subject to any sanctions
administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury
(“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering of the
Notes hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.



     (aaa) None of (i) the Company, the Guarantors or any of its or their subsidiaries or, to the
knowledge of the Company, any director, officer, agent, employee or Affiliate of the Company, the
Guarantors or any of its or their subsidiaries is aware of or has taken any action, directly or
indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations thereunder (the



12









 




“FCPA”), including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any “foreign official” (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA; and (ii) the Company, the Guarantors, its or their
subsidiaries and, to the knowledge of the Company, any Affiliate of the Company have conducted
their businesses in compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to ensure, continued
compliance therewith, except in the case of clauses (i) and (ii), as would not have a Material
Adverse Effect.




          Any certificate signed by any officer of the Company or any Guarantor and delivered to the
Representatives or counsel for the Initial Purchasers in connection with the Offering shall be
deemed a representation and warranty by the Company or such Guarantor, as to matters covered
thereby, to each Initial Purchaser.




          2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to sell to each
Initial Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from
the Company, at a purchase price of 101.35% of the principal amount thereof, plus accrued interest
from January 15, 2007 to the Closing Date, the principal amount of Notes set forth opposite such
Initial Purchaser’s name in Schedule I hereto.




          3. Delivery and Payment. Delivery of and payment for the Notes shall be made at 10:00
A.M., New York City time, on May 31, 2007, or at such time on such later date not more than three
Business Days after the foregoing date as the Representatives shall designate, which date and time
may be postponed by agreement between the Representatives and the Company or as provided in Section
9 hereof (such date and time of delivery and payment for the Notes being herein called the “Closing
Date”). Delivery of the Notes shall be made to the Representatives for the respective accounts of
the several Initial Purchasers against payment by the several Initial Purchasers through the
Representatives of the purchase price thereof to or upon the order of the Company by wire transfer
payable in same-day funds to the account specified by the Company. The Notes shall be delivered in
such names, forms and amounts as the Initial Purchasers shall specify and delivery shall be made
through the facilities of The Depository Trust Company unless the Representatives shall otherwise
instruct.




          4. Offering by the Initial Purchasers.




          (a) Each Initial Purchaser acknowledges that the Securities have not been and will
not be registered under the Act and the Notes may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Act.




          (b) Each Initial Purchaser, severally and not jointly, represents and warrants to
and agrees with the Company and the Guarantors that:





          (i) it has not offered or sold, and will not offer or sell, any Notes within
the United States or to, or for the account or benefit of, U.S. persons (x) as part of



13









 







their distribution at any time or (y) otherwise until 40 days after the later of the
commencement of the offering and the date of closing of the offering except:




          (A) to those it reasonably believes to be “qualified institutional
buyers” (as defined in Rule 144A under the Act); or




          (B) in accordance with Rule 903 of Regulation S;




          (ii) neither it nor any person acting on its behalf has made or will make
offers or sales of the Notes in the United States by means of any form of general
solicitation or general advertising (within the meaning of Regulation D) in the United
States;




          (iii) in connection with each sale pursuant to Section 4(b)(i)(A), it has
taken or will take reasonable steps to ensure that the purchaser of such Notes is aware
that such sale is being made in reliance on Rule 144A;




          (iv) neither it, nor any of its Affiliates nor any person acting on its or
their behalf has engaged or will engage in any directed selling efforts (within the meaning
of Regulation S) with respect to the Notes;




          (v) it has not entered and will not enter into any contractual arrangement
with any distributor (within the meaning of Regulation S) with respect to the distribution
of the Notes, except with its affiliates or with the prior written consent of the Company;




          (vi) it and its Affiliates have complied and will comply with the offering
restrictions requirement of Regulation S;




          (vii) at or prior to the confirmation of sale of Notes (other than a sale of
Notes pursuant to Section 4(b)(i)(A) of this Agreement), it shall have sent to each
distributor, dealer or person receiving a selling concession, fee or other remuneration
that purchases Notes from it during the distribution compliance period (within the meaning
of Regulation S) a confirmation or notice to substantially the following effect:



“The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the “Act”) and may not be offered or
sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the commencement
of the offering and the date of closing of the offering, except in
either case in accordance with Regulation S or Rule 144A under the
Act. Terms used in this paragraph have the meanings given to them
by Regulation S.”




          (viii) it has not offered or sold and, prior to the date six months after
the date of issuance of the Securities, will not offer or sell any Securities to persons in
the United Kingdom in circumstances which have resulted or will result in an offer to the
public in the United Kingdom within the meaning of section 85(1) of the FSMA;



14









 






          (ix) it has complied and will comply with all applicable provisions of the
FSMA) with respect to anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom;




          (x) it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage in
investment activity (within the meaning of section 21 of the FSMA) received by it in
connection with the issue or sale of any Notes, in circumstances in which section 21(1) of
the FSMA does not apply to the Company;




          (xi) it is an “accredited investor” (as defined in Rule 501(a) of Regulation
D); and




          (xii) without notice to the Company, it has not given and will not give to any
prospective purchaser of the Notes any Issuer Written Information; provided that the prior
written consent of the Company shall be deemed to have been given in respect of (x)
preliminary and final term sheets relating to the offer and sale of the Notes containing
customary terms and (y) material relating to the offer and sale of the Notes prepared by
the Initial Purchasers that does not contain information provided by or on behalf of the
Company specifically for use in such material.



          5. Agreements. The Company and the Guarantors agree as set forth below, jointly and
severally, with the Initial Purchasers that:




          (a) The Company and the Guarantors will furnish to each Initial Purchaser and to counsel for
the Initial Purchasers, without charge, during the period referred to in paragraph (c) below, as
many copies of the materials contained in the Disclosure Package and the Final Offering Memorandum
and any amendments and supplements thereto as they may reasonably request.




          (b) The Company and the Guarantors will prepare the Pricing Supplement, in the form approved
by you and attached as Schedule IV hereto.




          (c) None of the Company or the Guarantors will amend or supplement the Disclosure Package and
the Final Offering Memorandum without the prior written consent of the Representatives, which
consent shall not be unreasonably withheld or delayed; provided, however, that, prior to the
completion of the distribution of the Securities by the Initial Purchasers (as determined by the
Initial Purchasers), the Company will not file any document under the Exchange Act that is
incorporated by reference in the Disclosure Package or the Final Offering Memorandum unless, prior
to such proposed filing, the Company has furnished the Representatives with a copy of such document
for their review and the Representatives have not reasonably objected to the filing of such
document. The Company will promptly advise the Representatives when any document filed under the
Exchange Act that is incorporated by reference in the Disclosure Package or the Final Offering
Memorandum shall have been filed with the Commission.




          (d) If at any time prior to the completion of the sale of the Notes by the Initial Purchasers
(as determined by the Representatives), any event occurs as a result of which the Disclosure
Package or the Final Offering Memorandum, as then amended or supplemented,





15









 







would include any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it should be necessary to amend or supplement the Disclosure Package or
the Final Offering Memorandum to comply with applicable law, the Company and the Guarantors will
promptly (i) notify the Representatives of any such event; (ii) subject to the requirements of
paragraph (c) of this Section 5, prepare an amendment or supplement that will correct such
statement or omission or effect such compliance; and (iii) supply any supplemented or amended Final
Offering Memorandum to the several Initial Purchasers and counsel for the Initial Purchasers
without charge in such quantities as they may reasonably request.




     (e) Without the prior written consent of the Representatives, the Company and the Guarantors
have not given and will not give to any prospective purchaser of the Notes any Issuer Written
Information other than materials contained in the Disclosure Package, the Final Offering Memorandum
or any other offering materials prepared by or with the prior written consent of the
Representatives.



     (f) The Company and the Guarantors will arrange, if necessary, for the qualification of the
Notes for sale by the Initial Purchasers under the laws of such jurisdictions as the
Representatives may reasonably designate and will maintain such qualifications in effect so long as
reasonably required for the sale of the Notes; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to service of process in suits, other than those arising out of
the Offering, in any jurisdiction where it is not now so subject. The Company will promptly advise
the Representatives of the receipt by the Company or any Guarantor of any notification with respect
to the suspension of the qualification of the Notes for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose.



     (g) During the period of two years after the Closing Date, the Company and the Guarantors will
not, and will use its best efforts not permit any of its Affiliates to, resell any Notes that have
been acquired by any of them.



     (h) None of the Company, the Guarantors, their respective Affiliates or any person acting on
its or their behalf will, directly or indirectly, make offers or sales of any security, or solicit
offers to buy any security, under circumstances that would require the registration of the
Securities.



     (i) None of the Company, the Guarantors, their respective Affiliates or any person acting on
its or their behalf will engage in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with any offer or sale of the Notes in the United States
and none of the Company, the Guarantors, their respective Affiliates, or any person acting on its
or their behalf will engage in any directed selling efforts with respect to the Notes, and each of
them will comply with the offering restrictions requirement of Regulation S. Terms used in this
paragraph have the meanings given to them by Regulation S.



     (j) So long as any of the Notes are “restricted securities” within the meaning of Rule
144(a)(3) under the Act, the Company and the Guarantors will, during any period in which they are
not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as designated by such
holder) of such restricted securities, upon the request of such holder or prospective purchaser,
any information required to be provided by Rule 144A(d)(4) under the



16









 







Act. Such information will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. This covenant is intended
to be for the benefit of the holders, and the prospective purchasers designated by such holders,
from time to time of such restricted securities.



     (k) The Company and the Guarantors will cooperate with the Representatives and use their
respective best efforts to have the Notes designated as PORTAL eligible securities in accordance
with the rules and regulations of the NASD and to permit the Notes to be eligible for clearance and
settlement through The Depository Trust Company.



     (l) The Company and the Guarantors will use the net proceeds received from the sale of the
Notes pursuant to this Agreement in the manner specified in the Disclosure Package and the Final
Offering Memorandum.



     (m) None of the Company, any of the Guarantors or any of its or their respective subsidiaries
will for a period of 90 days following the Execution Time, without the prior written consent of
Citigroup, directly or indirectly, offer, sell, contract to sell, pledge, otherwise dispose of, or
enter into any transaction that is designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due to cash settlement
or otherwise) by the Company or any Affiliate of the Company or any person in privity with the
Company or any Affiliate of the Company, directly or indirectly, or announce the offering of, any
debt securities issued or guaranteed by the Company (other than the Securities).



     (n) None of the Company, any of the Guarantors or any of its or their respective subsidiaries
will take, directly or indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale or resale of the
Notes.



     (o) The Company and the Guarantors agree to pay the costs and expenses relating to the
following matters: (i) the fees, disbursements and expenses of the Company’s counsel and
accountants in connection with the issuance of the Securities; (ii) all expenses in connection with
the preparation, printing and filing of the materials contained in the Disclosure Package and the
Final Offering Memorandum and any amendments and supplements thereto and the mailing and delivering
of copies thereof to the Initial Purchasers and dealers; (iii) the cost of printing or producing
this Agreement, the Supplemental Indenture, the Registration Rights Agreement, the Securities, any
blue sky memoranda, closing documents (including, without limitation, any compilations thereof) and
any other documents in connection with the offering, purchase, sale and delivery of the Notes; (iv)
all expenses in connection with the qualification of the Securities for offering and sale under
state securities laws as provided in Section 5(d) hereof, including, without limitation, the fees
and disbursements of counsel for the Initial Purchasers in connection with such qualification and
in connection with the Blue Sky surveys; (v) any fees charged by securities rating services for
rating the Securities; (vi) the cost related to the preparation, printing, authentication,
issuance, and delivery of certificates for the Securities; (vii) any stamp or transfer taxes in
connection with the original issuance and sale of the Securities; (viii) the fees and expenses of
the Trustee and any agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Supplemental Indenture and the Securities; (ix) any cost incurred in
connection with the designation of the Notes for trading in the



17









 







PORTAL; (x) investor presentations on any “road show” undertaken in connection with the
marketing of the offering of the Notes, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the Company, but shall not
be responsible for any of the cost of any aircraft chartered in connection with the road show; (xi)
filing and fees and expenses in connection with the filing of a registration statement with the
Commission under the Act and the qualification of an indenture under the Trust Indenture Act,
pursuant to the Registration Rights Agreement; and (xii) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise specifically provided for in
this Section.



     (p) The Company and the Guarantors will, for a period of twelve months following the Execution
Time, furnish to the Representatives (i) all reports or other communications (financial or other)
generally made available to the Company’s stockholders, and deliver such reports and communications
to the Representatives as soon as they are available, unless such documents are furnished to or
filed with the Commission or any securities exchange on which any class of securities of the
Company is listed and generally made available to the public and (ii) such additional information
concerning the business and financial condition of the Company as the Representatives may from time
to time reasonably request (such statements to be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in reports furnished to
stockholders).



     (q) The Company and the Guarantors will comply in all material respects with all applicable
securities and other laws, rules and regulations, including, without limitation, provisions of the
Sarbanes-Oxley Act and rules and regulations of the NASD, and use their respective reasonable best
efforts to cause the respective directors and officers of the Company and each of the Guarantors,
in their capacities as such, to comply in all material respects with such laws, rules and
regulations.



     (r) The Company shall take any and all action required to ensure that at the Effective Time,
the Additional Guarantors shall have duly authorized the entering into of the Guarantor Joinder
Agreement, the Supplemental Indenture, the Registration Rights Agreement and any other Related
Document and the transactions contemplated thereby.



     (s) The Company and the Guarantors will not take any action or omit to take any action (such
as issuing any press release relating to any Securities without an appropriate legend) which may
result in the loss by any of the Initial Purchasers of the ability to rely on any stabilization
safe harbor provided by the Financial Services Authority under the FSMA.



     6. Conditions of Initial Purchasers’ Obligations. The obligations of the Initial
Purchasers hereunder are subject to the accuracy of the representations and warranties of the
Company and the Guarantors contained herein at the Execution Time and the Closing Date or in
certificates of any officer of the Company or the Guarantors delivered pursuant to the provisions
hereof, to the performance by the Company and the Guarantors of their covenants and other
obligations hereunder, and to the following further conditions:



     (a) Waller Lansden Dortch & Davis, LLP shall have furnished to the Representatives its written
opinion, or letter or letters, as counsel to the Company and the Guarantors, addressed to the
Representatives and dated the Closing Date, substantially in the form of Exhibit B hereto.



18









 





     (b) The Representatives shall have received from Weil, Gotshal & Manges LLP, counsel for the
Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to the issuance
and sale of the Securities, the Supplemental Indenture, this Agreement, the Registration Rights
Agreement, the Disclosure Package and the Final Offering Memorandum and other related matters as
the Representatives may reasonably require, and the Company and the Guarantors shall have furnished
to such counsel such documents as they reasonably request for the purpose of enabling them to pass
upon such matters.



     (c) At the time of the execution of this Agreement, the Representatives shall have received
from:




     (i) Ernst & Young LLP, a letter with respect to the financial
information of the Company included or incorporated by reference in the Disclosure
Package and the Final Offering Memorandum, in form and substance satisfactory to
the Representatives, addressed to the Representatives and dated the date hereof (A)
confirming that it is an independent registered public accounting firm within the
meaning of the Act and is in compliance with the applicable requirements relating
to the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (B) stating, as of the date hereof (or, with respect to matters
involving changes or developments since the respective dates as of which specified
financial information is given or incorporated by reference in the Disclosure
Package and the Final Offering Memorandum, as of a date not more than five days
prior to the date hereof), the conclusions and findings of such firm with respect
to the financial information and other matters ordinarily covered by accountants’
“comfort letters” to Representatives in connection with a registered public
offering; and




     (ii) PricewaterhouseCoopers LLP, two letters, one with respect to
the financial information of Horizon Health and the other with respect to the
financial information of ABS, included or incorporated by reference in the
Disclosure Package and the Final Offering Memorandum, each in form and substance
satisfactory to the Representatives and Pricewaterhouse Coopers LLP, addressed to
the Representatives and dated the date hereof (A) confirming that it is an
independent registered public accounting firm within the meaning of the Act and is
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (B) stating, as of
the date hereof (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given or
incorporated by reference in the Disclosure Package and the Final Offering
Memorandum, as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information and
other matters ordinarily covered by accountants’ “comfort letters” to
Representatives in connection with a registered public offering.



     (d) With respect to the letters referred to in the immediately preceding paragraph and
delivered to the Representatives concurrently with the execution of this Agreement (each, an
“initial letter”), the Representatives shall have received a letter (each, a “bring-down letter”)
addressed to the Representatives and dated as of the Closing Date:



19









 






     (i) Ernst & Young LLP, with respect to the financial information of
the Company, included or incorporated by reference in the Disclosure Package and
the Final Offering Memorandum, (A) confirming that it is an independent registered
public accounting firm within the meaning of the Act and is in compliance with the
applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (B) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given or
incorporated by reference in the Disclosure Package and the Final Offering
Memorandum, as of a date not more than five days prior to the date of the
bring-down letter), the conclusions and findings of such firm with respect to the
financial information and other matters covered by the initial letter and (C)
confirming in all material respects the conclusions and findings set forth in the
initial letter; and




     (ii) PricewaterhouseCoopers LLP, with respect to the financial
information of Horizon Health and ABS, included and incorporated by reference in
the Disclosure Package and the Final Offering Memorandum, (A) confirming that it is
an independent registered public accounting firm within the meaning of the Act and
is in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (B) stating, as of
the date of each of the bring-down letters (or, with respect to matters involving
changes or developments since the respective dates as of which specified financial
information is given or incorporated by reference in the Disclosure Package and the
Final Offering Memorandum, as of a date not more than five days prior to the date
of the applicable bring-down letter), the conclusions and findings of such firm
with respect to the financial information and other matters covered by each of the
initial letters and (C) confirming in all material respects the conclusions and
findings set forth in each of the initial letters.



     (e) The Company shall have furnished to the Representatives a certificate, dated the Closing
Date, signed by the Chief Executive Officer and Chief Accounting Officer of the Company stating, as
applicable, that:




     (i) The representations, warranties and agreements of the Company
and the Guarantors contained herein, as applicable, are true and correct in all
material respects (except with respect to representations, warranties and
agreements already qualified by materiality) as if made on and as of the Closing
Date (other than to the extent any such representation or warranty is made
expressly as of a certain date), and the Company and the Guarantors have performed
all covenants and agreements and satisfied all conditions (after giving effect to
all materiality qualifiers herein) on their part to be performed or satisfied
hereunder, to the extent a party hereto, at or prior to the Closing Date; and the
conditions set forth in Section 6 have been fulfilled; and




     (ii) They have carefully examined the Disclosure Package and the
Final Offering Memorandum (exclusive of any amendment or supplement thereto) and,
in their opinion (A) as of the Closing Date, the Disclosure Package



20









 







and the Final Offering Memorandum did not include any untrue statement of a
material fact and did not omit to state a material fact required to be stated
therein or necessary, in the light of the circumstances under which made, to make
the statements therein not misleading, and (B) since the date of the most recent
financial statements included in the Disclosure Package and the Final Offering
Memorandum (exclusive of any amendment or supplement thereto), there has been no
Material Adverse Effect, except as set forth in or contemplated in the Disclosure
Package and the Final Offering Memorandum (exclusive of any amendment or supplement
thereto).



     (f) Subsequent to the Execution Time or, if earlier, the dates as of which information is
given in the Disclosure Package and the Final Offering Memorandum (exclusive of any amendment or
supplement thereto), there shall not have been (i) any change or decrease specified in the letter
or letters referred to in paragraph (c) or (d) of this Section 6; or (ii) any change, or any
development involving a prospective change, in or affecting the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its subsidiaries taken as a whole,
whether or not arising from transactions in the ordinary course of business, except as set forth in
or contemplated in the Disclosure Package and the Final Offering Memorandum (exclusive of any
amendment or supplement thereto), the effect of which, in any case referred to in clause (i) or
(ii) above, is, in the sole judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering, sale or delivery of the Securities as
contemplated in the Disclosure Package and the Final Offering Memorandum (exclusive of any
amendment or supplement thereto).



     (g) Subsequent to the Execution Time, there shall not have been any decrease in the rating of
any of the Company’s securities by any “nationally recognized statistical rating organization” (as
defined for purposes of Rule 436(g) under the Act) or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such rating that does not indicate the
direction of the possible change.



     (h) Prior to the Closing Date, the Company shall have furnished to the Representatives such
further information, certificates and documents as the Representatives may reasonably request.



     (i) On the Closing Date, the Acquisition shall have been consummated and the Amendment shall
have been executed and delivered by all parties thereto.



     (j) The Notes shall have been designated as PORTAL-eligible securities in accordance with the
rules and regulations of the NASD, and the Notes shall be eligible for clearance and settlement
through The Depository Trust Company.


  If any of the conditions specified in this Section 6 shall not have been fulfilled when and as
provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere
in this Agreement shall not be reasonably satisfactory in form and substance to the Representatives
and counsel for the Initial Purchasers, this Agreement and all obligations of the Initial
Purchasers hereunder may be cancelled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in writing or by
telephone or facsimile confirmed in writing.





21









 





     The documents required to be delivered by this Section 6 will be delivered to the office of
Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, on the Closing Date.



          7. Reimbursement of Expenses. If the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers set forth in Section
6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or because of
any refusal, inability or failure on the part of the Company or any Guarantor to perform any
agreement herein or comply with any provision hereof other than by reason of a default by any of
the Initial Purchasers, the Company will reimburse the Initial Purchasers severally through
Citigroup on demand for all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Notes.




          8. Indemnification and Contribution. (a) Each of the Company and the Guarantors
agrees, jointly and severally, to indemnify and hold harmless each Initial Purchaser, the
directors, officers, employees, Affiliates and agents of each Initial Purchaser and each person who
controls any Initial Purchaser within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other U.S. federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum, the Final Offering
Memorandum, any Issuer Written Information, or other written information used by or on behalf of
the Company or the Guarantors in connection with the Offering, including any “road show” not
constituting Issuer Written Information, or in any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the Company and the Guarantors will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission made in the
Preliminary Offering Memorandum or the Final Offering Memorandum, or in any amendment thereof or
supplement thereto, in reliance upon and in conformity with written information furnished to the
Company or the Guarantors by or on behalf of any Initial Purchaser through the Representatives
specifically for inclusion therein. This indemnity agreement will be in addition to any liability
that the Company or the Guarantors may otherwise have.




     (b) Each Initial Purchaser severally, and not jointly, agrees to indemnify and hold harmless
the Company, each of the Guarantors, each of their respective directors and officers, and each
person who controls the Company or the Guarantors within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company and the Guarantors to
each Initial Purchaser, but only with reference to written information relating to such Initial
Purchaser furnished to the Company and the Guarantors by or on behalf of such Initial Purchaser
through the Representatives specifically for inclusion in the Preliminary Offering Memorandum, the
Final Offering Memorandum or in any amendment or supplement thereto. This indemnity agreement will
be in addition to any liability that any Initial Purchaser



22









 




may otherwise have. The Company and the Guarantors acknowledge that (i) the statements set forth
in the last paragraph of the cover page regarding delivery of the Securities and (ii), under the
heading “Plan of Distribution”, (x) the first sentence of the third paragraph, and the fifth
paragraph related to proposed resales of the Notes by the Initial Purchasers, (y) the fifth and
sixth sentences of the ninth paragraph related to market-making activities and (z) the tenth
paragraph related to stabilization, syndicate covering transactions and penalty bids, in each case
in the Preliminary Offering Memorandum and the Final Offering Memorandum constitute the only
information furnished in writing by or on behalf of the Initial Purchasers for inclusion in the
Preliminary Offering Memorandum, the Final Offering Memorandum or in any amendment or supplement
thereto.




     (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, notify the indemnifying party in writing
of the commencement thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the indemnifying party
of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel (including
local counsel) of the indemnifying party’s choice at the indemnifying party’s expense to represent
the indemnified party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses of any separate
counsel, other than local counsel if not appointed by the indemnifying party, retained by the
indemnified party or parties except as set forth below); provided, however, that
such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party’s election to appoint counsel (including local counsel) to represent the
indemnified party in an action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of interest; (ii) the
actual or potential defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party; (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of such action; or (iv)
the indemnifying party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle, compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability arising out of such
claim, action, suit or proceeding and does not include any statement as to or any admission of
fault, culpability or failure to act by or on behalf of any indemnified party.



     (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, the



23









 







Company and the Guarantors, jointly and severally, and the Initial Purchasers severally agree to
contribute to the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending any loss, claim, damage,
liability or action) (collectively “Losses”) to which the Company, each of the Guarantors and one
or more of the Initial Purchasers may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Guarantors on the one hand and by the Initial
Purchasers on the other from the offering of the Securities; provided, however,
that in no case shall any Initial Purchaser be responsible for any amount in excess of the purchase
discount or commission applicable to the Notes purchased by such Initial Purchaser hereunder. If
the allocation provided by the immediately preceding sentence is unavailable for any reason, the
Company and the Guarantors, jointly and severally, and the Initial Purchasers severally shall
contribute in such proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Guarantors, on the one hand, and the Initial Purchasers,
on the other, in connection with the statements or omissions that resulted in such Losses, as well
as any other relevant equitable considerations. Benefits received by the Company and the
Guarantors shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by the Company, and benefits received by the Initial Purchasers shall
be deemed to be equal to the total purchase discounts and commissions received by the Initial
Purchasers. Relative fault shall be determined by reference to, among other things, whether any
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information provided by the Company and the Guarantors, on the one hand,
or the Initial Purchasers, on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue statement or omission. The
Company, the Guarantors and the Initial Purchasers agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of allocation that does not
take account of the equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers’ obligation to contribute pursuant to this
Section 8 shall be several in proportion to their respective purchase obligations hereunder and not
joint. For purposes of this Section 8, each person who controls an Initial Purchaser within the
meaning of either the Act or the Exchange Act and each director, officer, employee, Affiliate and
agent of an Initial Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company or any of the Guarantors within the meaning of either the
Act or the Exchange Act and each officer and director of the Company or any of the Guarantors shall
have the same rights to contribution as the Company or any of the Guarantors, subject in each case
to the applicable terms and conditions of this paragraph (d).



          9. Default by an Initial Purchaser. If any one or more Initial Purchasers shall fail
to purchase and pay for any of the Notes agreed to be purchased by such Initial Purchaser hereunder
and such failure to purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Initial Purchasers shall be obligated severally to
take up and pay for (in the respective proportions which the principal amount of Notes set forth
opposite their names in Schedule I hereto bears to the aggregate principal amount of Notes set
forth opposite the names of all the remaining Initial Purchasers) the Notes which the defaulting
Initial Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Notes which the
defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10%
of the aggregate

24









 








principal amount of Notes set forth in Schedule I hereto, the remaining Initial Purchasers
shall have the right to purchase all, but shall not be under any obligation to purchase any, of the
Notes, and if such nondefaulting Initial Purchasers do not purchase all the Notes, this Agreement
will terminate without liability to any nondefaulting Initial Purchaser or the Company. In the
event of a default by any Initial Purchaser as set forth in this Section 9, the Closing Date shall
be postponed for such period, not exceeding five Business Days, as the Representatives shall
determine in order that the required changes in the Final Memorandum or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any nondefaulting Initial Purchaser
for damages occasioned by its default hereunder.




          10. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company prior to delivery of and payment
for the Notes, if at any time prior to such time (i) trading in the Company’s Common Stock shall
have been suspended by the Commission or the Nasdaq Global Select Market or trading in securities
generally on the New York Stock Exchange or the Nasdaq Global Select Market shall have been
suspended or limited or minimum prices shall have been established on either the New York Stock
Exchange or the Nasdaq Global Select Market; (ii) a banking moratorium shall have been declared
either by U.S. federal or New York State authorities; or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a national emergency or
war or other calamity or crisis the effect of which on financial markets is such as to make it, in
the sole judgment of the Representatives, impractical or inadvisable to proceed with the Offering
or delivery of the Securities as contemplated by the Disclosure Package and the Final Offering
Memorandum (exclusive of any amendment or supplement thereto).




          11. Additional Guarantors. On the Closing Date, the Company will cause each of the
Additional Guarantors to become a party to this Agreement by causing each Additional Guarantor to
execute a Guarantor Joinder Agreement in the form attached hereto as Exhibit C and delivering an
executed copy of such Guarantor Joinder Agreement to the Initial Purchasers on the Closing Date,
whereupon each of the Additional Guarantors shall become jointly and severally liable for all of
the Company’s obligations under Section 8 hereof; it being acknowledged and agreed that the
obligations of the Additional Guarantors under Section 8 hereof shall not be effective unless and
until the Additional Guarantors execute and deliver a Guarantor Joinder Agreement and that the
indemnity in Section 8(b) hereof in favor of the Additional Guarantors shall not become effective
until the Additional Guarantors execute and deliver a Guarantor Joinder Agreement.




          12. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company, the Guarantors or
their respective officers and of the Initial Purchasers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation made by or on
behalf of the Initial Purchasers or the Company, the Guarantors or any of the indemnified persons
referred to in Section 8 hereof, and will survive delivery of and payment for the Notes. The
provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.




          13. Notices. All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Representatives, will be mailed, delivered or telefaxed to the
Citigroup General Counsel (fax no.: (212) 816-7912) and confirmed to Citigroup at 388




25









 







Greenwich Street, New York, New York 10013, Attention: General Counsel; or, if sent to the
Company, will be mailed, delivered or telefaxed to it at 6640 Carothers Parkway, Suite 500
Franklin, Tennessee 37067, Attention: Christopher Howard, Esq. (Fax: (615) 312-5711), with copy to
Waller Lansden Dortch & Davis, LLP, 511 Union Street, Suite 2700, Nashville, Tennessee 37219,
Attention: Jay Nixon, Esq. (Fax: (615) 244-6804).




          14. No Fiduciary Duty. The Company and the Guarantors hereby acknowledge that (a) the
purchase and sale of the Notes pursuant to this Agreement is an arm’s-length commercial transaction
between the Company and the Guarantors, on the one hand, and the Initial Purchasers and any
affiliate through which it may be acting, on the other, (b) the Initial Purchasers are acting as
principal and not as an agent or fiduciary of the Company and the Guarantors and (c) the Company’s
and the Guarantors’ engagement of the Initial Purchasers in connection with the offering and the
process leading up to the offering is as independent contractors and not in any other capacity.
Furthermore, the Company and the Guarantors each agree that it is solely responsible for making its
own judgments in connection with the offering (irrespective of whether any of the Initial
Purchasers has advised or is currently advising the Company and the Guarantors on related or other
matters). Each of Company and the Guarantors agree that it will not claim that the Initial
Purchasers have rendered advisory services of any nature or respect, or owe an agency, fiduciary or
similar duty to the either of them, in connection with such transaction or the process leading
thereto.




          15. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the indemnified persons referred to in Section 8
hereof and their respective successors, and, except as expressly set forth in Section 5(j) hereof,
no other person will have any right or obligation hereunder.




          16. Applicable Law. This Agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed within the
State of New York. The parties hereto each hereby waive any right to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement.




          17. Counterparts. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
agreement.




          18. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.




          19. Definitions. The terms that follow, when used in this Agreement, shall have the
meanings indicated.




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




          “Affiliate” shall have the meaning specified in Rule 501(b) of Regulation D.




          “Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or a day
on which banking institutions or trust companies are authorized or obligated by law to close in The
City of New York.




26









 








          “Commission” shall mean the Securities and Exchange Commission.




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




          “Execution Time” shall mean, the date and time that this Agreement is executed and delivered
by the parties hereto.




          “Issuer Written Information” shall mean any writings in addition to the Preliminary Offering
Memorandum that the parties expressly agree in writing to treat as part of the Disclosure Package.




          “NASD” shall mean the National Association of Securities Dealers, Inc.




          “PORTAL” shall mean the Private Offerings, Resales and Trading through Automated Linkages
system of the NASD.




          “Regulation D” shall mean Regulation D under the Act.




          “Regulation S” shall mean Regulation S under the Act.




          “Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the Commission promulgated thereunder.




27









 








          If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement among the Company, the Guarantors and the several Initial Purchasers.




	 	 	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 	 	 
	 	 	PSYCHIATRIC SOLUTIONS, INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Christopher L. Howard
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Christopher L. Howard
	 

	 	 	 	Title:
	 	Executive Vice President






SIGNATURE
PAGE TO THE PURCHASE AGREEMENT






 









 








	 	 	 	 	 	 	 
	 

	 	 	 	 	 	ABS LINCS DC, LLC
	 

	 	 	 	 	 	ABS LINCS KY, INC.
	 

	 	 	 	 	 	ABS LINCS NJ, INC.
	 

	 	 	 	 	 	ABS LINCS PA, INC.
	 

	 	 	 	 	 	ABS LINCS PR, INC.
	 

	 	 	 	 	 	ABS LINCS SC, INC.
	 

	 	 	 	 	 	ABS LINCS TN, INC.
	 

	 	 	 	 	 	ABS LINCS TX, INC.
	 

	 	 	 	 	 	ABS LINCS VA, INC.
	 

	 	 	 	 	 	ABS LINCS VI, INC.
	 

	 	 	 	 	 	ABS LINCS, LLC
	 

	 	 	 	 	 	ABS NEW HOPE, MIDLANDS, INC.
	 

	 	 	 	 	 	ABS-FIRST STEP, INC.
	 

	 	 	 	 	 	ALLIANCE CROSSINGS, LLC
	 

	 	 	 	 	 	ALLIANCE HEALTH CENTER, INC.
	 

	 	 	 	 	 	ALTERNATIVE BEHAVIORAL SERVICES, INC.
	 

	 	 	 	 	 	ATLANTIC SHORES HOSPITAL, LLC
	 

	 	 	 	 	 	BEHAVIORAL EDUCATIONAL SERVICES, INC.
	 

	 	 	 	 	 	BEHAVIORAL HEALTHCARE LLC
	 

	 	 	 	 	 	BENCHMARK
BEHAVIORAL HEALTH SYSTEM, INC.

	 

	 	 	 	 	 	BHC ALHAMBRA HOSPITAL, INC.
	 

	 	 	 	 	 	BHC BELMONT PINES HOSPITAL, INC.
	 

	 	 	 	 	 	BHC CEDAR VISTA HOSPITAL, INC.
	 

	 	 	 	 	 	BHC FAIRFAX HOSPITAL, INC.
	 

	 	 	 	 	 	BHC FORT LAUDERDALE HOSPITAL, INC.
	 

	 	 	 	 	 	BHC FOX RUN HOSPITAL, INC.
	 

	 	 	 	 	 	BHC FREMONT HOSPITAL, INC.
	 

	 	 	 	 	 	BHC HEALTH SERVICES OF NEVADA, INC.
	 

	 	 	 	 	 	BHC HERITAGE OAKS HOSPITAL, INC.
	 

	 	 	 	 	 	BHC HOLDINGS, INC.
	 

	 	 	 	 	 	BHC INTERMOUNTAIN HOSPITAL, INC.
	 

	 	 	 	 	 	BHC MANAGEMENT SERVICES OF LOUISIANA, LLC

	 

	 	 	 	 	 	BHC MANAGEMENT SERVICES OF NEW MEXICO, LLC

	 

	 	 	 	 	 	BHC MANAGEMENT SERVICES OF STREAMWOOD, LLC

	 

	 	 	 	 	 	BHC MESILLA VALLEY HOSPITAL, LLC
	 

	 	 	 	 	 	BHC MONTEVISTA HOSPITAL, INC.
	 

	 	 	 	 	 	BHC NEWCO 2, LLC
	 

	 	 	 	 	 	BHC NEWCO 3, LLC
	 

	 	 	 	 	 	BHC NEWCO 4, LLC
	 

	 	 	 	 	 	BHC NEWCO 5, LLC
	 

	 	 	 	 	 	BHC NEWCO 6, LLC
	 

	 	 	 	 	 	BHC NEWCO 7, LLC
	 

	 	 	 	 	 	BHC NEWCO 8, LLC
	 

	 	 	 	 	 	BHC NEWCO 9, LLC






SIGNATURE
PAGE TO THE PURCHASE AGREEMENT




 









 








	 	 	 	 	 	 	 
	 

	 	 	 	 	 	BHC NEWCO 10, LLC
	 

	 	 	 	 	 	BHC NORTHWEST PSYCHIATRIC HOSPITAL, LLC
	 

	 	 	 	 	 	BHC PINNACLE POINTE HOSPITAL, INC.
	 

	 	 	 	 	 	BHC PROPERTIES, LLC
	 

	 	 	 	 	 	BHC SIERRA VISTA HOSPITAL, INC.
	 

	 	 	 	 	 	BHC SPIRIT OF ST. LOUIS HOSPITAL, INC.
	 

	 	 	 	 	 	BHC STREAMWOOD HOSPITAL, INC.
	 

	 	 	 	 	 	BHC WINDSOR HOSPITAL, INC.
	 

	 	 	 	 	 	BRENTWOOD ACQUISITION, INC.
	 

	 	 	 	 	 	BRENTWOOD ACQUISITION-SHREVEPORT, INC.
	 

	 	 	 	 	 	BRYNN MARR HOSPITAL, INC.
	 

	 	 	 	 	 	CALVARY CENTER, INC.
	 

	 	 	 	 	 	CANYON RIDGE HOSPITAL, INC.
	 

	 	 	 	 	 	CEDAR SPRINGS HOSPITAL, INC.
	 

	 	 	 	 	 	COLLABORATIVE CARE LLC
	 

	 	 	 	 	 	COLUMBUS HOSPITAL PARTNERS, LLC
	 

	 	 	 	 	 	COLUMBUS HOSPITAL, LLC
	 

	 	 	 	 	 	COMPASS HOSPITAL, INC.
	 

	 	 	 	 	 	CRAWFORD FIRST EDUCATION, INC.
	 

	 	 	 	 	 	CUMBERLAND HOSPITAL, LLC
	 

	 	 	 	 	 	DIAMOND GROVE CENTER, LLC
	 

	 	 	 	 	 	FHCHS OF PUERTO RICO, INC.
	 

	 	 	 	 	 	FIRST CORRECTIONS – PUERTO-RICO, INC.
	 

	 	 	 	 	 	FIRST HOSPITAL CORPORATION OF NASHVILLE
	 

	 	 	 	 	 	FIRST HOSPITAL CORPORATION OF VIRGINIABEACH

	 

	 	 	 	 	 	FIRST HOSPITAL PANAMERICANO, INC.
	 

	 	 	 	 	 	FORT LAUDERDALE HOSPITAL, INC.
	 

	 	 	 	 	 	GREAT PLAINS HOSPITAL, INC.
	 

	 	 	 	 	 	GULF COAST TREATMENT CENTER, INC.
	 

	 	 	 	 	 	H.C. CORPORATION
	 

	 	 	 	 	 	HAVENWYCK HOSPITAL INC.
	 

	 	 	 	 	 	HOLLY HILL HOSPITAL, LLC
	 

	 	 	 	 	 	HSA HILL CREST CORPORATION
	 

	 	 	 	 	 	HSA OF OKLAHOMA, INC.
	 

	 	 	 	 	 	INDIANA PSYCHIATRIC INSTITUTES, LLC
	 

	 	 	 	 	 	INFOSCRIBER CORPORATION
	 

	 	 	 	 	 	LAKELAND BEHAVIORAL, LLC
	 

	 	 	 	 	 	LAUREL OAKS BEHAVIORAL HEALTH CENTER, INC.

	 

	 	 	 	 	 	LEBANON HOSPITAL PARTNERS, LLC
	 

	 	 	 	 	 	LIBERTY POINT BEHAVIORAL HEALTHCARE, LLC

	 

	 	 	 	 	 	MESILLA VALLEY HOSPITAL, INC.
	 

	 	 	 	 	 	MESILLA VALLEY MENTAL HEALTH ASSOCIATES, INC.







SIGNATURE PAGE TO THE PURCHASE AGREEMENT




 









 








	 	 	 	 	 	 	 
	 

	 	 	 	 	 	MICHIGAN PSYCHIATRIC SERVICES, INC.
	 

	 	 	 	 	 	MISSION VISTA BEHAVIORAL HEALTH SERVICES, INC.

	 

	 	 	 	 	 	NORTH SPRING BEHAVIORAL HEALTHCARE, INC.

	 

	 	 	 	 	 	NORTHERN INDIANA PARTNERS, LLC
	 

	 	 	 	 	 	PALMETTO BEHAVIORAL HEALTH HOLDINGS, LLC

	 

	 	 	 	 	 	PALMETTO BEHAVIORAL HEALTH SYSTEM, L.L.C.

	 

	 	 	 	 	 	PALMETTO LOWCOUNTRY BEHAVIORAL HEALTH, L.L.C.

	 

	 	 	 	 	 	PALMETTO PEE DEE BEHAVIORAL HEALTH, L.L.C.

	 

	 	 	 	 	 	PEAK BEHAVIORAL HEALTH SERVICES, LLC

	 

	 	 	 	 	 	PREMIER BEHAVIORAL SOLUTIONS OF FLORIDA, INC.

	 

	 	 	 	 	 	PREMIER BEHAVIORAL SOLUTIONS, INC.
	 

	 	 	 	 	 	PRIDE INSTITUTE, INC.
	 

	 	 	 	 	 	PSYCHIATRIC MANAGEMENT RESOURCES, INC.
	 

	 	 	 	 	 	PSYCHIATRIC SOLUTIONS HOSPITALS, LLC
	 

	 	 	 	 	 	PSYCHIATRIC SOLUTIONS OF VIRGINIA, INC.
	 

	 	 	 	 	 	RAMSAY MANAGED CARE, LLC
	 

	 	 	 	 	 	RAMSAY YOUTH SERVICES OF GEORGIA, INC.
	 

	 	 	 	 	 	RAMSAY YOUTH SERVICES PUERTO RICO, INC.
	 

	 	 	 	 	 	RED ROCK BEHAVIORAL HEALTH LLC
	 

	 	 	 	 	 	RED ROCK SOLUTIONS, LLC
	 

	 	 	 	 	 	RIVEREDGE HOSPITAL HOLDINGS, INC.
	 

	 	 	 	 	 	RIVEREDGE HOSPITAL, INC.
	 

	 	 	 	 	 	ROLLING HILLS HOSPITAL, LLC
	 

	 	 	 	 	 	SAMSON PROPERTIES, LLC
	 

	 	 	 	 	 	SHADOW MOUNTAIN BEHAVIORAL HEALTH SYSTEM, LLC

	 

	 	 	 	 	 	SOMERSET, INCORPORATED
	 

	 	 	 	 	 	SP BEHAVIORAL, LLC
	 

	 	 	 	 	 	SUMMIT OAKS HOSPITAL, INC.
	 

	 	 	 	 	 	SUNSTONE BEHAVIORAL HEALTH, LLC
	 

	 	 	 	 	 	TEXAS HOSPITAL HOLDINGS, INC.
	 

	 	 	 	 	 	TEXAS HOSPITAL HOLDINGS, LLC
	 

	 	 	 	 	 	THE COUNSELING CENTER OF MIDDLE TENNESSEE, INC.

	 

	 	 	 	 	 	THE NATIONAL DEAF ACADEMY, LLC
	 

	 	 	 	 	 	THE PINES RESIDENTIAL TREATMENT CENTER, INC.

	 

	 	 	 	 	 	THERAPEUTIC SCHOOL SERVICES, L.L.C.
	 

	 	 	 	 	 	THREE RIVERS BEHAVIORAL HEALTH, LLC






SIGNATURE PAGE TO THE PURCHASE AGREEMENT




 









 








	 	 	 	 	 	 	 
	 	 	THREE RIVERS HEALTHCARE GROUP, LLC
	 	 	THREE RIVERS SPE HOLDING, LLC
	 	 	THREE RIVERS SPE MANAGER, INC.
	 	 	THREE RIVERS SPE, LLC
	 	 	TRANSITIONAL CARE VENTURES, INC.
	 	 	TUCSON HEALTH SYSTEMS, INC.
	 	 	UNIVERSITY BEHAVIORAL, LLC
	 	 	VALLE VISTA HOSPITAL PARTNERS, LLC
	 	 	VALLE VISTA, LLC
	 	 	WELLSTONE HOLDINGS, INC.
	 	 	WELLSTONE REGIONAL HOSPITAL ACQUISITION, LLC

	 	 	WILLOW SPRINGS, LLC
	 	 	WINDMOOR HEALTHCARE, INC.
	 	 	WINDMOOR HEALTHCARE OF PINELLAS PARK, INC.

	 	 	ZEUS ENDEAVORS, LLC
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Christopher L. Howard
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Christopher L. Howard
	 

	 	 	 	Title:
	 	Vice President
	 
	 	 	 	 	 	 
	 	 	H.C. PARTNERSHIP
	 
	 	 	 	 	 	 
	 	 	BY:	 	H.C. CORPORATION
	 	 	 	 	HSA HILL CREST CORPORATION
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Christopher L. Howard
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Christopher L. Howard
	 

	 	 	 	Title:
	 	Vice President






SIGNATURE PAGE TO THE PURCHASE AGREEMENT





 










 





	 	 	 	 	 	 	 
	 	 	BHC OF INDIANA, GENERAL PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:
	 	COLUMBUS HOSPITAL PARTNERS, LLC	 	 
	 

	 	 	 	LEBANON HOSPITAL PARTNERS, LLC	 	 
	 

	 	 	 	NORTHERN INDIANA PARTNERS, LLC	 	 
	 

	 	 	 	VALLE VISTA HOSPITAL PARTNERS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher L. Howard	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher L. Howard	 	 
	 

	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	BLOOMINGTON MEADOWS, GENERAL PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:
	 	BHC OF INDIANA, GENERAL PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:
	 	COLUMBUS HOSPITAL PARTNERS, LLC	 	 
	 

	 	 	 	LEBANON HOSPITAL PARTNERS, LLC	 	 
	 

	 	 	 	NORTHERN INDIANA PARTNERS, LLC	 	 
	 

	 	 	 	VALLE VISTA HOSPITAL PARTNERS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher L. Howard	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher L. Howard	 	 
	 

	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:
	 	INDIANA PSYCHIATRIC INSTITUTES, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher L. Howard	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher L. Howard	 	 
	 

	 	 	 	Title: Vice President	 	 






SIGNATURE
PAGE TO THE PURCHASE AGREEMENT




 









 





	 	 	 	 	 	 	 
	 	 	HICKORY TRAIL HOSPITAL, L.P.

HIGH PLAINS BEHAVIORAL HEALTH, L.P.

MILLWOOD HOSPITAL, L.P.

TEXAS CYPRESS CREEK HOSPITAL, L.P.

TEXAS WEST OAKS HOSPITAL, L.P.

NEURO INSTITUTE OF AUSTIN, L.P.

TEXAS LAUREL RIDGE HOSPITAL, L.P.

TEXAS OAKS PSYCHIATRIC HOSPITAL, L.P.

TEXAS SAN MARCOS TREATMENT CENTER, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:
	 	TEXAS HOSPITAL HOLDINGS, LLC,	 	 
	 

	 	 	 	     as General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher L. Howard
 

Name: Christopher L. Howard
	 	 
	 

	 	 	 	Title: Vice President	 	 






SIGNATURE
PAGE TO THE PURCHASE AGREEMENT




 









 








	 	 	 
	The foregoing Agreement is hereby

	 	 
	confirmed and accepted as of the
	 	 
	date first above written.
	 	 
	 
	 	 
	Citigroup Global Markets Inc.
	 	 
	Merrill Lynch, Pierce Fenner & Smith Incorporated
	 	 
	Banc of America Securities LLC
	 	 
	J.P. Morgan Securities Inc.
	 	 
	 
	 	 
	By: Citigroup Global Markets Inc.
	 	 






	 	 	 	 	 
	By:

	 	/s/ John W. Peruzzi
 

Name: John W. Peruzzi

Title: Managing Director
	 	 
	 
	 	 	 	 
	For itself and the other several

Initial Purchasers named in Schedule I

to the foregoing Agreement.	 	 






SIGNATURE
PAGE TO THE PURCHASE AGREEMENT





 










 





Exhibit A




EMPLOYEE PENSION OR BENEFIT PLANS



Psychiatric Solutions, Inc. Retirement Savings Plan

Delta Dental Plan

Hartford Basic Group Term Life & AD&D

Hartford Optional Life & AD&D

Hartford Long Term Disability

Flexible Spending Accounts – Unreimbursed Medical & Dependent Care

BCBS of TN Medical Plan

VSP Vision Plan

LifeServices EAP

Short Term Disability with Unum

Accident with Unum

Critical Illness with Unum

Riveredge Health Plan with BCBS

Premier Behavioral Solutions, Inc. Medical Plan – Kaiser/Hawaii

Premier Behavioral Solutions, Inc. Medical Plan – BC/BS of Michigan

Premier Behavioral Solutions, Inc. Medical Plan – COSVI (Puerto Rico)

Whole Life Insurance with Unum

ABS — Puerto Rico — Medical Plan

ABS — Puerto Rico — Dental Plan

ABS — Virgin Islands — Medical Plan

ABS — VIrgin Islands — Dental Plan

Wellstone — Medical, Dental, Life, LTD

Kaiser — CA — Canyon Ridge, Alhambra, Fremont, Heritage Oaks, Sierra Vista

BCBS of CA — Somerset




A-1




 









 





Exhibit B




FORM OF OPINION OF COMPANY’S COUNSEL

TO BE DELIVERED PURSUANT TO SECTION 6(b)




     Waller Lansden Dortch & Davis, LLP shall have furnished to the Initial Purchasers its written
opinion, as counsel to the Company and the Guarantors, addressed to the Initial Purchasers and
dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, to
the effect that:



     (i) The Company and each Domestic Guarantor1 is validly existing as a corporation,
limited liability company or partnership, as the case may be, in good standing under the laws of
its jurisdiction of organization, with the corporate, limited liability company, limited
partnership or partnership, as the case may be, power and authority to own or lease, as the case
may be, and to operate its properties and to conduct its business as described in the Disclosure
Package and the Final Offering Memorandum;



     (ii) Except as contemplated by the Registration Rights Agreement, no registration under the
Act of the Securities is required for the offer and sale of the Securities to the Initial
Purchasers in the manner contemplated in the Purchase Agreement and in the Disclosure Package and
the Final Offering Memorandum, assuming (a) the accuracy of the Initial Purchasers’ representations
in the Purchase Agreement and (b) the accuracy of the Company’s representations contained therein;



     (iii) The Company has an authorized capitalization as set forth in the Disclosure Package and
the Final Offering Memorandum. All of the issued shares of capital stock of the Company and each
corporate Domestic Guarantor have been duly authorized and validly issued and are fully paid and
non-assessable; and all of the issued shares of capital stock of each of the Domestic Guarantors
(except for directors’ qualifying shares), to the best of our knowledge, are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, other
than liens, encumbrances, equities or claims under the Company’s existing senior secured credit
facilities;



     (iv) Neither the Company nor any of the Domestic Guarantors is, or after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof as described in the
Disclosure Package and the Final Offering Memorandum will be, required to be registered as an
“investment company,” as defined in the Investment Company Act of 1940, as amended;



     (v) To the best of such counsel’s knowledge and other than as set forth in the Disclosure
Package and the Final Offering Memorandum, there are no legal or governmental proceedings pending
or threatened to which the Company or the Guarantors is a party or of which





 




			
	1	 	For purposes of this opinion the Guarantors
other than Ramsay Youth Services Puerto Rico, Inc., a Puerto Rican corporation,
are sometimes collectively referred to as the “Domestic
Guarantors,” and each individually as a “Domestic Guarantor.”





B-1









 




any property or assets of the Company or the Guarantors is the subject that, if determined
adversely to the Company or the Guarantors, would reasonably be likely to have a Material Adverse
Effect;




     (vi) The statements contained or incorporated by reference in (i) the Disclosure
Package and the Final Offering Memorandum under the captions “Description of the Notes”,
“Description of Other Indebtedness” and “Material U.S. Federal Income Tax Considerations”; and (ii)
Item 1 of Part I of the Company’s Annual Report of Form 10-K for the fiscal year ended December 31,
2006 under the caption “Regulation and Other Factors”, in each case as amended and supplemented by
statements contained in the Disclosure Package and the Final Offering Memorandum, insofar as they
purport to constitute summaries of the terms of the Securities, legal matters, agreements,
documents or proceedings discussed therein, are accurate in all material aspects;



     (vii) The Company and each Domestic Guarantor have all requisite corporate, limited liability
company, partnership or limited liability partnership, as the case may be, power and authority to
enter into the Supplemental Indenture. The Supplemental Indenture has been duly authorized by the
Company and the Domestic Guarantors that are PSI Guarantors and at the Effective Time will have
been duly authorized by the Domestic Guarantors that are Additional Guarantors, and upon its
execution and delivery and, assuming due authorization, execution and delivery by the Trustee, will
constitute the valid and binding obligation of the Company and the Guarantors in accordance with
the terms thereof, enforceable against the Company and the Guarantors in accordance with its terms,
except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and
by general equitable principles; no qualification of the Indenture under the Trust Indenture Act of
1939 (the “1939 Act”) is required in connection with the offer and sale of the Securities to the
Initial Purchasers;



     (viii) The Company has all requisite corporate power and authority to issue and sell the
Notes. The Notes have been duly authorized by the Company and, when duly executed by the Company
in accordance with the terms of the Indenture, assuming due authentication of the Notes by the
Trustee, upon delivery to the Initial Purchasers against payment therefor in accordance with the
terms hereof, will be validly issued and delivered, and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors’ rights generally and by general equitable principles;



     (ix) The Company has all requisite corporate power and authority to issue the Exchange Notes.
The Exchange Notes have been duly authorized by the Company and if and when duly issued and
authenticated in accordance with the terms of the Indenture and delivered in accordance with the
Registered Exchange Offer provided for in the Registration Rights Agreement, will constitute valid
and binding obligations of the Company entitled to the benefits of the Indenture, enforceable
against the Company in accordance with their terms, except as such enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating
to or affecting creditors’ rights generally and by general equitable principles;



B-2









 





     (x) Each Guarantor has all requisite corporate, limited liability company, partnership or
limited liability partnership, as the case may be, power and authority to issue the Guarantees.
The Guarantees have been duly authorized by the Guarantors that are PSI Guarantors and at the
Effective Time will have been duly authorized by the Guarantors that are Additional Guarantors and,
when duly executed and delivered by the Guarantors in accordance with the terms of the Indenture
and upon the due execution, authentication and delivery of the Notes in accordance with the
Indenture and the issuance of the Notes in the sale to the Initial Purchasers contemplated by the
Purchase Agreement, will constitute valid and binding obligations of the Guarantors, enforceable
against the Guarantors in accordance with their terms, except as such enforceability may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors’ rights generally and by general equitable principles;



     (xi) Each Guarantor has all requisite corporate, limited liability company, partnership or
limited liability partnership, as the case may be, power and authority to issue the Exchange
Guarantees. The Exchange Guarantees have been duly and validly authorized by the Guarantors that
are PSI Guarantors and at the Effective Time will have been duly authorized by the Guarantors that
are Additional Guarantors and, if and when duly executed and delivered by the Guarantors in
accordance with the terms of the Indenture and upon the due execution and authentication of the
Exchange Notes in accordance with the Indenture and the issuance and delivery of the Exchange Notes
in the Registered Exchange Offer contemplated by the Registration Rights Agreement, will constitute
valid and binding obligations of the Guarantors, entitled to the benefits of the Indenture,
enforceable against the Guarantors in accordance with their terms, except as such enforceability
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors’ rights generally and by general equitable
principles;



     (xii) The Company and each Guarantor has all requisite corporate, limited liability company,
partnership or limited liability partnership, as the case may be, power and authority to enter into
the Registration Rights Agreement. The Registration Rights Agreement has been duly authorized by
the Company and each Guarantor that is a PSI Guarantor and at the Effective Time will have been
duly authorized by the Guarantors that are Additional Guarantors and, when executed and delivered
by the Company and each Guarantor in accordance with the terms of the Indenture and the
Registration Rights Agreement, will be validly executed and delivered and (assuming the due
authorization, execution and delivery thereof by the Initial Purchasers) will be the valid and
binding obligation of the Company and each Guarantor in accordance with the terms thereof,
enforceable against the Company and each Guarantor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditor’s rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in equity or at law) and,
as to rights of indemnification and contribution, by principles of public policy;



     (xiii) The Company and each PSI Guarantor has all requisite corporate, limited liability
company, partnership or limited liability partnership, as the case may be, power and authority to
enter into the Purchase Agreement. The Purchase Agreement has been duly authorized, executed and
delivered by the Company and the PSI Guarantors;



B-3









 





     (xiv) Each Additional Guarantor has all requisite corporate, limited liability company,
partnership or limited liability partnership, as the case may be, power and authority to enter into
the Guarantor Joinder Agreement. The Guarantor Joinder Agreement has been duly authorized by each
Additional Guarantor and, when executed and delivered by each Additional Guarantor in accordance
with the terms of the Purchase Agreement, will be validly executed and delivered and will be the
valid and binding obligation of each Additional Guarantor in accordance with the terms thereof,
enforceable against each Additional Guarantor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditor’s rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in equity or at law) and,
as to rights of indemnification and contribution, by principles of public policy; and



     (xv) The issue and sale of the Notes and the Guarantees and the compliance by the Company and
the Guarantors with all of the provisions of the Notes, the Guarantees, the Exchange Notes, the
Exchange Guarantees, the Indenture, the Registration Rights Agreement, the Purchase Agreement and
the Related Documents and the consummation of the transactions contemplated thereby (i) do not
conflict with or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any agreement filed as an exhibit to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2006 and Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2007 and any Current Reports on Form 8-K filed since January 1, 2007, (ii)
do not result in any material violation of the provisions of the charter, by-laws or other
organizational documents of the Company or such Guarantors or (iii) do not violate any applicable
statute, order, rule or regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties or assets, except for such
violations that do not have a Material Adverse Effect (as defined in the Purchase Agreement); and
no consent, approval, authorization or order of, or filing, registration or qualification with, any
such court or governmental agency or body is required for the issue and sale of the Notes and the
Guarantees or the consummation by the Company and the Guarantors of the transactions contemplated
by the Purchase Agreement, the Guarantor Joinder Agreement, the Registration Rights Agreement or
the Indenture, except for the filing of a registration statement by the Company with the Commission
pursuant to the Act as required by the Registration Rights Agreement and such consents, approvals,
authorizations, orders, filings, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of the Securities by
the Initial Purchasers.



     In rendering such opinion, such counsel may (i) state that its opinion is limited to matters
governed by the federal laws of the United States of America, the laws of the State of Tennessee,
the General Corporation Law of the State of Delaware, the Limited Liability Company Act of the
State of Delaware, and the Revised Uniform Partnership Act of the State of Delaware, and (ii) the
laws governing the formation and operation of, and the execution and delivery of agreements by,
corporations, limited liability companies and partnerships for the jurisdictions listed on
Schedule B hereto (the “Other Laws”). Such counsel’s opinions regarding the Other Laws
expressed in opinions numbered (i), (iii), (vii), (x), (xi), (xii) and (xiii), to the extent that
power and authority, the issuance of capital stock or the due authorization, execution and delivery
of documents, as applicable, are governed by Other Laws, may be based solely on such counsel’s
review of the Other Laws as published in Aspen Law & Business Corporations and as published in
Aspen Law & Business State Limited Partnership Laws.



B-4









 





     Such counsel shall also have furnished to the Initial Purchasers a written statement,
addressed to the Initial Purchasers and dated the Closing Date, in form and substance satisfactory
to the Initial Purchasers, to the effect that (x) such counsel has acted as counsel to the Company
and the Guarantors in connection with the preparation of the Disclosure Package and the Final
Offering Memorandum, and (y) based on the foregoing, no facts have come to the attention of such
counsel that lead it to believe that the Disclosure Package, as of the Execution Time, and the
Final Offering Memorandum, as of its date or the date hereof, contained or contains an untrue
statement of material fact, or omitted or omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were made, not misleading
(except for financial statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which such counsel need make no statement). The
foregoing statement may be qualified by a statement to the effect that such counsel does not assume
any responsibility for the accuracy, completeness or fairness of the statements contained in the
Disclosure Package or the Final Offering Memorandum.



B-5









 





EXHIBIT C




Form of Guarantor Joinder Agreement




          THIS GUARANTOR JOINDER AGREEMENT (this “Guarantor Joinder Agreement”) is entered into
effective as of ___, ___, by the persons set forth on the signature page attached hereto.




          Pursuant to Section 11 of the Purchase Agreement, dated as of May 24, 2007 (the “Purchase
Agreement”), among Psychiatric Solutions, Inc, a Delaware corporation (the “Company”), the
Guarantors (as defined in the Purchase Agreement) from time to time party thereto and the Initial
Purchasers (as defined in the Purchase Agreement), the Company agreed to cause the Guarantors to
become parties to the Purchase Agreement as Guarantors upon the Closing Date (as defined in the
Purchase Agreement) for the purpose of becoming jointly and severally liable for all of the
Company’s obligations under Section 8 thereof, by executing and delivering to the Company a
Guarantor Joinder Agreement; and




          The guarantors listed on the signature pages hereto have each agreed to execute this Guarantor
Joinder Agreement to become parties to, and Guarantors under, the Purchase Agreement.




     NOW, THEREFORE, each of the undersigned agrees as follows:




	1.	 	Purchase Agreement. By executing this Guarantor Joinder Agreement, each of the
undersigned does hereby acknowledge the terms of, and agrees to become a party to, and a
Guarantor under, the Purchase Agreement with the same force and effect as if originally named
therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly
assumes all obligations and liabilities of a Guarantor thereunder and becomes jointly and
severally liable for all of the Company’s obligations under Section 8 thereof.
	 
	 	 	Each of the undersigned hereby represents and warrants that this Guarantor Joinder
Agreement has been duly authorized, executed and delivered by such undersigned.
	 
	2.	 	GOVERNING LAW. THIS GUARANTOR JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED, IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CHOICE OF LAW THEREOF.





[Signature page follows.]





C-1









 








     IN WITNESS WHEREOF, each of the undersigned has executed this Guarantor Joinder Agreement as
of the date set forth in the introductory paragraph hereof.



	 	 	 
	 

	 	[LIST OF HORIZON GUARANTORS]
	 
	 	 
	 

	 	By:                                                             
	 

	 	Name:
	 

	 	Title:







C-2