<PAGE>

                                                                    EXHIBIT 10.2

   233 South Wacker Drive, Suite 2800
   Chicago, Illinois 60606
   Tel 312-234-2732
   Fax 312-234-3603

BANK OF AMERICA N. A.

TO:     Psychiatric Solutions
        113 Seaboard Lane. Ste C 100
        Franklin, TN 37067

ATTN:   Brent Turner
TEL:    615-312-5709
FAX:    615-312-5710

FROM:   Bank of America, N A
        233 South Wacker Drive - Suite 2800
        Chicago, Illinois 60606
        Todd Craig/Tifani Bergum

Date:   28JAN04

Our Reference No. 3194162

Internal Tracking Nos. 7628329 7648397

The purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into between Psychiatric Solutions and Bank of America,
N.A. (each a "party" and together "the parties") on the Trade Date specified
below (the "Transaction"). This letter agreement constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified in paragraph 1 below (the
"Agreement").

The definitions and provisions contained in the 2000 ISDA Definitions, as
published by the International Swaps and Derivatives Association, Inc., (the
"Definitions") are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.

1. This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of 02JAN04, as amended and supplemented from time to
time (the "Agreement"), between the parties. All provisions contained in the
Agreement govern this Confirmation except as expressly modified below:

         In this Confirmation "Party A" means Bank of America, N.A. and "Party
         B" means Psychiatric Solutions.

         2. The terms of the particular Transaction to which this Confirmation
         relates are as follows:

<TABLE>
<S>                       <C>
Notional Amount:          USD 20,000,000.00

Trade Date:               26JAN04

Effective Date:           26JAN04

Termination Date:         15JUN13, subject to "Other Provisions"

FIXED AMOUNTS:

Fixed Rate Payer:         Party A

Fixed Rate Payer Payment
Dates:                    The 15th of each June and December, commencing
                          15JUN04 and ending 15JUN13, subject to adjustment in
                          accordance with the Modified Following Business Day
                          Convention, and "Other Provisions". No Adjustment Of
                          Period End Dates.

Fixed Rate:               10.62500%

Fixed Rate Day Count
Fraction:                 30/360

FLOATING AMOUNTS:

Floating Rate Payer:      Party B
</TABLE>
<PAGE>
<TABLE>
<S>                       <C>
Floating Rate Payer
Payment Dates:            The 15th of each June and December, commencing 15JUN04
                          and ending 15JUN 13, Subject to adjustment in
                          accordance with the Modified Following Business Day
                          Convention, and "Other Provisions"

Floating Rate for
initial Calculation
Period:                   TO BE SET

Floating Rate Option:     USD-LIBOR-BBA

Averaging:                Inapplicable

Designated Maturity:      6 Month

Spread:                   Plus 5. 86000%

Floating Rate Day Count
Fraction:                 Actual/360

Reset Dates:              The last day of each Calculation Period

Compounding:              Inapplicable

Business Days:            NewYork

Calculation Agent:        Party A

OTHER PROVISIONS:
</TABLE>

         ADDITIONAL OPTIONAL TERMINATION:

         Notwithstanding anything to the contrary herein or in the Agreement or
         the Definitions, Party A may, in its sole discretion and at its
         expense, terminate this Transaction on any day from and including
         15JUN08 to but excluding 15JUN 13 (the "Optional Termination Date"),
         In accordance with this Additional Optional Termination provision. The
         cancellation premium owed by Party A with respect to such Optional
         Termination Date is set forth under Section (i) below. Party A may only
         elect an Optional Termination Date by providing oral (including
         telephonic) notice of such election to Party B two New York Business
         Days prior to such Optional Termination Date, on or before 4:30 p.m.
         New York City time. Party A shall provide written confirmation of any
         telephonic notice within one New York Business Day of that notice.
         Failure to provide that written confirmation will not affect the
         validity of the telephonic notice.

         The Cash Settlement Amount payable by Party A on the Optional
         Termination Date shall be calculated as the sum of the following:

         (i)      the cancellation premium, in accordance with the Optional
                  Termination Date schedule as set forth below:

<TABLE>
<CAPTION>
    Optional Termination period            Amount
    ---------------------------            ------
<S>                                     <C>
15JUN08 to but excluding 15JUN09        USD    1,062,500.00
15JUN09 to but excluding 15JUN10        USD      708,333.31
15JUN10 to but excluding 15JUN11        USD      354,166.66
15JUN11 to but excluding 15JUN13        USD            0.00
</TABLE>

         (ii)     the net of the accrued but unpaid amount between the Fixed
                  Rate Payer and the Floating Rate Payer from and including the
                  last Payment Date to but excluding the Optional Termination
                  Date.

         Nothing herein shall obligate Party A to elect the Optional Termination
         Date as provided herein.

         MUTUAL EARLY TERMINATION. Notwithstanding anything to the contrary in
         the Definitions or the Agreement, the parties hereby agree to the
         following Early Termination provisions:

         Either party shall have the right (but not the obligation) to terminate
         this Transaction on June 15, 2008 and every anniversary thereafter or,
         if such day is not a Business Day, on the next succeeding Business Day
         (the "Mutual Early Termination Date"), by providing the other party
         with notice of its exercise of this right two Business Days prior to
         the Mutual Early Termination Date. This notice shall be irrevocable and
         may be given orally, including by telephone. Such notice shall be
         followed by a written confirmation confirming the

<PAGE>

         substance of any telephonic notice within one Business Day of that
         notice. Failure to provide that written confirmation will not affect
         the validity of the telephonic notice

         In the event either party elects to terminate this Transaction as
         provided above, the Calculation Agent shall determine the cash
         settlement amount of this Transaction, which shall be an amount in USD
         equal to the amount which would have been payable if the Mutual Early
         Termination Date were an Early Termination Date with respect to this
         Transaction as a result of a Termination Event (the "Cash Settlement
         Amount"). The Calculation Agent shall determine such Cash Settlement
         Amount in good faith and in a commercially reasonable manner in
         accordance with normal market practice in the relevant market. Such
         determination shall be made on the day that is two Business Days prior
         to the Mutual Early Termination Date. In the absence of manifest error,
         such determination shall be final and conclusive evidence of the Cash
         Settlement Amount payable in respect of such Mutual Early Termination
         Date.

         Party A or Party B (as determined by the Calculation Agent) shall pay
         to the other party the Cash Settlement Amount on the Mutual Early
         Termination Date. Once the Cash Settlement Amount has been fully and
         finally paid, then all rights, duties and obligations of the parties
         under and with respect to this Transaction shall terminate.

3.   RECORDING OF CONVERSATIONS:

     Each party to this Transaction acknowledges and agrees to the tape
     recording of conversations between the parties to this Transaction whether
     by one or other or both of the parties or their agents, and that any such
     tape recordings may be submitted in evidence in any Proceedings relating to
     the Agreement and/or this Transaction.

4.   ACCOUNT DETAILS:

     Account for payments to Party A:

         USD
NAME:    Bank of America NA New York
ABA #:   026009593
ATTN:    BOFAUS8N

NAME:    Bank of America NA Charlotte
ACCT:    6550-219388
ATTN:    BOF AUS6SGDS

Account for payments to Party B:

             USD
       PLEASE PROVIDE

5.   OFFICES:

     The Office of Party A for this
     Transaction is:                      Charlotte, NC

     Please send reset notices to fax no. (312-234-3603)

     The Office of Party B for this
     Transaction is:                      Tennessee, USA

     CREDIT SUPPORT DOCUMENT: As per Agreement (and Credit Support Annex if
     applicable).

     Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by returning via telecopier an executed copy of this
Confirmation to the attention of Global Derivative Operations at (fax no. (312)
234-3603).

Yours Sincerely,

Bank of America, N.A.

/s/ Dave Walker
-------------------------------------------
Dave Walker
Senior Vice President

Authorized Signatory

<PAGE>

Accepted and confirmed as of the date first written:

Psychiatric Solutions

By: /s/ Brent Turner
    ----------------------------
Name:  Brent Turner

Title: Vice President - Treasurer

Our Reference # 3194162 7628329

<PAGE>

(MULTICURRENCY -- CROSS BORDER)

                                   [ISDA LOGO]
                  International Swap Dealers Association. Inc.
                                MASTER AGREEMENT

                           DATED AS OF JANUARY 2, 2004

BANK OF AMERICA, N.A.             AND                PSYCHIATRIC SOLUTIONS, INC.

have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.

 Accordingly, the parties agree as follows:--

1.       INTERPRETATION

(a)      DEFINITIONS. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.

(b)      INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.

(c)      SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.

2.       OBLIGATIONS

(a)      GENERAL CONDITIONS.

         (i) Each party will make each payment or delivery specified in each
         Confirmation to be made by it, subject to the other provisions of this
         Agreement.

         (ii) Payments under this Agreement will be made on the due date for
         value on that date in the place of the account specified in the
         relevant Confirmation or otherwise pursuant to this Agreement, in
         freely transferable funds and in the manner customary for payments in
         the required currency. Where settlement is by delivery (that is, other
         than by payment), such delivery will be made for receipt on the due
         date in the manner customary for the relevant obligation unless
         otherwise specified in the relevant Confirmation or elsewhere in this
         Agreement.

         (iii) Each obligation of each party under Section 2(a)(i) is subject to
         (1) the condition precedent that no Event of Default or Potential Event
         of Default with respect to the other party has occurred and is
         continuing, (2) the condition precedent that no Early Termination Date
         in respect of the relevant Transaction has occurred or been effectively
         designated and (3) each other applicable condition precedent specified
         in this Agreement.

       Copyright (C)1992 by International Swap Dealers Association, Inc.

<PAGE>

(b)      CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.

(c)      NETTING. If on any date amounts would otherwise be payable:--

         (i) in the same currency; and

         (ii) in respect of the same Transaction,

by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.

(d)      DEDUCTION OR WITHHOLDING FOR TAX.

         (i) GROSS-UP. All payments under this Agreement will be made without
         any deduction or withholding for or on account of any Tax unless such
         deduction or withholding is required by any applicable law, as modified
         by the practice of any relevant governmental revenue authority, then in
         effect. If a party is so required to deduct or withhold, then that
         party ("X") will:--

                  (1) promptly notify the other party ("Y") of such requirement;

                  (2) pay to the relevant authorities the full amount required
                  to be deducted or withheld (including the full amount required
                  to be deducted or withheld from any additional amount paid by
                  X to Y under this Section 2(d)) promptly upon the earlier of
                  determining that such deduction or withholding is required or
                  receiving notice that such amount has been assessed against Y;

                  (3) promptly forward to Y an official receipt (or a certified
                  copy), or other documentation reasonably acceptable to Y,
                  evidencing such payment to such authorities; and

                  (4) if such Tax is an Indemnifiable Tax, pay to Y, in addition
                  to the payment to which Y is otherwise entitled under this
                  Agreement, such additional amount as is necessary to ensure
                  that the net amount actually received by Y (free and clear of
                  Indemnifiable Taxes, whether assessed against X or Y) will
                  equal the full amount Y would have received had no such
                  deduction or withholding been required. However, X will not be
                  required to pay any additional amount to Y to the extent that
                  it would not be required to be paid but for:--

                          (A) the failure by Y to comply with or perform any
                          agreement contained in Section 4(a)(i), 4(a)(iii) or
                          4(d); or

                          (B) the failure of a representation made by Y pursuant
                          to Section 3(f) to be accurate and true unless such
                          failure would not have occurred but for (I) any action
                          taken by a taxing authority, or brought in a court of
                          competent jurisdiction, on or after the date on which
                          a Transaction is entered into (regardless of whether
                          such action is taken or brought with respect to a
                          party to this Agreement) or (II) a Change in Tax Law.

                                                                   ISDA (R) 1992

                                       2

<PAGE>

         (ii) LIABILITY. If:--

                  (1) X is required by any applicable law, as modified by the
                  practice of any relevant governmental revenue authority, to
                  make any deduction or withholding in respect of which X would
                  not be required to pay an additional amount to Y under Section
                  2(d)(i)(4);

                  (2) X does not so deduct or withhold; and

                  (3) a liability resulting from such Tax is assessed directly
                  against X,

         then, except to the extent Y has satisfied or then satisfies the
         liability resulting from such Tax, Y will promptly pay to X the amount
         of such liability (including any related liability for interest, but
         including any related liability for penalties only if Y has failed to
         comply with or perform any agreement contained in Section 4(a)(i),
         4(a)(iii) or 4(d)).

(e)      DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.

3.       REPRESENTATIONS

Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that: --

(a)      BASIC REPRESENTATIONS.

         (i) STATUS. It is duly organised and validly existing under the laws of
         the jurisdiction of its organisation or incorporation and, if relevant
         under such laws, in good standing;

         (ii) POWERS. It has the power to execute this Agreement and any other
         documentation relating to this Agreement to which it is a party, to
         deliver this Agreement and any other documentation relating to this
         Agreement that it is required by this Agreement to deliver and to
         perform its obligations under this Agreement and any obligations it has
         under any Credit Support Document to which it is a party and has taken
         all necessary action to authorise such execution, delivery and
         performance;

         (iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
         performance do not violate or conflict with any law applicable to it,
         any provision of its constitutional documents, any order or judgment of
         any court or other agency of government applicable to it or any of its
         assets or any contractual restriction binding on or affecting it or any
         of its assets;

         (iv) CONSENTS. All governmental and other consents that are required to
         have been obtained by it with respect to this Agreement or any Credit
         Support Document to which it is a party have been obtained and are in
         full force and effect and all conditions of any such consents have been
         complied with; and

         (v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
         Credit Support Document to which it is a party constitute its legal,
         valid and binding obligations, enforceable in accordance with their
         respective terms (subject to applicable bankruptcy, reorganisation,
         insolvency, moratorium or similar laws affecting creditors' rights
         generally and subject, as to enforceability, to equitable principles of
         general application (regardless of whether enforcement is sought in a
         proceeding in equity or at law)).

                                                                   ISDA (R) 1992

                                       3

<PAGE>

(b)      ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.

(c)      ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.

(d)      ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

(e)      PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.

(f)      PAYEE TAX REPRESENTATIONS. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.

4.       AGREEMENTS

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party: --

(a)      FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--

         (i) any forms, documents or certificates relating to taxation specified
         in the Schedule or any Confirmation;

         (ii) any other documents specified in the Schedule or any Confirmation;
         and

         (iii) upon reasonable demand by such other party, any form or document
         that may be required or reasonably requested in writing in order to
         allow such other party or its Credit Support Provider to make a payment
         under this Agreement or any applicable Credit Support Document without
         any deduction or withholding for or on account of any Tax or with such
         deduction or withholding at a reduced rate (so long as the completion,
         execution or submission of such form or document would not materially
         prejudice the legal or commercial position of the party in receipt of
         such demand), with any such form or document to be accurate and
         completed in a manner reasonably satisfactory to such other party and
         to be executed and to be delivered with any reasonably required
         certification,

in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.

(b)      MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.

(c)      COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

(d)      TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.

(e)      PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,

                                                                   ISDA (R) 1992

                                       4

<PAGE>

organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.- -

5.       EVENTS OF DEFAULT AND TERMINATION EVENTS

(a)      EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party: --

         (i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due,
         any payment under this Agreement or delivery under Section 2(a)(i) or
         2(e) required to be made by it if such failure is not remedied on or
         before the third Local Business Day after notice of such failure is
         given to the party;

         (ii) BREACH OF AGREEMENT. Failure by the party to comply with or
         perform any agreement or obligation (other than an obligation to make
         any payment under this Agreement or delivery under Section 2(a)(i) or
         2(e) or to give notice of a Termination Event or any agreement or
         obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
         with or performed by the party in accordance with this Agreement if
         such failure is not remedied on or before the thirtieth day after
         notice of such failure is given to the party;

         (iii) CREDIT SUPPORT DEFAULT.

               (1) Failure by the party or any Credit Support Provider of such
               party to comply with or perform any agreement or obligation to be
               complied with or performed by it in accordance with any Credit
               Support Document if such failure is continuing after any
               applicable grace period has elapsed;

               (2) the expiration or termination of such Credit Support Document
               or the failing or ceasing of such Credit Support Document to be
               in full force and effect for the purpose of this Agreement (in
               either case other than in accordance with its terms) prior to the
               satisfaction of all obligations of such party under each
               Transaction to which such Credit Support Document relates without
               the written consent of the other party; or

               (3) the party or such Credit Support Provider disaffirms,
               disclaims, repudiates or rejects, in whole or in part, or
               challenges the validity of, such Credit Support Document;

         (iv) MISREPRESENTATION. A representation (other than a representation
         under Section 3(e) or (f)) made or repeated or deemed to have been made
         or repeated by the party or any Credit Support Provider of such party
         in this Agreement or any Credit Support Document proves to have been
         incorrect or misleading in any material respect when made or repeated
         or deemed to have been made or repeated;

         (v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
         Provider of such party or any applicable Specified Entity of such party
         (1) defaults under a Specified Transaction and, after giving effect to
         any applicable notice requirement or grace period, there occurs a
         liquidation of, an acceleration of obligations under, or an early
         termination of, that Specified Transaction, (2) defaults, after giving
         effect to any applicable notice requirement or grace period, in making
         any payment or delivery due on the last payment, delivery or exchange
         date of, or any payment on early termination of, a Specified
         Transaction (or such default continues for at least three Local
         Business Days if there is no applicable notice requirement or grace
         period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
         or in part, a Specified Transaction (or such action is taken by any
         person or entity appointed or empowered to operate it or act on its
         behalf);

         (vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
         applying to the party, the occurrence or existence of (1) a default,
         event of default or other similar condition or event (however

                                                                   ISDA (R) 1992

                                       5

<PAGE>

         described) in respect of such party, any Credit Support Provider of
         such party or any applicable Specified Entity of such party under one
         or more agreements or instruments relating to Specified Indebtedness of
         any of them (individually or collectively) in an aggregate amount of
         not less than the applicable Threshold Amount (as specified in the
         Schedule) which has resulted in such Specified Indebtedness becoming,
         or becoming capable at such time of being declared, due and payable
         under such agreements or instruments, before it would otherwise have
         been due and payable or (2) a default by such party, such Credit
         Support Provider or such Specified Entity (individually or
         collectively) in making one or more payments on the due date thereof in
         an aggregate amount of not less than the applicable Threshold Amount
         under such agreements or instruments (after giving effect to any
         applicable notice requirement or grace period);

         (vii) BANKRUPTCY. The party, any Credit Support Provider of such party
         or any applicable Specified Entity of such party:--

               (1) is dissolved (other than pursuant to a consolidation,
               amalgamation or merger); (2) becomes insolvent or is unable to
               pay its debts or fails or admits in writing its inability
               generally to pay its debts as they become due; (3) makes a
               general assignment, arrangement or composition with or for the
               benefit of its creditors; (4) institutes or has instituted
               against it a proceeding seeking a judgment of insolvency or
               bankruptcy or any other relief under any bankruptcy or insolvency
               law or other similar law affecting creditors' rights, or a
               petition is presented for its winding-up or liquidation, and, in
               the case of any such proceeding or petition instituted or
               presented against it, such proceeding or petition (A) results in
               a judgment of insolvency or bankruptcy or the entry of an order
               for relief or the making of an order for its winding-up or
               liquidation or (B) is not dismissed, discharged, stayed or
               restrained in each case within 30 days of the institution or
               presentation thereof; (5) has a resolution passed for its
               winding-up, official management or liquidation (other than
               pursuant to a consolidation, amalgamation or merger); (6) seeks
               or becomes subject to the appointment of an administrator,
               provisional liquidator, conservator, receiver, trustee, custodian
               or other similar official for it or for all or substantially all
               its assets; (7) has a secured party take possession of all or
               substantially all its assets or has a distress, execution,
               attachment, sequestration or other legal process levied, enforced
               or sued on or against all or substantially all its assets and
               such secured party maintains possession, or any such process is
               not dismissed, discharged, stayed or restrained, in each case
               within 30 days thereafter; (8) causes or is subject to any event
               with respect to it which, under the applicable laws of any
               jurisdiction, has an analogous effect to any of the events
               specified in clauses (1) to (7) (inclusive); or (9) takes any
               action in furtherance of, or indicating its consent to, approval
               of, or acquiescence in, any of the foregoing acts; or

         (viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
         Provider of such party consolidates or amalgamates with, or merges with
         or into, or transfers all or substantially all its assets to, another
         entity and, at the time of such consolidation, amalgamation, merger or
         transfer: --

               (1) the resulting, surviving or transferee entity fails to assume
               all the obligations of such party or such Credit Support Provider
               under this Agreement or any Credit Support Document to which it
               or its predecessor was a party by operation of law or pursuant to
               an agreement reasonably satisfactory to the other party to this
               Agreement; or

               (2) the benefits of any Credit Support Document fail to extend
               (without the consent of the other party) to the performance by
               such resulting, surviving or transferee entity of its obligations
               under this Agreement.

(b)      TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event

                                                                   ISDA (R) 1992

                                       6

<PAGE>

Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--

         (i) ILLEGALITY. Due to the adoption of, or any change in, any
         applicable law after the date on which a Transaction is entered into,
         or due to the promulgation of, or any change in, the interpretation by
         any court, tribunal or regulatory authority with competent jurisdiction
         of any applicable law after such date, it becomes unlawful (other than
         as a result of a breach by the party of Section 4(b)) for such party
         (which will be the Affected Party):--

               (1) to perform any absolute or contingent obligation to make a
               payment or delivery or to receive a payment or delivery in
               respect of such Transaction or to comply with any other material
               provision of this Agreement relating to such Transaction; or

               (2) to perform, or for any Credit Support Provider of such party
               to perform, any contingent or other obligation which the party
               (or such Credit Support Provider) has under any Credit Support
               Document relating to such Transaction;

         (ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
         brought in a court of competent jurisdiction, on or after the date on
         which a Transaction is entered into (regardless of whether such action
         is taken or brought with respect to a party to this Agreement) or (y) a
         Change in Tax Law, the party (which will be the Affected Party) will,
         or there is a substantial likelihood that it will, on the next
         succeeding Scheduled Payment Date (1) be required to pay to the other
         party an additional amount in respect of an Indemnifiable Tax under
         Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
         6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is
         required to be deducted or withheld for or on account of a Tax (except
         in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no
         additional amount is required to be paid in respect of such Tax under
         Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or
         (B));

         (iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
         next succeeding Scheduled Payment Date will either (1) be required to
         pay an additional amount in respect of an Indemnifiable Tax under
         Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
         6(d)(ii) or 6(e)) or (2)receive a payment from which an amount has been
         deducted or withheld for or on account of any Indemnifiable Tax in
         respect of which the other party is not required to pay an additional
         amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
         either case as a result of a party consolidating or amalgamating with,
         or merging with or into, or transferring all or substantially all its
         assets to, another entity (which will be the Affected Party) where such
         action does not constitute an event described in Section 5(a)(viii);

         (iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
         specified in the Schedule as applying to the party, such party ("X"),
         any Credit Support Provider of X or any applicable Specified Entity of
         X consolidates or amalgamates with, or merges with or into, or
         transfers all or substantially all its assets to, another entity and
         such action does not constitute an event described in Section
         5(a)(viii) but the creditworthiness of the resulting, surviving or
         transferee entity is materially weaker than that of X, such Credit
         Support Provider or such Specified Entity, as the case may be,
         immediately prior to such action (and, in such event, X or its
         successor or transferee, as appropriate, will be the Affected Party);
         or

         (v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event"
         is specified in the Schedule or any Confirmation as applying, the
         occurrence of such event (and, in such event, the Affected Party or
         Affected Parties shall be as specified for such Additional Termination
         Event in the Schedule or such Confirmation).

(c)      EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.

                                                                   ISDA (R) 1992

                                       7

<PAGE>

6.       EARLY TERMINATION

(a)      RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)      RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.

         (i) NOTICE. If a Termination Event occurs, an Affected Party will,
         promptly upon becoming aware of it, notify the other party, specifying
         the nature of that Termination Event and each Affected Transaction and
         will also give such other information about that Termination Event as
         the other party may reasonably require.

         (ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
         Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
         Party, or if a Tax Event Upon Merger occurs and the Burdened Party is
         the Affected Party, the Affected Party will, as a condition to its
         right to designate an Early Termination Date under Section 6(b)(iv),
         use all reasonable efforts (which will not require such party to incur
         a loss, excluding immaterial, incidental expenses) to transfer within
         20 days after it gives notice under Section 6(b)(i) all its rights and
         obligations under this Agreement in respect of the Affected
         Transactions to another of its Offices or Affiliates so that such
         Termination Event ceases to exist.

         If the Affected Party is not able to make such a transfer it will give
         notice to the other party to that effect within such 20 day period,
         whereupon the other party may effect such a transfer within 30 days
         after notice is given under Section 6(b)(i).

         Any such transfer by a party under this Section 6(b)(ii) will be
         subject to and conditional upon the prior written consent of the other
         party, which consent will not be withheld if such other party's
         policies in effect at such time would permit it to enter into
         transactions with the transferee on the terms proposed.

         (iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
         or a Tax Event occurs and there are two Affected Parties, each party
         will use all reasonable efforts to reach agreement within 30 days after
         notice thereof is given under Section 6(b)(i) on action to avoid that
         Termination Event.

         (iv) RIGHT TO TERMINATE. If:--

               (1)a transfer under Section 6(b)(ii) or an agreement under
               Section 6(b)(iii), as the case may be, has not been effected with
               respect to all Affected Transactions within 30 days after an
               Affected Party gives notice under Section 6(b)(i); or

               (2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
               Merger or an Additional Termination Event occurs, or a Tax Event
               Upon Merger occurs and the Burdened Party is not the Affected
               Party,

         either party in the case of an Illegality, the Burdened Party in the
         case of a Tax Event Upon Merger, any Affected Party in the case of a
         Tax Event or an Additional Termination Event if there is more than one
         Affected Party, or the party which is not the Affected Party in the
         case of a Credit Event Upon Merger or an Additional Termination Event
         if there is only one Affected Party may, by not more than 20 days
         notice to the other party and provided that the relevant Termination
         Event is then

                                                                   ISDA (R) 1992

                                       8

<PAGE>

         continuing, designate a day not earlier than the day such notice is
         effective as an Early Termination Date in respect of all Affected
         Transactions.

(c)      EFFECT OF DESIGNATION.

         (i) If notice designating an Early Termination Date is given under
         Section 6(a) or (b), the Early Termination Date will occur on the date
         so designated, whether or not the relevant Event of Default or
         Termination Event is then continuing.

         (ii) Upon the occurrence or effective designation of an Early
         Termination Date, no further payments or deliveries under Section
         2(a)(i) or 2(e) in respect of the Terminated Transactions will be
         required to be made, but without prejudice to the other provisions of
         this Agreement- The amount if any, payable in respect of an Early
         Termination Date shall be determined pursuant to Section 6(e).

(d)      CALCULATIONS.

         (i) STATEMENT. On or as soon as reasonably practicable following the
         occurrence of an Early Termination Date, each party will make the
         calculations on its part, if any, contemplated by Section 6(e) and will
         provide to the other party a statement (1) showing, in reasonable
         detail, such calculations (including all relevant quotations and
         specifying any amount payable under Section 6(e)) and (2) giving
         details of the relevant account to which any amount payable to it is to
         be paid. In the absence of written confirmation from the source of a
         quotation obtained in determining a Market Quotation, the records of
         the party obtaining such quotation will be conclusive evidence of the
         existence and accuracy of such quotation.

         (ii) PAYMENT DATE. An amount calculated as being due in respect of any
         Early Termination Date under Section 6(e) will be payable on the day
         that notice of the amount payable is effective (in the case of an Early
         Termination Date which is designated or occurs as a result of an Event
         of Default) and on the day which is two Local Business Days after the
         day on which notice of the amount payable is effective (in the case of
         an Early Termination Date which is designated as a result of a
         Termination Event). Such amount will be paid together with (to the
         extent permitted under applicable law) interest thereon (before as well
         as after judgment) in the Termination Currency, from (and including)
         the relevant Early Termination Date to (but excluding) the date such
         amount is paid, at the Applicable Rate. Such interest will be
         calculated on the basis of daily compounding and the actual number of
         days elapsed.

(e)      PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs. the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.

         (i) EVENTS OF DEFAULT. If the Early Termination Date results from an
         Event of Default:--

               (1) First Method and Market Quotation. If the First Method and
               Market Quotation apply, the Defaulting Party will pay to the
               Non-defaulting Party the excess, if a positive number, of (A) the
               sum of the Settlement Amount (determined by the Non-defaulting
               Party) in respect of the Terminated Transactions and the
               Termination Currency Equivalent of the Unpaid Amounts owing to
               the Non-defaulting Party over (B) the Termination Currency
               Equivalent of the Unpaid Amounts owing to the Defaulting Party.

               (2) First Method and Loss. If the First Method and Loss apply,
               the Defaulting Party will pay to the Non-defaulting Party, if a
               positive number, the Non-defaulting Party's Loss in respect of
               this Agreement.

               (3) Second Method and Market Quotation. If the Second Method and
               Market Quotation apply, an amount will be payable equal to (A)
               the sum of the Settlement Amount (determined by the

                                                                   ISDA (R) 1992

                                       9

<PAGE>

               Non-defaulting Party) in respect of the Terminated Transactions
               and the Termination Currency Equivalent of the Unpaid Amounts
               owing to the Non-defaulting Party less (B) the Termination
               Currency Equivalent of the Unpaid Amounts owing to the Defaulting
               Party. If that amount is a positive number, the Defaulting Party
               will pay it to the Non-defaulting Party; if it is a negative
               number, the Non-defaulting Party will pay the absolute value of
               that amount to the Defaulting Party.

               (4) Second Method and Loss. If the Second Method and Loss apply,
               an amount will be payable equal to the Non-defaulting Party's
               Loss in respect of this Agreement. If that amount is a positive
               number, the Defaulting Party will pay it to the Non-defaulting
               Party; if it is a negative number, the Non-defaulting Party will
               pay the absolute value of that amount to the Defaulting Party.

         (ii) TERMINATION EVENTS. If the Early Termination Date results from a
         Termination Event:--

               (1) One Affected Party. If there is one Affected Party, the
               amount payable will be determined in accordance with Section
               6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
               if Loss applies, except that, in either case, references to the
               Defaulting Party and to the Non-defaulting Party will be deemed
               to be references to the Affected Party and the party which is not
               the Affected Party, respectively, and, if Loss applies and fewer
               than all the Transactions are being terminated, Loss shall be
               calculated in respect of all Terminated Transactions.

               (2) Two Affected Parties. If there are two Affected Parties:--

                  (A) if Market Quotation applies, each party will determine a
                  Settlement Amount in respect of the Terminated Transactions,
                  and an amount will be payable equal to (I) the sum of (a)
                  one-half of the difference between the Settlement Amount of
                  the party with the higher Settlement Amount ("X") and the
                  Settlement Amount of the party with the lower Settlement
                  Amount ("Y") and (b) the Termination Currency Equivalent of
                  the Unpaid Amounts owing to X less (II) the Termination
                  Currency Equivalent of the Unpaid Amounts owing to Y; and

                  (B) if Loss applies, each party will determine its Loss in
                  respect of this Agreement (or, if fewer than all the
                  Transactions are being terminated, in respect of all
                  Terminated Transactions) and an amount will be payable equal
                  to one-half of the difference between the Loss of the party
                  with the higher Loss ("X") and the Loss of the party with the
                  lower Loss ("Y").

               If the amount payable is a positive number, Y will pay it to X;
               if it is a negative number, X will pay the absolute value of that
               amount to Y.

         (iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
         Termination Date occurs because "Automatic Early Termination" applies
         in respect of a party, the amount determined under this Section 6(e)
         will be subject to such adjustments as are appropriate and permitted by
         law to reflect any payments or deliveries made by one party to the
         other under this Agreement (and retained by such other party) during
         the period from the relevant Early Termination Date to the date for
         payment determined under Section 6(d)(ii).

         (iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
         an amount recoverable under this Section 6(e) is a reasonable
         pre-estimate of loss and not a penalty. Such amount is payable for the
         loss of bargain and the loss of protection against future risks and
         except as otherwise provided in this Agreement neither party will be
         entitled to recover any additional damages as a consequence of such
         losses.

                                                                   ISDA (R) 1992

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<PAGE>

7.       TRANSFER

Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--

(a)      a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b)      a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8.       CONTRACTUAL CURRENCY

(a)      PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into this Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.

(b)      JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.

(c)      SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.

(d)      EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.

                                                                   ISDA (R) 1992

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<PAGE>

9.       MISCELLANEOUS

(a)      ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.

(b)      AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.

(c)      SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.

(d)      REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e)      COUNTERPARTS AND CONFIRMATIONS.

         (i) This Agreement (and each amendment, modification and waiver in
         respect of it) may be executed and delivered in counterparts (including
         by facsimile transmission), each of which will be deemed an original.

         (ii) The parties intend that they are legally bound by the terms of
         each Transaction from the moment they agree to those terms (whether
         orally or otherwise). A Confirmation shall be entered into as soon as
         practicable and may be executed and delivered in counterparts
         (including by facsimile transmission) or be created by an exchange of
         telexes or by an exchange of electronic messages on an electronic
         messaging system, which in each case will be sufficient for all
         purposes to evidence a binding supplement to this Agreement. The
         parties will specify therein or through another effective means that
         any such counterpart, telex or electronic message constitutes a
         Confirmation.

(f)      NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.

(g)      HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

10.      OFFICES; MULTIBRANCH PARTIES

(a)      If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.

(b)      Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.

(c)      If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.

11.      EXPENSES

A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document

                                                                   ISDA (R) 1992

                                       12

<PAGE>

to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.

12.      NOTICES

(a)      EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated: --

         (i) if in writing and delivered in person or by courier, on the date it
         is delivered;

         (ii) if sent by telex, on the date the recipient's answerback is
         received;

         (iii) if sent by facsimile transmission, on the date that transmission
         is received by a responsible employee of the recipient in legible form
         (it being agreed that the burden of proving receipt will be on the
         sender and will not be met by a transmission report generated by the
         sender's facsimile machine);

         (iv) if sent by certified or registered mail (airmail, if overseas) or
         the equivalent (return receipt requested), on the date that mail is
         delivered or its delivery is attempted; or

         (v) if sent by electronic messaging system, on the date that electronic
         message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

(b)      CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.- -

13.      GOVERNING LAW AND JURISDICTION

(a)      GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b)      JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--

         (i) submits to the jurisdiction of the English courts, if this
         Agreement is expressed to be governed by English law, or to the
         non-exclusive jurisdiction of the courts of the State of New York and
         the United States District Court located in the Borough of Manhattan in
         New York City, if this Agreement is expressed to be governed by the
         laws of the State of New York; and

         (ii) waives any objection which it may have at any time to the laying
         of venue of any Proceedings brought in any such court, waives any claim
         that such Proceedings have been brought in an inconvenient forum and
         further waives the right to object, with respect to such Proceedings,
         that such court does not have any jurisdiction over such party.

Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

(c)      SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any

                                                                   ISDA (R) 1992

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<PAGE>

reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.

(d)      WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.

14.      DEFINITIONS

As used in this Agreement:--

"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).

"AFFECTED PARTY" has the meaning specified in Section 5(b).

"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.

"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.

"APPLICABLE RATE" means:--

(a)      in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b)      in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;

(c)      in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and

(d)      in all other cases, the Termination Rate.

"BURDENED PARTY" has the meaning specified in Section 5(b).

"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.

"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.

"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).

"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.

"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.

"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

                                                                   ISDA (R) 1992

                                       14

<PAGE>

"DEFAULTING PARTY" has the meaning specified in Section 6(a).

"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).

"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"ILLEGALITY" has the meaning specified in Section 5(b).

"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).

"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"LAWFUL" and "UNLAWFUL" will be construed accordingly.

"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.

"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.

"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have

                                                                   ISDA (R) 1992

                                       15

<PAGE>

been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.

"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).

"OFFICE" means a branch or office of a party, which may be such party's head or
home office.

"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.

"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--

(a)      the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and

(b)      such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.

"SPECIFIED ENTITY" has the meaning specified in the Schedule.

                                                                   ISDA (R) 1992

                                       16

<PAGE>

"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"SPECIFIED TRANSACTION " means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.

"STAMP TAX" means any stamp, registration, documentation or similar tax.

"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.

"TAX EVENT" has the meaning specified in Section 5(b).

"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).

"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).

"TERMINATION CURRENCY" has the meaning specified in the Schedule.

"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.

"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.

"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market

                                                                   ISDA (R) 1992

                                       17

<PAGE>

value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

BANK OF AMERICA, N.A.                     PSYCHIATRIC SOLUTIONS, INC.
-----------------------------------       --------------------------------------
          (Name of Party)                             (Name of Party)

By:    /s/ Roger Heintzelman              By:    /s/ Brent Turner
    -------------------------------           ----------------------------------
    Name:  Roger Heintzelman                  Name:  Brent Turner

    Title: Principal                          Title: VP, Treasurer & Investor
                                                     Relations

    Date:  3/11/04                            Date:  1/26/04

                                                                   ISDA (R) 1992

                                       18

<PAGE>

(MULTICURRENCY -- CROSS BORDER)

                                   [ISDA LOGO]
                  International Swap Dealers Association, Inc.

                                    SCHEDULE
                                     TO THE
                                MASTER AGREEMENT

                             dated as of January 2, 2004

                                    between

                              BANK OF AMERICA, N.A.
                                   ("Party A")
                                       and
                           PSYCHIATRIC SOLUTIONS, INC.
                                   ("Party B")

                         PART 1: TERMINATION PROVISIONS

(a)      "SPECIFIED ENTITY" means in relation to Party A for the purpose of
         Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(iv):

         None;

         "SPECIFIED ENTITY" means in relation to Party B for the purpose of
         Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(iv):

         Any Guarantor under the Credit Agreement.

(b)      "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
         but shall also include any transaction with respect to the forward sale
         or delivery of any security.

(c)      The "CROSS-DEFAULT" provisions of Section 5(a)(vi) (as amended in Part
         5(i))

                  will apply to Party A and
                  will apply to Party B.

         In connection therewith, "SPECIFIED INDEBTEDNESS" will have the meaning
         specified in Section 14, except that such term shall not include
         obligations in respect of deposits received in the ordinary course of a
         party's banking business."

         "THRESHOLD AMOUNT" means with respect to Party A an amount equal to
         three percent (3%) of the Shareholders' Equity of Bank of America
         Corporation and with respect to Party B, $3,000,000.

                                       19

<PAGE>

         With respect to Party B, an Event of Default, as defined in the Credit
         Agreement shall be an Event of Default under this Agreement.

         "CREDIT AGREEMENT" means the Credit Agreement dated on or about January
         6, 2004 among Psychiatric Solutions, Inc., as Borrower, the Guarantors,
         as defined therein, the Lenders party thereto and as defined therein,
         Bank of America, N.A., as Administrative Agent, Swing Line Lender and
         L/C Issuer (as amended, restated, extended, supplemented or otherwise
         modified in writing from time to time) together with any replacement
         credit agreement for which Party A is the administrative agent.

         "SHAREHOLDERS' EQUITY" means with respect to an entity, at any time,
         the sum (as shown in the most recent annual audited financial
         statements of such entity) of (i) its capital stock (including
         preferred stock) outstanding, taken at par value, (ii) its capital
         surplus and (iii) its retained earnings, minus (iv) treasury stock,
         each to be determined in accordance with generally accepted accounting
         principles.

(d)      The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)

                   will apply to Party A
                   will apply to Party B.

(e)      The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)

                   will not apply to Party A
                   will not apply to Party B.

(f)      PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e):-

                   (i)     Market Quotation will apply.

                   (ii)    The Second Method will apply.

(g)      "TERMINATION CURRENCY" means United States Dollars.

                                       20

<PAGE>

(h)      ADDITIONAL TERMINATION EVENT will apply.

         In the event that at any time prior to the termination of this
         Agreement, the Credit Agreement terminates (a "Collateral Event"),
         Party B shall within three Business Days of a Collateral Event (a)
         execute a security agreement reasonably satisfactory to Party A and
         provide cash collateral pursuant thereto to secure the Performance
         Exposure of Party A or (b) transfer its rights and obligations under
         this Agreement to another party which is acceptable to Party A. Failure
         to take either action mentioned in the preceding sentence to the
         satisfaction of Party A shall constitute an Additional Termination
         Event under this Agreement with Party B being the Affected Party.
         "Performance Exposure" means on any Business Day, the amount, if any,
         estimated by Party A in good faith and in a commercially reasonable
         manner, which would be payable to Party A if this Agreement were
         terminated as of such day as the result of an Event of Default with
         respect to Party B and a payment was due to Party A pursuant to Section
         6(e)(i)(3) of this Agreement.

         If Party A ceases to be a party to the Credit Agreement, and at such
         time an Event of Default by Party B under the Credit Agreement has not
         occurred and is then continuing, the covenants, terms and provisions
         of, including all representations and warranties of Party B contained
         in the Credit Agreement (the "Incorporated Provisions"), as in effect
         as of the date Party A exits the Credit Agreement, will, as of the date
         Party A exits the Credit Agreement, be incorporated by reference in,
         and made part of, this Agreement to the same extent as if such
         covenants, terms, and provisions were set forth in full herein and
         notwithstanding any consent of any party to the Credit Agreement to any
         amendment, variance or waiver, Party B shall be required to obtain the
         consent of Party A to such amendment, variance or waiver by virtue of
         the incorporation of the Incorporated Provisions into this Agreement.
         Party B hereby agrees that, during the period commencing with the date
         Party A ceases to be a party to the Credit Agreement through and
         including such date on which all of Party B's obligations under this
         Agreement are fully performed, Party B will (a) observe, perform, and
         fulfill each and every such covenant, term, and provision applicable to
         Party B, and (b) deliver to Party A at the address for notices to Party
         A provided in Part 4 each notice, document, certificate or other
         writing as Party B is obligated to furnish to any other party to the
         Credit Agreement; provided further, that Party B may at any time
         eliminate such Incorporated Provisions by executing a security
         agreement reasonably satisfactory to Party A and providing cash
         collateral pursuant thereto to secure the Performance Exposure (as
         defined above) of Party A. Party B hereby agrees that after Party A
         ceases to be a party to the Credit Agreement Party B shall not amend or
         modify (or permit any amendment or modification of) the Credit
         Agreement to permit the release of all or substantially all of the
         Guarantors (as defined in the Credit Agreement on the date Party A
         ceases to be a party to the Credit Agreement) or release all or
         substantially all of the Collateral (as defined in the Credit Agreement
         on the date Party A ceases to be a party to the Credit Agreement)
         without the consent of Party A.

                           PART 2: TAX REPRESENTATIONS

(a)      PAYER TAX REPRESENTATIONS. For the purpose of Section 3(e) of this
         Agreement, Party A and Party B will make the following representation:-

         It is not required by any applicable law, as modified by the practice
         of any relevant governmental revenue authority of any Relevant
         Jurisdiction to make any deduction or

                                       21

<PAGE>

         withholding for or on account of any Tax from any payment (other than
         interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be
         made by it to the other party under this Agreement. In making this
         representation, it may rely on (x) the accuracy of any representations
         made by the other party pursuant to Section 3(f) of this Agreement, (y)
         the satisfaction of the agreement contained in Section 4(a)(i) or
         4(a)(iii) of this Agreement and the accuracy and effectiveness of any
         document provided by the other party pursuant to Section 4(a)(i) or
         4(a)(iii) of this Agreement and (z) the satisfaction of the agreement
         of the other party contained in Section 4(d) of this Agreement,
         provided that it shall not be a breach of this representation where
         reliance is placed on clause (y) and the other party does not deliver a
         form or document under Section 4(a)(iii) by reason of material
         prejudice to its legal or commercial position.

(b)      PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
         Agreement, Party A and Party B will make the following representations
         specified below, if any:-

         (i)      The following representations will apply to Party A:

                  Party A is a national banking association created or organized
                  under the laws of the United States of America and the federal
                  taxpayer identification number is 94-1687665.

         (ii)     The following representations will apply to Party B:

                  Party B is a corporation created or organized under the laws
                  of the State of Delaware and the federal taxpayer
                  identification number is 23-2491707.

                     PART 3: AGREEMENT TO DELIVER DOCUMENTS

For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees
to deliver the following documents:

(a)      Tax forms, documents or certificates to be delivered are:

<TABLE>
<CAPTION>
PARTY REQUIRED TO
DELIVER DOCUMENT           FORM/DOCUMENT/CERTIFICATE            DATE BY WHICH TO BE DELIVERED
-----------------          -------------------------            ------------------------------
<S>                    <C>                                      <C>
Party B                Internal Revenue Service                 Upon execution and delivery of
                       Form W-9                                 this Agreement
</TABLE>

                                       22

<PAGE>

(b)      Other documents to be delivered are:-

<TABLE>
<CAPTION>
   PARTY
REQUIRED TO                                                                                     COVERED BY
  DELIVER                                                                DATE BY               SECTION 3(d)
 DOCUMENT                  FORM/DOCUMENT/CERTIFICATE              WHICH TO BE DELIVERED       REPRESENTATION
-----------            -----------------------------------      -------------------------     --------------
<S>                    <C>                                      <C>                           <C>
Party A                Annual Report of Bank of America         To be made available on             Yes
                       Corporation containing audited,          www.bankofamerica.com/
                       consolidated financial statements        investor/ as soon as
                       certified by independent certified       available and in any
                       public accountants and prepared in       event within 120 days
                       accordance with generally accepted       after the end of each
                       accounting principles in the             fiscal year of Party A
                       country in which such party is
                       organized

Party B                Annual Report of Party B and of any      As  soon  as  available             Yes
                       Credit Support Provider thereof          and in any event within
                       containing audited, consolidated         90 days after the end of
                       financial statements certified by        each fiscal year of
                       independent certified public             Party B and of the
                       accountants and prepared in              Credit Support Provider
                       accordance with generally accepted
                       accounting principles in the
                       country in which such party and
                       such Credit Support Provider is
                       organized

Party A                Quarterly Financial Statements of        To be made available on             Yes
                       Bank of America Corporation thereof      www.bankofamerica.com/
                       containing unaudited, consolidated       investor/ as soon
                       financial statements of such             as available and in
                       party's fiscal quarter prepared in       any event within 120 days
                       accordance with generally accepted       after the end of each
                       accounting principles in the             fiscal year of Party A
                       country in which such party is
                       organized
</TABLE>

                                       23

<PAGE>

<TABLE>
<CAPTION>
   PARTY
REQUIRED TO                                                                                     COVERED BY
  DELIVER                                                                DATE BY               SECTION 3(d)
 DOCUMENT                  FORM/DOCUMENT/CERTIFICATE              WHICH TO BE DELIVERED       REPRESENTATION
-----------            -----------------------------------      -------------------------     --------------
<S>                    <C>                                      <C>                           <C>
Party B                Quarterly Financial Statements of        As soon as available and            Yes
                       Party B and any Credit Support           in any event within 30
                       Provider thereof containing              days after the end of
                       unaudited, consolidated financial        each fiscal quarter of
                       statements of such party's fiscal        Party B and of the Credit
                       quarter prepared in accordance with      Support Provider
                       generally accepted accounting
                       principles in the country in which
                       such party and such Credit Support
                       Provider is organized

Party A and            Certified copies of all corporate        Upon execution and                  Yes
Party B                or partnership authorizations, as        delivery of this
                       the case may be, and any other           Agreement
                       documents with respect to the
                       execution, delivery and
                       performance of this Agreement
                       and any Credit Support
                       Document

Party A and            Certificate of authority and             Upon execution and                  Yes
Party B                specimen signatures of individuals       delivery of this
                       executing this Agreement any Credit      Agreement and
                       Support Document and Confirmations       thereafter upon request
                                                                of the other party
</TABLE>

                              PART 4: MISCELLANEOUS

(a)      ADDRESS FOR NOTICES. For the purpose of Section 12(a) of this
         Agreement:-

         Address for notice or communications to Party A:

           Bank of America, N.A.
           Sears Tower
           233 South Wacker Drive, Suite 2800
           Chicago, IL 60606
           Attention: Swap Operations

         with a copy to:

                                       24

<PAGE>

           Bank of America, N.A.
           100 N. Tryon St., NC1-007-13-01
           Charlotte, North Carolina 28255
           Attention: Capital Markets Documentation
           Facsimile: 704-386-4113

         Financial Statements for Party A must be sent to:-

           Bank of America, N.A.
           414 Union Street
           Nashville, TN 37219
           Attention: Elizabeth Knox, Senior Vice President
           Telephone: 615-749-3918
           Facsimile: 615-749-4951

         Address for notice or communications to Party B:

           Psychiatric Solutions, Inc.
           113 Seaboard Lane, Suite C-100
           Franklin, TN 37067
           Attention: Brent Turner
           Telephone No.: (615) 312-5700 ext. 3046 / 615-978-5746 (direct)
           Facsimile No.: (615)312-5711

(b)      PROCESS AGENT. For the purpose of Section 13(c):

         Party A appoints as its Process Agent: Not applicable.

         Party B appoints as its Process Agent: Not applicable.

(c)      OFFICES. The provisions of Section 10(a) will apply to this Agreement.

(d)      MULTIBRANCH PARTY. For the purpose of Section 10 of this Agreement:-

         Party A is a Multibranch Party and may act through its Charlotte, North
         Carolina, Chicago, Illinois, San Francisco, California, New York, New
         York or London, England Office, or such other Office as may be agreed
         to by the parties in connection with a Transaction.

         Party B is not a Multibranch Party.

(e)      CALCULATION AGENT. The Calculation Agent is Party A.

(f)      CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:-

         Each of the following, as amended, supplemented, modified, renewed,
         replaced, consolidated, substituted or extended from time to time, is a
         "Credit Support Document":

         In relation to Party B,

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         the Collateral Documents, and the Guaranty, as such terms are defined
         in the Credit Agreement.

         Party B agrees that the security interests in collateral granted to
         Party A under the foregoing Credit Support Documents shall secure the
         obligations of Party B to Party A under this Agreement.

(g)      CREDIT SUPPORT PROVIDER.

         Credit Support Provider means in relation to Party A:

         Not applicable.

         Credit Support Provider means in relation to Party B:

         Guarantors, as defined in the Credit Agreement.

(h)      GOVERNING LAW. This Agreement will be governed by and construed in
         accordance with the laws of the State of New York (without reference to
         its conflict of laws doctrine).

(i)      NETTING OF PAYMENTS. All amounts payable on the same date, in the same
         currency and in respect of the same Transaction shall be netted in
         accordance with Section 2(c) of this Agreement. The election contained
         in the last paragraph of Section 2(c) of this Agreement shall not apply
         for the purposes of this Agreement.

(j)      "AFFILIATE" will have the meaning specified in Section 14 of this
         Agreement.

                            PART 5: OTHER PROVISIONS

(a)      SET-OFF. Any amount (the "Early Termination Amount") payable to one
         party (the Payee) by the other party (the Payer) under Section 6(e), in
         circumstances where there is a Defaulting Party or one Affected Party
         in the case where a Termination Event under Section 5(b)(iv) or (v) has
         occurred, will, at the option of the party ("X") other than the
         Defaulting Party or the Affected Party (and without prior notice to the
         Defaulting Party or the Affected Party), be reduced by its set-off
         against any amount(s) (the "Other Agreement Amount") payable (whether
         at such time or in the future or upon the occurrence of a contingency)
         by the Payee to the Payer (irrespective of the currency, place of
         payment or booking office of the obligation) under any other
         agreement(s) between the Payee and the Payer or instrument(s) or
         undertaking(s) issued or executed by one party to, or in favor of, the
         other party (and the Other Agreement Amount will be discharged promptly
         and in all respects to the extent it is so set-off). X will give notice
         to the other party of any set-off effected under this Part 5(a).

         For this purpose, either the Early Termination Amount or the Other
         Agreement Amount (or the relevant portion of such amounts) may be
         converted by X into the currency in which the other is denominated at
         the rate of exchange at which such party would be able, acting in a
         reasonable manner and in good faith, to purchase the relevant amount of
         such currency.

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         If an obligation is unascertained, X may in good faith estimate that
         obligation and set-off in respect of the estimate, subject to the
         relevant party accounting to the other when the obligation is
         ascertained.

         Nothing in this Part 5(a) shall be effective to create a charge or
         other security interest. This Part 5(a) shall be without prejudice and
         in addition to any right of set-off, combination of accounts, lien or
         other right to which any party is at any time otherwise entitled
         (whether by operation of law, contract or otherwise).

(b)      DELIVERY OF CONFIRMATIONS. For each Transaction entered into hereunder,
         Party A shall promptly send to Party B a Confirmation via facsimile
         transmission. Party B agrees to respond to such Confirmation within two
         (2) Local Business Days, either confirming agreement thereto or
         requesting a correction of any error(s) contained therein. Failure by
         Party A to send a Confirmation or of Party B to respond within such
         period shall not affect the validity or enforceability of such
         Transaction. Absent manifest error, there shall be a presumption that
         the terms contained in such Confirmation are the terms of the
         Transaction.

(c)      RECORDING OF CONVERSATIONS. Each party to this Agreement acknowledges
         and agrees to the tape recording of conversations between trading and
         marketing personnel of the parties to this Agreement whether by one or
         other or both of the parties or their agents, and that any such tape
         recordings may be submitted in evidence in any Proceedings relating to
         the Agreement.

(d)      FURNISHING SPECIFIED INFORMATION. Section 4(a)(iii) is hereby amended
         by inserting "promptly upon the earlier of (i)" in lieu of the word
         "upon" at the beginning thereof and inserting "or (ii) such party
         learning that the form or document is required" before the word "any"
         on the first line thereof.

(e)      NOTICE BY FACSIMILE TRANSMISSION. Section 12(a) is hereby amended by
         deleting the parenthetical "(except that a notice or other
         communication under Section 5 or 6 may not be given by facsimile
         transmission or electronic messaging system)".

(f)      Section 3(a) of this Agreement is amended by (i) deleting the word
         "and" at the end of clause (iv); (ii) deleting the period at the end of
         clause (v) and inserting therein "; and " ; and (iii) by inserting the
         following additional representation:

                  "(vi) ELIGIBLE CONTRACT PARTICIPANT. Each party represents to
                  the other party (which representation will be deemed to be
                  repeated by each party on each date on which a Transaction is
                  entered into) that it is an "eligible contract participant" as
                  defined in Section la(12) of the U.S. Commodity Exchange Act,
                  7 U.S.C. Section 1a(12)."

(g)      Section 3 is revised so as to add the following Section (g) at the end
         thereof:

         "(g)     RELATIONSHIP BETWEEN PARTIES. Each party represents to the
         other party and will be deemed to represent to the other party on the
         date on which it enters into a Transaction that (absent a written
         agreement between the parties that expressly imposes affirmative
         obligations to the contrary for that Transaction):-

                  (i)      NON-RELIANCE. It is acting for its own account, and
                  it has made its own independent decisions to enter into that
                  Transaction and as to whether that

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<PAGE>

                  Transaction is appropriate or proper for it based upon its own
                  judgment and upon advice from such advisors as it has deemed
                  necessary. It is not relying on any communication (written or
                  oral) of the other party as investment advice or as a
                  recommendation to enter into that Transaction; it being
                  understood that information and explanations related to the
                  terns and conditions of a Transaction shall not be considered
                  investment advice or a recommendation to enter into that
                  Transaction. Further, such party has not received from the
                  other party any assurance or guarantee as to the expected
                  results of that Transaction.

                  (ii)     EVALUATION AND UNDERSTANDING. It is capable of
                  evaluating and understanding (on its own behalf or through
                  independent professional advice), and understands and accepts,
                  the terms, conditions and risks of that Transaction. It is
                  also capable of assuming, and assumes, the financial and other
                  risks of that Transaction.

                  (iii)    STATUS OF PARTIES. The other party is not acting as
                  an agent, fiduciary or advisor for it in respect of that
                  Transaction."

(h)      WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES
         ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL
         PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
         TRANSACTION CONTEMPLATED HEREBY.

(i)      CROSS DEFAULT. Section 5(a)(vi), of this Agreement is hereby amended
         adding the following after the semicolon at the end thereof;

                  "provided, however, that notwithstanding the foregoing (but
                  subject to any provision to the contrary contained in any such
                  agreement or instrument), an Event of Default shall not occur
                  under either (1) or (2) above if the default, event of default
                  or other similar condition or event referred to in (1) or the
                  failure to pay referred to in (2) is caused not (even in part)
                  by the unavailability of funds but is caused solely due to a
                  technical or administrative error which has been remedied
                  within Three Local Business Days after notice of such failure
                  is given to the party."

(j)      SWAP CONTRACT. This Agreement is a Swap Contract, as defined in the
         Credit Agreement.

ACCEPTED AND AGREED:

         BANK OF AMERICA, N.A.         PSYCHIATRIC SOLUTIONS, INC.

            /s/ Roger H. Heintzelman   /s/ Brent Turner
         ----------------------------  -----------------------------------------
         Name:  Roger H. Heintzelman   Name:  Brent Turner
         Title: Principal              Title: VP, Treasurer & Investor Relations

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