Document:

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                                                                 EXHIBIT 10.139

                 THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

         This Third Amendment to Loan and Security Agreement (this "THIRD
AMENDMENT") is entered into as of the 17th day of November, 1999, between RAMSAY
YOUTH SERVICES, INC., a Delaware corporation, f/k/a RAMSAY HEALTH CARE, INC.
("HOLDINGS"), with its principal place of business at Columbus Center, One
Alhambra Plaza, Suite 750, Coral Gables, Florida 33134, each of the Subsidiaries
of Holdings party to this Third Amendment and listed in EXHIBIT B to the Loan
Agreement referred to below (the "HOLDINGS SUBSIDIARIES"), each of which is a
corporation or other legal entity as indicated in EXHIBIT B, is organized under
the laws of the jurisdiction indicated in EXHIBIT B, and has its principal place
of business at the location indicated in EXHIBIT B (Holdings, the Holdings
Subsidiaries, and each other Subsidiary of Holdings or of any Subsidiary of
Holdings from time to time party to the Loan Agreement referred to below are
hereinafter collectively referred to as "BORROWERS" and each individually as a
"BORROWER"), and FLEET CAPITAL CORPORATION, a Rhode Island corporation (in its
individual capacity, "FCC"), with offices at 2711 North Haskell Avenue, Suite
2100, LB 21, Dallas Texas 75204, as a Lender, and as agent for all Lenders, in
such capacity, "AGENT"), and such Persons who are or hereafter become parties to
the Loan Agreement as Lenders. Capitalized terms used but not defined in this
Third Amendment have the meanings assigned to them in Appendix A of that certain
Loan and Security Agreement dated October 30, 1998, among Borrowers, Lenders and
Agent, as amended (the "LOAN AGREEMENT").

                              W I T N E S S E T H:

         WHEREAS, the Borrowers have requested certain amendments to the Loan
Agreement; and

         WHEREAS, subject to the terms and conditions herein contained, Agent
and Lenders have agreed to the Borrowers' requests.

         NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrowers, Agent and Lenders hereby agree as follows:

         SECTION 1. Subject to the satisfaction of each condition precedent set
forth in SECTION 2 hereof and in reliance on the representations, warranties,
covenants and agreements contained in this Third Amendment, the Loan Agreement
shall be amended effective November 17, 1999 (the "THIRD AMENDMENT EFFECTIVE
DATE") in the manner provided in this SECTION 1:

         1.1 AMENDED DEFINITIONS. The definitions of Acquisition Loan Commitment
Termination Date and Pro Forma Quarterly Availability contained in APPENDIX A to
the Loan Agreement shall be amended by deleting those definitions in their
entirety and inserting in their place, respectively, the following definitions:

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         ACQUISITION LOAN COMMITMENT TERMINATION DATE - THE EARLIEST OF (I) WITH
         RESPECT TO ACQUISITION ADVANCES, NOVEMBER 30, 1999, OR WITH RESPECT TO
         BRIDGE LOAN ADVANCES, FEBRUARY 28, 2000, (II) THE DATE OF TERMINATION
         OF THE COMMITMENT TO MAKE FURTHER ACQUISITION LOANS PURSUANT TO SECTION
         4.2, AND (III) THE DATE OF TERMINATION OF THE COMMITMENT TO MAKE
         FURTHER REVOLVING CREDIT LOANS PURSUANT TO SECTION 10.2.

         PRO FORMA QUARTERLY AVAILABILITY - FOR ANY FISCAL QUARTER OF HOLDINGS
         THE SUM OF (I) THE AVERAGE DAILY BALANCE OF THE AVAILABILITY, MINUS
         (II) THE AVERAGE DAILY LC AMOUNT, MINUS (III) SETTLEMENT AMOUNTS PAID
         IN SUCH FISCAL QUARTER OR COMMITTED TO BE PAID IN THE NEXT-FOLLOWING
         FISCAL QUARTER, CALCULATED ON A PRO FORMA BASIS FOR SUCH FISCAL QUARTER
         AS IF SUCH SETTLEMENT AMOUNTS WERE PAID IN CASH ON THE FIRST DAY OF
         SUCH FISCAL QUARTER, PLUS (IV) THE AMOUNT OF THE LIQUIDITY RESERVE AS
         CALCULATED BY AGENT PURSUANT TO SECTION 1.1.1(A)(V).

         1.2      ADDITIONAL DEFINITIONS. Appendix A to the Loan Agreement shall
be amended to add the following definitions to such Appendix:

         ACQUISITION ADVANCES - AS DEFINED IN SECTION 1.2.2.

         BRIDGE LOAN ADVANCES - AS DEFINED IN SECTION 1.2.2.

         BENCHMARK YOUTH RESIDENTIAL FACILITY - THE FACILITY LOCATED AT 592 WEST
         1350 SOUTH STREET, WOODS CROSS, UTAH 84087.

         CAPITAL STOCK - ANY AND ALL SHARES, INTERESTS, PARTICIPATIONS OR OTHER
         EQUIVALENTS (HOWEVER DESIGNATED) OF CORPORATE STOCK, INCLUDING WITHOUT
         LIMITATION, WITH RESPECT TO HOLDINGS, ALL COMMON STOCK.

         CHARTER SALE INDEMNIFICATION - THE INDEMNIFICATION CLAIM ASSERTED
         AGAINST HOLDINGS BY CHARTER BEHAVIORAL HEALTH SYSTEMS, L.L.C. REGARDING
         THE DIFFERENCE BETWEEN ESTIMATED AND ACTUAL WORKING CAPITAL ACQUIRED BY
         CHARTER IN THE CHARTER SALE.

         CONTINGENT LIABILITIES - THE CHARTER SALE INDEMNIFICATION, THE JENNINGS
         LAWSUIT, AND THE RHCL ASSUMED TAX LIABILITY.

         DISQUALIFIED STOCK - ANY CAPITAL STOCK WHICH, BY ITS TERMS (OR BY THE
         TERMS OF ANY SECURITY INTO WHICH IT IS CONVERTIBLE OR FOR WHICH IT IS
         EXCHANGEABLE), OR UPON THE HAPPENING OF ANY EVENT, (I) MATURES OR IS
         MANDATORILY REDEEMABLE, PURSUANT TO A SINKING FUND OBLIGATION OR
         OTHERWISE, OR IS REDEEMABLE AT THE SOLE OPTION OF THE HOLDER THEREOF,
         IN WHOLE OR IN PART, IN ANY CASE, ON OR PRIOR TO THE MATURITY DATE,
         (II) PERMITS OR REQUIRES THE PAYMENT OF ANY DIVIDENDS IN CASH PRIOR TO
         THE PAYMENT IN FULL OF ALL OF THE OBLIGATIONS AND TERMINATION OF THE
         AGREEMENT, OR (III) IS NOT SUBORDINATED TO THE PRIOR PAYMENT IN FULL OF
         ALL OF THE OBLIGATIONS AND TERMINATION OF THE AGREEMENT ON TERMS
         ACCEPTABLE TO AGENT.

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         JENNINGS LAWSUIT - THE LAWSUIT FILED BY REYNOLD JENNINGS, A FORMER
         CHIEF OPERATING OFFICER OF HOLDINGS, AGAINST HOLDINGS FOR DAMAGES
         INCLUDING LOST WAGES, SEVERANCE PAYMENTS AND STOCK OPTIONS.

         LIQUIDITY EVENT - THE RECEIPT BY HOLDINGS, AFTER THE THIRD AMENDMENT
         EFFECTIVE DATE, OF AN AGGREGATE AMOUNT OF AT LEAST $7,000,000.00, PLUS
         THE AGGREGATE AMOUNT OF ALL RHCL PAYMENTS, IF ANY, FROM THE OCCURRENCE
         OF ANY ONE OR MORE OF THE FOLLOWING EVENTS: (I) THE PLACEMENT OF
         SUBORDINATED INDEBTEDNESS ON TERMS AND CONDITIONS SATISFACTORY TO AGENT
         IN ITS SOLE AND ABSOLUTE DISCRETION, (II) THE CONSUMMATION OF THAT
         CERTAIN SALE/LEASEBACK OF HOLDINGS' BENCHMARK YOUTH RESIDENTIAL
         FACILITY, (III) THE CONSUMMATION OF A SALE OF THE MISSION VISTA
         FACILITY ON TERMS AND CONDITIONS SATISFACTORY TO AGENT IN ITS SOLE AND
         ABSOLUTE DISCRETION, (IV) THE SALE AND ISSUANCE BY HOLDINGS OF ITS
         CAPITAL STOCK (OTHER THAN DISQUALIFIED STOCK), AND (V) RHCL RECEIPTS.

         RHCL ASSUMED TAX LIABILITY - THE $1,800,000 FEDERAL TAX LIABILITY OF
         RHCL ASSUMED BY HOLDINGS AS PART OF THE PURCHASE PRICE OF RHCL IN THE
         RHCL STOCK PURCHASE.

         RHCL PAYMENTS - ANY AND ALL PAYMENTS MADE BY HOLDINGS OR ANY OF ITS
         SUBSIDIARIES, AFTER THE DATE OF THE THIRD AMENDMENT, TO THE STATE OF
         LOUISIANA OR ANY AGENCY OR GOVERNMENTAL BODY THEREOF IN CONNECTION WITH
         THE LOUISIANA MEDICAID DISPROPORTIONATE SHARE PAYMENTS.

         RHCL RECEIPTS - ANY AND ALL PAYMENTS RECEIVED BY HOLDINGS OR ANY OF ITS
         SUBSIDIARIES, AFTER THE DATE OF THE THIRD AMENDMENT, FROM THE STATE OF
         LOUISIANA OR ANY AGENCY OR GOVERNMENTAL BODY THEREOF IN CONNECTION WITH
         THE LOUISIANA MEDICAID DISPROPORTIONATE SHARE PAYMENTS.

         RHCL STOCK PURCHASE - AS DEFINED IN THE FIRST RECITAL OF THE SECOND
         AMENDMENT TO LOAN AND SECURITY AGREEMENT, CONSENT AND BORROWING BASE
         CHANGE NOTICE, DATED AS OF JUNE 30, 1999 BETWEEN HOLDINGS, HOLDINGS
         SUBSIDIARIES, AGENT AND LENDER.

         SUSPENSION EVENT - THE EXISTENCE OF ANY ONE OR MORE OF THE FOLLOWING:
         (I) A DEFAULT OR EVENT OF DEFAULT, (II) AN AGREEMENT BETWEEN BORROWERS,
         AGENT AND LENDERS THAT AGENT AND LENDERS SHALL FORBEAR FROM EXERCISING
         ANY RIGHTS OR REMEDIES PURSUANT TO THE LOAN DOCUMENTS OR (III) THE
         ACCELERATION OF ANY AMOUNTS DUE WITH RESPECT TO THE LOAN DOCUMENTS.

         THIRD AMENDMENT - THE THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
         AMONG BORROWERS, LENDERS AND AGENT DATED NOVEMBER 17, 1999.

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         THIRD AMENDMENT EFFECTIVE DATE - AS DEFINED IN THE THIRD AMENDMENT.

         1.3      AMENDMENT ACKNOWLEDGING ADDITION TO BORROWING BASE RESERVE.
SECTION 1.1.1(A)(V) of the Loan Agreement shall be amended in its entirety to
read as follows:

                  (V) IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT A RESERVE EQUAL
         TO THE SUM OF THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) MINUS
         THE AGGREGATE AMOUNT OF ANY BRIDGE LOAN ADVANCES MADE FROM TIME TO TIME
         PURSUANT TO SECTION 1.2.2, SHALL BE ESTABLISHED AND MAINTAINED AGAINST
         THE AMOUNT OF REVOLVING CREDIT LOANS THAT BORROWERS MAY OTHERWISE
         REQUEST UNDER THIS AGREEMENT (THE "LIQUIDITY RESERVE"), WHICH LIQUIDITY
         RESERVE SHALL REMAIN IN PLACE UNTIL THE OCCURRENCE OF A LIQUIDITY EVENT
         AND THE SETTLEMENT AND SATISFACTION OF ALL CONTINGENT LIABILITIES.

         1.4      AMENDMENT TO ACQUISITION LOANS. SECTION 1.2.2 of the Loan
Agreement shall be amended in its entirety to read as follows:

                  1.2.2    ACQUISITION LOANS. DURING THE PERIOD COMMENCING
         MARCH 1, 1999, AND ENDING ON THE DAY PRECEDING THE ACQUISITION LOAN
         COMMITMENT TERMINATION DATE WITH RESPECT TO ACQUISITION ADVANCES AND
         BRIDGE LOAN ADVANCES, AS THE CASE MAY BE, (THE "ACQUISITION LOAN
         PERIOD"), EACH LENDER AGREES, FOR SO LONG AS NO DEFAULT OR EVENT OF
         DEFAULT EXISTS, TO MAKE LOANS ("ACQUISITION LOAN(S)") TO BORROWERS (I)
         TO FINANCE PERMITTED ACQUISITIONS CONSUMMATED WITHIN THE ACQUISITION
         LOAN PERIOD (THE "ACQUISITION ADVANCES") AND (II) FOR WORKING CAPITAL
         AND GENERAL CORPORATE PURPOSES (THE "BRIDGE LOAN ADVANCES"); PROVIDED
         THAT BRIDGE LOAN ADVANCES SHALL BE MADE IN THE SOLE AND ABSOLUTE
         DISCRETION OF AGENT AND THE REQUIRED LENDERS AND, EXCEPT FOR THE
         INITIAL BRIDGE LOAN ADVANCE, SUBJECT TO THE RECEIPT BY AGENT OF
         EVIDENCE SATISFACTORY TO AGENT AND REQUIRED LENDERS THAT THE PROCEEDS
         OF ANY AND ALL PRIOR BRIDGE LOAN ADVANCES WERE USED SOLELY TO SATISFY
         CONTINGENT LIABILITIES OR, WITH THE PRIOR WRITTEN APPROVAL OF AGENT,
         WHICH SHALL NOT BE UNREASONABLY WITHHELD, THE SATISFACTION OF OTHER
         LIABILITIES OF BORROWERS, AS THEY BECOME DUE. THE AGGREGATE AMOUNT OF
         ALL BRIDGE LOAN ADVANCES SHALL NOT EXCEED $3,000,000 AND THE AGGREGATE
         AMOUNT OF ALL ACQUISITION ADVANCES SHALL NOT EXCEED $500,000 AFTER THE
         THIRD AMENDMENT CLOSING DATE. THE AGGREGATE AMOUNT OF THE ACQUISITION
         LOANS TO BE MADE BY EACH LENDER (SUCH LENDER'S "ACQUISITION LOAN
         COMMITMENT"), PURSUANT TO THE TERMS HEREOF, SHALL BE THE AMOUNT SET
         BELOW SUCH LENDER'S NAME ON THE SIGNATURE PAGES OF THE THIRD AMENDMENT
         OR IN THE MOST RECENT ASSIGNMENT AND ACCEPTANCE AGREEMENT, IF ANY,
         EXECUTED BY SUCH LENDER. THE AGGREGATE PRINCIPAL AMOUNT OF THE
         ACQUISITION LOAN COMMITMENTS IS SIX MILLION DOLLARS ($6,000,000). THE

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         ACQUISITION LOAN SHALL BE EVIDENCED BY ONE OR MORE ACQUISITION NOTES TO
         BE EXECUTED AND DELIVERED BY BORROWERS TO LENDERS ON THE THIRD
         AMENDMENT CLOSING DATE, WHICH SHALL BEAR INTEREST AS SPECIFIED IN
         SECTION 2.1 AND SHALL BE REPAYABLE IN ACCORDANCE WITH THE TERMS OF
         ACQUISITION NOTES. THE PERCENTAGE EQUAL TO THE QUOTIENT OF (X) EACH
         LENDER'S ACQUISITION LOAN COMMITMENT, DIVIDED BY (Y) THE AGGREGATE OF
         ALL ACQUISITION LOAN COMMITMENTS, IS THAT LENDER'S "ACQUISITION LOAN
         PERCENTAGE." SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THIS
         AGREEMENT, EACH LENDER AGREES, FOR SO LONG AS NO DEFAULT OR EVENT OF
         DEFAULT EXISTS, TO MAKE ACQUISITION LOANS TO BORROWERS FROM TIME TO
         TIME, AS REQUESTED BY BORROWERS IN ACCORDANCE WITH THE TERMS OF SECTION
         3.1, UP TO A MAXIMUM PRINCIPAL AMOUNT AT ANY TIME OUTSTANDING EQUAL TO
         THE PRODUCT OF (A) SIX MILLION DOLLARS ($6,000,000), MULTIPLIED BY (B)
         SUCH LENDER'S ACQUISITION LOAN PERCENTAGE. AMOUNTS REPAID WITH RESPECT
         TO THE ACQUISITION LOANS MAY NOT BE REBORROWED. IN NO EVENT SHALL ANY
         ONE REQUEST BY BORROWERS FOR ACQUISITION LOANS BE IN AN AGGREGATE
         AMOUNT OF LESS THAN TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000).

         1.5      AMENDMENT TO UNUSED LINE FEE. SECTION 2.4 of the Loan
Agreement is hereby amended to read in its entirety as follows:

                  2.4      UNUSED LINE FEE. BORROWERS, ON A JOINT AND SEVERAL
         BASIS, SHALL PAY TO AGENT FOR THE RATABLE BENEFIT OF LENDERS AN UNUSED
         LINE FEE EQUAL TO (A) ONE-HALF PERCENT (0.50%) PER ANNUM OF THE AMOUNT
         BY WHICH THE AVERAGE MONTHLY REVOLVING CREDIT LOAN BALANCE IS LESS THAN
         THE REVOLVING CREDIT LOAN COMMITMENT PLUS (B)(I) DURING THE PERIOD FROM
         MARCH 1, 1999, THROUGH OCTOBER 31, 1999, ONE-HALF PERCENT (0.50%) PER
         ANNUM OF THE AMOUNT BY WHICH THE AVERAGE MONTHLY ACQUISITION LOAN
         BALANCE IS LESS THAN THE ACQUISITION LOAN COMMITMENT, (II) DURING THE
         PERIOD FROM NOVEMBER 1, 1999, THROUGH FEBRUARY 28, 2000, ONE-HALF
         PERCENT (0.50%) PER ANNUM OF THE AMOUNT BY WHICH THE AVERAGE MONTHLY
         ACQUISITION LOAN BALANCE IS LESS THAN $4,240,000. THE UNUSED LINE FEE
         SHALL BE PAYABLE MONTHLY IN ARREARS ON THE FIRST DAY OF EACH CALENDAR
         MONTH AFTER THE CLOSING DATE.

         1.6      AMENDMENT OF MANDATORY PREPAYMENTS. SECTION 3.3 of the Loan
Agreement is hereby amended to read in its entirety as follows:

                  3.3      MANDATORY PREPAYMENTS.

                  3.3.1

                           (A)     PROCEEDS OF SALE, LOSS, DESTRUCTION OR
                  CONDEMNATION OF COLLATERAL. EXCEPT AS PROVIDED IN SECTION
                  6.4.2, IF ANY BORROWER SELLS ANY OF THE EQUIPMENT, THE
                  MEADOWLAKE FACILITY, OR ANY OTHER REAL PROPERTY (OTHER THAN
                  THE MISSION VISTA FACILITY OR THE PERMITTED DISPOSITION OF THE
                  BENCHMARK YOUTH RESIDENTIAL FACILITY), OR IF A PERMITTED
                  DISPOSITION OF THE MISSION VISTA FACILITY OR THE BENCHMARK
                  YOUTH RESIDENTIAL FACILITY IS CONSUMMATED DURING THE
                  CONTINUANCE OF AN EVENT OF DEFAULT, OR IF ANY OF THE
                  COLLATERAL IS LOST OR DESTROYED OR TAKEN BY CONDEMNATION,
                  BORROWERS, ON A JOINT AND SEVERAL BASIS, SHALL PAY TO AGENT
                  FOR THE RATABLE BENEFIT OF LENDERS, UNLESS OTHERWISE AGREED BY
                  REQUIRED LENDERS, AS AND WHEN RECEIVED BY SUCH BORROWER AND AS
                  A MANDATORY PREPAYMENT OF (X) THE ACQUISITION ADVANCES OR (Y)
                  IF THE ACQUISITION ADVANCES ARE PAID IN FULL, THE TERM LOANS,
                  A SUM EQUAL TO THE PROCEEDS (INCLUDING INSURANCE PAYMENTS)
                  RECEIVED BY SUCH BORROWER FROM SUCH SALE, LOSS, DESTRUCTION OR
                  CONDEMNATION, PROVIDED, THAT IF NO EVENT OF DEFAULT EXISTS
                  WHEN SUCH PROCEEDS ARE RECEIVED BY SUCH BORROWER, THE AMOUNT
                  OF SUCH PROCEEDS PAYABLE TO AGENT UNDER THIS SECTION 3.3.1
                  SHALL BE NET OF (A) ANY REASONABLE COSTS OF SALE OR
                  DISPOSITION INCURRED BY BORROWERS IN CONNECTION THEREWITH, (B)

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                  PROVISIONS FOR ANY INCOME TAX EXPENSE REASONABLY EXPECTED TO
                  BE INCURRED BY BORROWERS AS A RESULT OF SUCH SALE OR
                  DISPOSITION, AND, (C) CASH ESCROW OR SIMILAR DEPOSITS REQUIRED
                  TO BE MADE BY SUCH BORROWER FOR THE BENEFIT OF THE PURCHASER
                  IN SUCH SALE TRANSACTION AS SECURITY FOR POST-CLOSING
                  CONTINGENT LIABILITIES OF SUCH BORROWER IN ORDER TO ENABLE
                  SUCH BORROWER TO CONSUMMATE SUCH SALE TRANSACTION (BUT ANY
                  AMOUNTS RELEASED TO SUCH BORROWER FROM ANY DEPOSIT OF THE TYPE
                  DESCRIBED IN THE PRECEDING CLAUSE (C) MADE BY SUCH BORROWER
                  SHALL, UPON RECEIPT BY BORROWER, BE DEEMED PROCEEDS SUBJECT TO
                  THE PROVISIONS OF THIS SECTION 3.3.1 AND SHALL BE PROMPTLY
                  PAID OVER TO AGENT FOR APPLICATION IN ACCORDANCE WITH THE
                  PROVISIONS HEREOF).

                  ANY SUCH PREPAYMENTS (OTHER THAN PREPAYMENTS RELATING TO A
                  PERMITTED DISPOSITION OF THE BENCHMARK YOUTH RESIDENTIAL
                  FACILITY CONSUMMATED IN THE ABSENCE OF AN EVENT OF DEFAULT)
                  SHALL BE APPLIED RATABLY AMONG LENDERS TO PRINCIPAL
                  INSTALLMENTS DUE UNDER THE ACQUISITION NOTES OR TERM NOTES, AS
                  APPLICABLE, IN THE INVERSE ORDER OF MATURITY. NOTWITHSTANDING
                  THE FOREGOING, UNLESS AN EVENT OF DEFAULT EXISTS AT THE TIME
                  SUCH PROCEEDS ARE RECEIVED BY BORROWER, UP TO $250,000 OF THE
                  AGGREGATE AMOUNT OF SUCH NET PROCEEDS RECEIVED BY ALL
                  BORROWERS DURING ANY PERIOD OF TWELVE CONSECUTIVE MONTHS BY
                  REASON OF SUCH TRANSACTIONS OR OCCURRENCES, PLUS ADDITIONAL
                  AMOUNTS SO RECEIVED AND EXPENDED PURSUANT TO AND FOR THE
                  PURPOSES REFERENCED IN SECTION 6.4.2(II) MAY BE RETAINED BY
                  BORROWERS AND SHALL NOT BE SUBJECT TO PREPAYMENT UNDER THIS
                  SECTION 3.3.1.

                           (B)     PERMITTED DISPOSITION OF BENCHMARK YOUTH
                  RESIDENTIAL FACILITY. IF ANY BORROWER CONSUMMATES A PERMITTED
                  DISPOSITION OF THE BENCHMARK YOUTH RESIDENTIAL FACILITY IN THE
                  ABSENCE OF AN EVENT OF DEFAULT, BORROWERS, ON A JOINT AND
                  SEVERAL BASIS, SHALL PAY TO AGENT FOR THE RATABLE BENEFIT OF
                  LENDERS, UNLESS OTHERWISE AGREED BY REQUIRED LENDERS, AS AND
                  WHEN RECEIVED BY SUCH BORROWER, AND AS A MANDATORY PREPAYMENT
                  OF THE TERM LOANS AND THE REVOLVING CREDIT LOAN, AS
                  APPLICABLE, A SUM EQUAL TO THE PROCEEDS RECEIVED BY SUCH
                  BORROWER FROM SUCH PERMITTED DISPOSITION. ANY SUCH PREPAYMENTS
                  RELATING TO A PERMITTED DISPOSITION OF THE BENCHMARK YOUTH

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                  RESIDENTIAL FACILITY CONSUMMATED IN THE ABSENCE OF AN EVENT OF
                  DEFAULT SHALL (I) BE FIRST APPLIED TO REDUCE THE OUTSTANDING
                  PRINCIPAL BALANCE OF THE TERM NOTES BY AN AMOUNT EQUAL TO THE
                  LESSER OF (A) THE AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF
                  THE TERM NOTES AND (B) $1,900,000, (II) THEREAFTER, BE APPLIED
                  TO THE OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING CREDIT
                  LOANS AND (III) NOT BE SUBJECT TO RETENTION BY BORROWERS OR
                  ANY OF THEM NOTWITHSTANDING ANY PROVISIONS TO THE CONTRARY SET
                  FORTH IN THIS SECTION 3.3.1.

                           (C)     PREPAYMENTS RELATING TO THE LIQUIDITY
                  EVENT. UNTIL SUCH TIME AS ANY OF THE EVENTS DESCRIBED IN
                  CLAUSES (I) THROUGH (V) OF THE DEFINITION OF LIQUIDITY EVENT
                  RESULTS IN THE RECEIPT BY BORROWERS OF AT LEAST THE AGGREGATE
                  NET PROCEEDS REQUIRED FOR A LIQUIDITY EVENT, SO LONG AS NO
                  SUSPENSION EVENT HAS OCCURRED AND IS CONTINUING AT THE TIME
                  SUCH EVENT OCCURS, ALL PROCEEDS FROM THE OCCURRENCE OF ANY
                  SUCH EVENTS SHALL BE APPLIED TO THE OUTSTANDING PRINCIPAL
                  BALANCE OF THE REVOLVING CREDIT LOANS UNLESS THE APPLICATION
                  OF SUCH PROCEEDS IS OTHERWISE EXPRESSLY SET FORTH IN THIS
                  SECTION 3.3.1. UPON THE RECEIPT BY BORROWERS OF THE AGGREGATE
                  NET PROCEEDS REQUIRED FOR A LIQUIDITY EVENT, BORROWERS MAY,
                  SUBJECT TO SECTION 3.1 AND PROVIDED THAT NO SUSPENSION EVENT
                  HAS OCCURRED AND IS CONTINUING AND ALL CONTINGENT LIABILITIES
                  HAVE BEEN SETTLED AND SATISFIED, REQUEST A REVOLVING CREDIT
                  LOAN TO MAKE THE PREPAYMENT OF THE BRIDGE LOAN ADVANCES
                  REQUIRED BY THE ACQUISITION NOTES, AND LENDERS AGREE TO MAKE
                  SUCH REVOLVING CREDIT LOANS IN ACCORDANCE WITH AND SUBJECT TO
                  THE TERMS OF THIS AGREEMENT.

                  IN ADDITION, UNLESS AN EVENT OF DEFAULT EXISTS AT THE TIME OF
                  SUCH DISPOSITION, THE PROVISIONS OF THIS SECTION 3.3.1 SHALL
                  NOT BE APPLICABLE TO A DISPOSITION OF THE MISSION VISTA
                  FACILITY MADE IN ACCORDANCE WITH SECTION 6.3.2. THE PROVISIONS
                  OF THIS SECTION 3.3.1 SHALL NOT BE APPLICABLE TO A DISPOSITION
                  OF THE MIDVALE FACILITY MADE IN ACCORDANCE WITH SECTION 6.3.3
                  OR TO A DISPOSITION OF THE OKLAHOMA LLC INTERESTS MADE IN
                  ACCORDANCE WITH SECTION 6.3.4.

                  3.3.2    EXCESS CASH FLOW RECAPTURE. BORROWERS, ON A
         JOINT AND SEVERAL BASIS, SHALL PREPAY THE TERM LOAN IN AMOUNTS EQUAL TO
         HOLDINGS' EXCESS CASH FLOW WITH RESPECT TO EACH FISCAL YEAR OF HOLDINGS
         ENDING ON OR AFTER JUNE 30, 1999, SUCH PREPAYMENTS TO BE MADE WITHIN 2
         BUSINESS DAYS FOLLOWING THE DUE DATE FOR DELIVERY BY BORROWERS TO AGENT
         AND LENDERS OF THE ANNUAL FINANCIAL STATEMENTS REQUIRED BY SECTION
         8.1.3(I) AND EACH SUCH PREPAYMENT SHALL BE APPLIED TO THE INSTALLMENTS
         OF PRINCIPAL DUE UNDER THE TERM LOAN IN THE INVERSE ORDER OF THEIR
         MATURITIES UNTIL PAYMENT THEREOF IN FULL.

         1.7      AMENDMENT TO NEGATIVE COVENANT REGARDING PAYMENT WITH RESPECT
TO RHCL STOCK PURCHASE. SUBSECTION 8.2.19 of the Loan Agreement shall be amended
in its entirety to read as follows:

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                  8.2.19   LIMITS ON PAYMENT WITH RESPECT TO RHCL STOCK
         PURCHASE. HOLDINGS SHALL NOT PAY THE REMAINING BALANCE OF THE $700,000
         CASH PURCHASE PRICE, WHICH AMOUNT DOES NOT EXCEED $600,000, WITH
         RESPECT TO ITS PURCHASE OF ALL OF THE CAPITAL STOCK OF RAMSAY HOSPITAL
         CORPORATION OF LOUISIANA, INC. UNTIL A LIQUIDITY EVENT HAS OCCURRED AND
         ALL CONTINGENT LIABILITIES HAVE BEEN SETTLED AND SATISFIED.

         1.8      ADDITION OF NEGATIVE COVENANT REGARDING USE OF PROCEEDS OF
BRIDGE LOAN ADVANCES. SECTION 8.2 of the Loan Agreement shall be amended by
inserting a new SUBSECTION 8.2.20 as follows:

                  8.2.20   LIMIT ON USE OF PROCEEDS OF BRIDGE LOAN ADVANCES. USE
         THE PROCEEDS OF ANY BRIDGE LOAN ADVANCE FOR ANY PURPOSE OTHER THAN TO
         SATISFY CONTINGENT LIABILITIES OR, WITH THE PRIOR WRITTEN APPROVAL OF
         AGENT, WHICH SHALL NOT BE UNREASONABLY WITHHELD, THE SATISFACTION OF
         OTHER LIABILITIES OF BORROWERS, AS THEY BECOME DUE.

         1.9      ADDITION OF NEGATIVE COVENANT REGARDING SETTLEMENT OF
CONTINGENT LIABILITIES. SECTION 8.2 of the Loan Agreement shall be amended by
inserting a new SUBSECTION 8.2.21 as follows:

                  8.2.21   LIMIT ON SETTLEMENT OF CONTINGENT LIABILITIES.
         OBLIGATE BORROWERS OR ANY ONE OF THEM TO MAKE PAYMENTS WITH RESPECT TO
         THE SETTLEMENT OF ANY OF THE CONTINGENT LIABILITIES IN AN AMOUNT OR
         AMOUNTS THE PAYMENT OF WHICH WOULD CAUSE EITHER (I) THE AGGREGATE OF
         PAYMENTS IN SETTLEMENT OF THE CONTINGENT LIABILITIES MADE ON OR AFTER
         THE THIRD AMENDMENT EFFECTIVE DATE TO EXCEED $3,100,000 (TOGETHER WITH
         ANY STATUTORY INTEREST OR PENALTIES, IF ANY, IN RESPECT OF THE RHCL
         ASSUMED TAX LIABILITY, WHICH ARE DEEMED BY AGENT, PRIOR TO THE PAYMENT
         THEREOF, NOT TO BE MATERIAL IN AGENT'S REASONABLE CREDIT JUDGMENT) OR
         (II) A MATERIAL ADVERSE EFFECT UPON ANY BORROWER.

         1.10     AMENDMENT TO SPECIFIC FINANCIAL COVENANT REGARDING PRO FORMA
QUARTERLY AVAILABILITY. SUBSECTION 8.3.4 of the Loan Agreement shall be amended
in its entirety to read as follows:

                  8.3.4    PRO FORMA AVAILABILITY COVENANT. PERMIT, AT ANY TIME,
         PRO FORMA QUARTERLY AVAILABILITY TO BE LESS THAN THE LIQUIDITY RESERVE.

         1.11     NOTICES. Subsections (A) and (B) of SECTION 12.8 of the Loan
Agreement shall be amended in its entirety to read as follows:

         (A)      IF TO AGENT PRIOR TO
                  NOVEMBER 19, 1999:        FLEET CAPITAL CORPORATION
                                            2711 N. HASKELL AVENUE, SUITE 2100
                                            DALLAS, TEXAS  75204

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                                     ATTENTION:  LOAN ADMINISTRATION MANAGER
                                     FACSIMILE NO.: (214) 828-6530

                  IF TO AGENT AFTER
                  NOVEMBER 19, 1999:        FLEET CAPITAL CORPORATION
                                            5950 SHERRY LANE, SUITE 300
                                            DALLAS, TEXAS  75225
                                            FACSIMILE NO.: (214) 706-7066

         (B)      IF TO ANY BORROWER:       RAMSAY YOUTH SERVICES, INC.
                                            ONE ALHAMBRA PLAZA, SUITE 750
                                            CORAL GABLES, FLORIDA 33134
                                            ATTENTION:  CHIEF FINANCIAL OFFICER
                                            FACSIMILE NO.: (305) 569-4647

                  WITH A COPY TO:           TORY HAYTHE
                                            237 PARK AVENUE
                                            NEW YORK, NEW YORK 10017
                                            ATTENTION: BRADLEY P. COST
                                            FACSIMILE NO.: (212) 682-0200

                  AND A COPY TO:            PAUL RAMSAY HOLDINGS PTY. LIMITED
                                            154 PACIFIC HIGHWAY, 9TH FLOOR
                                            ST. LEONARDS, NSW  2065
                                            AUSTRALIA
                                            ATTENTION:  PETER J. EVANS
                                            FACSIMILE NO.:  011-612-94-333-460

         1.12     AMENDMENT OF ACQUISITION NOTE FORM. EXHIBIT A-2 attached
hereto as Annex I to this Third Amendment hereby replaces in its entirety
EXHIBIT A-2 attached to the Loan Agreement.

         SECTION 2.  CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENTS. The
amendments to the Loan Agreement contained in SECTION 1 of this Third Amendment
shall be effective only upon the satisfaction of each of the conditions set
forth in this SECTION 2. If each condition set forth in this SECTION 2 has not
been satisfied by November 30, 1999, this Third Amendment and all obligations of
Lenders contained herein shall, at the option of Lenders, terminate.

         2.1      DOCUMENTATION. Agent and Lenders shall have received, in form
and substance acceptable to Agent and Lenders and their counsel a duly executed
copy of this Third Amendment, and any other documents, instruments and
certificates as Agent and Lenders and their counsel shall require in connection
therewith prior to the date hereof, all in form and substance satisfactory to
Agent and Lenders and their counsel.

                                       9
<PAGE>   10

         2.2      ACQUISITION NOTES. Borrowers shall have executed and delivered
an amended and restated Acquisition Note in the stated principal amount of
$6,000,000 to restate in its entirety the outstanding Acquisition Note executed
on the Closing Date.

         2.3      CORPORATE EXISTENCE AND AUTHORITY. Agent and Lenders shall
have received such resolutions, certificates and other documents as Agent and
Lenders shall request relative to the authorization, execution and delivery by
each Borrower of this Third Amendment.

         2.4      NO DEFAULT. No Default or Event of Default shall exist.

         2.5      NO LITIGATION. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of this Third Amendment, the Agreement or the consummation of the
transactions contemplated hereby.

         2.6      PERFECTION OF LIENS IN COLLATERAL. Agent and Lenders shall
have received such financing statements on Form UCC-1 or Form UCC-3 (or any
other form required by Agent and Lenders) as Agent and Lenders shall require
which shall be duly executed and delivered by the appropriate Loan Party.

         SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWERS. To induce Agent
and Lenders to enter into this Third Amendment, each Borrower hereby represents
and warrants to Agent and Lenders as follows:

         3.1      AMOUNT REQUIRED TO SETTLE CONTINGENT LIABILITIES. The
aggregate amount of remaining payments required to fully and finally settle all
Contingent Liabilities is not expected to exceed $3,100,000.

         3.2      REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty of any Loan Party contained in the Loan Agreement
and the other Loan Documents, as amended hereby, is true and correct on the date
hereof and will be true and correct after giving effect to the amendments set
forth in SECTION 1 hereof.

         3.3      CORPORATE AUTHORITY; NO CONFLICTS. The execution, delivery and
performance by each Borrower of this Third Amendment and all documents,
instruments and agreements contemplated herein are within each Borrower's
respective corporate powers, have been duly authorized by necessary action,
require no action by or in respect of, or filing with, any court or agency of
government and do not violate or constitute a default under any provision of
applicable Law or any material agreement binding upon any Loan Party or result
in the creation or imposition of any Lien upon any of the assets of any Loan
Party except as permitted in the Loan Agreement, as amended hereby.

                                       10
<PAGE>   11

         3.4      ENFORCEABILITY. This Third Amendment constitutes the valid and
binding obligation of each of the Borrowers enforceable in accordance with its
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights generally, and (ii) the
availability of equitable remedies may be limited by equitable principles of
general application.

         3.5      NO DEFENSES. No Loan Party has any defenses to payment,
counterclaims or rights of set off with respect to the Obligations.

         SECTION 4. MISCELLANEOUS.

         4.1      REAFFIRMATION OF LOAN DOCUMENTS; EXTENSION OF LIENS. Any and
all of the terms and provisions of the Loan Agreement and the Loan Documents
shall, except as amended and modified hereby, remain in full force and effect.
Borrowers hereby extend the Liens securing the Obligations until the Obligations
have been paid in full, and agree that the amendments and modifications herein
contained shall in no manner affect or impair the Obligations or the Liens
securing the payment and performance thereof.

         4.2      PARTIES IN INTEREST. All of the terms and provisions of this
Third Amendment shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.

         4.3      LEGAL EXPENSES. The Borrowers hereby agree to pay promptly
following receipt of an invoice detailing all reasonable fees and expenses of
counsel to Agent and Lenders incurred by Agent or any Lender, in connection with
the preparation, negotiation and execution of this Third Amendment and all
related documents.

         4.4      COUNTERPARTS. This Third Amendment may be executed in
counterparts, and all parties need not execute the same counterpart. However, no
party shall be bound by this Third Amendment until all parties have executed a
counterpart. Facsimiles shall be effective as originals.

         4.5      COMPLETE AGREEMENT. THIS THIRD AMENDMENT, THE LOAN AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

         4.6      HEADINGS. The headings, captions and arrangements used in this
Third Amendment are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify or modify the terms of this Third Amendment, nor
affect the meaning thereof.

                                       11
<PAGE>   12

                           ( Signature Pages Follow )

                                       12
<PAGE>   13

         IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be duly executed by their respective authorized officers on the date and year
first above written.

BORROWERS:

RAMSAY YOUTH SERVICES, INC.
BETHANY PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.

By:/s/ Marcio Cabrera
   ------------------------------
       Marcio Cabrera
       Executive Vice President

H. C. PARTNERSHIP
By:  H.C. CORPORATION, General Partner
By:  HSA HILL CREST CORPORATION, General Partner

By:/s/ Marcio Cabrera
   ------------------------------
       Marcio Cabrera
       Executive Vice President

                                       13
<PAGE>   14

                            CONSENT AND REAFFIRMATION

         Each of the undersigned (each a "GUARANTOR") hereby (i) acknowledges
receipt of a copy of the foregoing Third Amendment to Loan and Security
Agreement (the "THIRD AMENDMENT"); (ii) consents to Borrowers' execution and
delivery thereof; (iii) agrees to be bound thereby; and (iv) affirms that
nothing contained therein shall modify in any respect whatsoever its guaranty of
the obligations of the Borrowers to Lenders pursuant to the terms of those
certain Guaranties dated March 19, 1999 (collectively, the "GUARANTY") and
reaffirms that the Guaranty is and shall continue to remain in full force and
effect. Although each Guarantor has been informed of the matters set forth
herein and has acknowledged and agreed to same, each Guarantor understands that
the Lenders have no obligation to inform Guarantors of such matters in the
future or to seek any Guarantor's acknowledgment or agreement to future
amendments or waivers, and nothing herein shall create such duty.

         IN WITNESS WHEREOF, the each of the undersigned has executed this
Consent and Reaffirmation on and as of the date of the Third Amendment.

GUARANTORS:

THE RADER GROUP, INCORPORATED,
a Florida corporation

By:/s/ Marcio Cabrera
   ------------------------------
       Marcio Cabrera
       Executive Vice President

RAMSAY YOUTH SERVICES PUERTO RICO, INC.,
a Puerto Rico corporation

By:/s/ Marcio Cabrera
   ------------------------------
       Marcio Cabrera
       Executive Vice President

                                       14
<PAGE>   15

                                            Accepted in Dallas, Texas:

Acquisition Loan Commitment:                FLEET CAPITAL CORPORATION
$6,000,000                                  ("Agent" and "Lender")

                                            By: /s/ Dennis M. Hansen
                                               --------------------------------
                                                Name:    Dennis M. Hansen
                                                Title:   Senior Vice President

                                       15
<PAGE>   16

                           ANNEX I TO THIRD AMENDMENT

                                   EXHIBIT A-2

                             SECURED PROMISSORY NOTE

                               (Acquisition Note)

$-------------    --------------, ----
                                                           -----------, -------

         FOR VALUE RECEIVED, each of the undersigned, jointly and severally,
(hereinafter collectively referred to as "BORROWERS", and each individually, a
"BORROWER"), hereby promise (as hereinafter defined) with respect to the
Acquisition Loan to pay to the order of            , a         corporation
(hereinafter "Lender"), or its registered assigns at the office of Fleet Capital
Corporation, as agent for such Lender, or at such other place in the United
States of America as the holder of this Note may designate from time to time in
writing, in lawful money of the United States, in immediately available funds,
at the time of payment, the principal sum of        Dollars ($         ), or
such lesser principal amount as may be outstanding pursuant to the Loan
Agreement together with interest from and after the date hereof on the unpaid
principal balance outstanding from time to time.

         This Secured Promissory Note (the "Note") is one of the Acquisition
Notes referred to in, and is issued pursuant to, that certain Loan and Security
Agreement dated as of October 30, 1998 by and among Borrowers, the lenders
signatories thereto (including Lender) and Fleet Capital Corporation ("FCC") as
Agent for said lenders (FCC in such capacity "Agent") (as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.

         For so long as no Event of Default shall have occurred and be
continuing the principal amount and accrued interest of this Note shall be due
and payable on the dates and in the manner hereinafter set forth:

         (a) Interest on the unpaid principal balance outstanding from time to
      time shall be paid at such interest rates and at such times as are
      specified in the Loan Agreement;

         (b) Principal shall be due and payable monthly commencing on December
      1, 1999, and continuing on the first day of each month thereafter to and
      including the first day of the month in which the Commitment Termination

                                       16
<PAGE>   17

      Date occurs, in installments equal to the aggregate outstanding principal
      balance of all Acquisition Advances made by Lender prior to December 1,
      1999 DIVIDED BY 48; and

         (c) The entire remaining principal amount then outstanding, together
      with any and all other amounts due hereunder, shall be due and payable on
      the Commitment Termination Date.

         In addition to the foregoing, immediately upon the receipt by any
Borrower or any of their Subsidiaries of the amount necessary to constitute the
Liquidity Event and provided that no Suspension Event shall have occurred and be
continuing and all Contingent Liabilities have been settled and satisfied,
Borrower shall prepay this Acquisition Note in an amount equal to the aggregate
amount of all Bridge Loan Advances made to Borrowers plus all accrued but unpaid
interest on the Bridge Loan Advances as of the date of such prepayment. All such
prepayments shall first be applied to the accrued but unpaid interest on the
Bridge Loan Advances and then in payment of the outstanding principal balance of
the Bridge Loan Advances in the inverse order of maturity.

         Notwithstanding the foregoing, the entire unpaid principal balance of
and accrued interest on this Note shall be due and payable immediately upon any
termination of the Loan Agreement pursuant to Section 4 thereof.

         This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrowers may also prepay
this Note in the manner provided in Section 4 of the Loan Agreement.

         Upon the occurrence, and during the continuation, of an Event of
Default, this Note shall or may, as provided in the Loan Agreement, and become
or be declared immediately due and payable.

         The right to receive principal of, and stated interest on, this Note
may only be transferred in accordance with the provisions of the Loan Agreement.

         Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by each Borrower.

         This Note is issued in substitution for and replacement of, but not in
payment of the Secured Promissory Note of Borrowers dated October 30, 1998,
payable to the order of Lender in the original principal amount of
$6,000,000.00.

                                       17
<PAGE>   18

         This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.

RAMSAY HEALTH CARE, INC.
RAMSAY YOUTH SERVICES, INC.
BETHANY PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.

By:      __________________________________

Name:    __________________________________

Its:     __________________________________

                                       18<PAGE>   1
                                                                 EXHIBIT 10.140

                FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

         This Fourth Amendment to Loan and Security Agreement (this "FOURTH
AMENDMENT") is entered into as of the 25th day of January, 2000, between RAMSAY
YOUTH SERVICES, INC., a Delaware corporation, f/k/a RAMSAY HEALTH CARE, INC.
("HOLDINGS"), with its principal place of business at Columbus Center, One
Alhambra Plaza, Suite 750, Coral Gables, Florida 33134, each of the Subsidiaries
of Holdings party to this Fourth Amendment and listed in EXHIBIT B to the Loan
Agreement referred to below (the "HOLDINGS SUBSIDIARIES"), each of which is a
corporation or other legal entity as indicated in EXHIBIT B, is organized under
the laws of the jurisdiction indicated in EXHIBIT B, and has its principal place
of business at the location indicated in EXHIBIT B (Holdings, the Holdings
Subsidiaries, and each other Subsidiary of Holdings or of any Subsidiary of
Holdings from time to time party to the Loan Agreement referred to below are
hereinafter collectively referred to as "BORROWERS" and each individually as a
"BORROWER"), and FLEET CAPITAL CORPORATION, a Rhode Island corporation (in its
individual capacity, "FCC"), with offices at 5950 Sherry Lane, Suite 300,
Dallas, Texas 75225, as a Lender, and as agent for all Lenders, in such
capacity, "AGENT"), and such Persons who are or hereafter become parties to the
Loan Agreement as Lenders. Capitalized terms used but not defined in this Fourth
Amendment have the meanings assigned to them in Appendix A of that certain Loan
and Security Agreement dated October 30, 1998, among Borrowers, Lenders and
Agent, as amended (the "LOAN AGREEMENT").

                              W I T N E S S E T H:

         WHEREAS, the Borrowers have requested certain amendments to the Loan
Agreement to (i) permit Holdings to incur certain subordinated debt in favor of
SunTrust Banks, Inc., a Georgia corporation ("SUNTRUST"), in an aggregate
principal amount of $5,000,000, to be evidenced by a certain Subordinated Note
and Warrant Purchase Agreement by and between SunTrust and Holdings (the
"SUNTRUST PURCHASE AGREEMENT") and one or more Subordinated Notes (the "SUNTRUST
SUBORDINATED NOTES"), and (ii) permit SunTrust to purchase certain Warrants (the
"SUNTRUST WARRANTS") convertible, under certain circumstances, into capital
stock of Holdings, pursuant to that certain Warrant Agreement by and between
SunTrust and Holdings (the "SUNTRUST WARRANT AGREEMENT"; together with the
SunTrust Purchase Agreement, SunTrust Subordinated Notes, SunTrust Warrants,
that certain Registration Rights Agreement by and between SunTrust and Holdings
of even date herewith ("SUNTRUST REGISTRATION AGREEMENT") and all other
instruments, documents and agreements executed by or on behalf of any Loan Party
in connection therewith, collectively, the "SUNTRUST SUBORDINATED DEBT
DOCUMENTS"); and

         WHEREAS, subject to the terms and conditions herein contained, Agent
and Lenders have agreed to the Borrowers' requests.

                                       1
<PAGE>   2

         NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed,
Borrowers, Agent and Lenders hereby agree as follows:

         SECTION 1. Subject to the satisfaction of each condition precedent set
forth in SECTION 2 hereof and in reliance on the representations, warranties,
covenants and agreements contained in this Fourth Amendment, the Loan Agreement
shall be amended effective January 25, 2000 (the "FOURTH AMENDMENT EFFECTIVE
DATE") in the manner provided in this SECTION 1:

         1.1      AMENDED DEFINITIONS. The following definitions contained in
APPENDIX A to the Loan Agreement shall be amended to read in their entirety as
follows:

         SUBORDINATED DEBT - (I) ALL INDEBTEDNESS EVIDENCED BY THE SUNTRUST
         SUBORDINATED DEBT DOCUMENTS, (II) ALL INDEBTEDNESS WITH RESPECT TO THE
         PREFERRED STOCK, AND (III) ALL OTHER INDEBTEDNESS OF ANY BORROWER THAT
         IS SUBORDINATED TO THE OBLIGATIONS IN A MANNER SATISFACTORY TO AGENT.

         SUBORDINATION AGREEMENT - THE JUNIOR SUBORDINATED DEBT SUBORDINATION
         AGREEMENT OR THE SUNTRUST SUBORDINATION AGREEMENT, AS THE CASE MAY BE.

         1.2      ADDITIONAL DEFINITIONS. Appendix A to the Loan Agreement shall
be amended to add the following definitions to such Appendix:

         FOURTH AMENDMENT - THE FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
         AMONG BORROWERS, LENDERS AND AGENT DATED JANUARY 25, 2000.

         FOURTH AMENDMENT EFFECTIVE DATE - AS DEFINED IN THE FOURTH AMENDMENT.

         JUNIOR SUBORDINATED DEBT SUBORDINATION AGREEMENT - SUBORDINATION
         AGREEMENT DATED ON OR ABOUT THE CLOSING DATE BETWEEN AGENT AND ONE OR
         MORE HOLDERS OF THE JUNIOR SUBORDINATED DEBT AND PREFERRED STOCK, AS
         THE SAME MAY BE AMENDED OR MODIFIED FROM TIME TO TIME.

         SUNTRUST - SUNTRUST BANKS, INC., A GEORGIA CORPORATION.

         SUNTRUST REGISTRATION AGREEMENT - THAT CERTAIN REGISTRATION RIGHTS
         AGREEMENT, DATED AS OF THE FOURTH AMENDMENT EFFECTIVE DATE BETWEEN
         HOLDINGS AND SUNTRUST IN ITS CAPACITY AS A HOLDER OF THE SUNTRUST
         WARRANTS, TOGETHER WITH ALL AMENDMENTS AND MODIFICATIONS THERETO.

         SUNTRUST SUBORDINATED DEBT - THE SUBORDINATED INDEBTEDNESS EVIDENCED BY
         THE SUNTRUST SUBORDINATED DEBT DOCUMENTS.

         SUNTRUST SUBORDINATED DEBT DOCUMENTS - THE SUNTRUST SUBORDINATED LOAN
         AGREEMENT, THE SUNTRUST SUBORDINATED NOTES, THE SUNTRUST WARRANT
         AGREEMENT, THE SUNTRUST REGISTRATION AGREEMENT, THE SUNTRUST WARRANTS,

                                       2
<PAGE>   3

         AND ALL OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED BY OR ON
         BEHALF OF ANY LOAN PARTY AND DELIVERED CONCURRENTLY THEREWITH OR AT ANY
         TIME HEREAFTER TO OR FOR THE BENEFIT OF THE HOLDERS OF THE SUNTRUST
         SUBORDINATED NOTES OR THE HOLDERS OF THE SUNTRUST WARRANTS, OR ANY
         AGENT OR REPRESENTATIVE THEREOF IN CONNECTION WITH THE SUNTRUST
         SUBORDINATED DEBT AND OTHER TRANSACTIONS CONTEMPLATED BY THE SUNTRUST
         SUBORDINATED LOAN AGREEMENT, ALL AS AMENDED, SUPPLEMENTED OR MODIFIED
         FROM TIME TO TIME AS PERMITTED UNDER THE LOAN AGREEMENT; BUT EXCLUDING
         ALL LOAN DOCUMENTS.

         SUNTRUST PURCHASE AGREEMENT - THAT CERTAIN SUBORDINATED NOTE AND
         WARRANT PURCHASE AGREEMENT DATED ON OR ABOUT THE FOURTH AMENDMENT
         EFFECTIVE DATE, BY AND BETWEEN SUNTRUST AND HOLDINGS.

         SUNTRUST SUBORDINATED NOTE - COLLECTIVELY, THAT CERTAIN SUBORDINATED
         NOTE DUE JANUARY 25, 2007, EXECUTED BY HOLDINGS, AS MAKER, ON OR ABOUT
         THE FOURTH AMENDMENT EFFECTIVE DATE, AND BEARING INTEREST AT AN INITIAL
         FIXED RATE OF TWELVE AND ONE-HALF PERCENT (12 1/2%) PER ANNUM, AND
         PAYABLE TO THE ORDER OF SUNTRuST BANKS, INC., IN THE AGGREGATE ORIGINAL
         PRINCIPAL AMOUNT OF $5,000,000.

         SUNTRUST SUBORDINATION AGREEMENT - THAT CERTAIN SUBORDINATION AGREEMENT
         DATED ON OR ABOUT THE FOURTH AMENDMENT EFFECTIVE DATE, BY AND BETWEEN
         AGENT AND SUNTRUST, AS THE SAME MAY BE AMENDED OR MODIFIED FROM TIME TO
         TIME.

         SUNTRUST WARRANT AGREEMENT - THAT CERTAIN WARRANT AGREEMENT, DATED AS
         OF THE FOURTH AMENDMENT EFFECTIVE DATE, BETWEEN HOLDINGS AND SUNTRUST
         IN ITS CAPACITY AS A HOLDER OF THE SUNTRUST WARRANTS, TOGETHER WITH ALL
         AMENDMENTS AND MODIFICATIONS THERETO.

         SUNTRUST WARRANTS - THAT (THOSE) CERTAIN WARRANT(S), CONVERTIBLE, UNDER
         CERTAIN CIRCUMSTANCES, INTO CAPITAL STOCK OF HOLDINGS, ACQUIRED BY
         SUNTRUST PURSUANT TO THAT CERTAIN WARRANT AGREEMENT, DATED ON OR ABOUT
         THE FOURTH AMENDMENT EFFECTIVE DATE, BY AND BETWEEN SUNTRUST AND
         HOLDINGS, AS MORE FULLY DESCRIBED THEREIN.

         1.3      AMENDMENT TO TOTAL INDEBTEDNESS. SECTION 8.2.3 of the Loan
Agreement is hereby amended to read in its entirety as follows:

                  8.2.3    TOTAL INDEBTEDNESS. CREATE, INCUR, ASSUME, OR SUFFER
TO EXIST, OR PERMIT ANY OF THEIR RESPECTIVE SUBSIDIARIES TO CREATE, INCUR OR
SUFFER TO EXIST, ANY INDEBTEDNESS, EXCEPT:

                           (I)      OBLIGATIONS OWING TO AGENT AND LENDERS;

                           (II)     THE SUNTRUST SUBORDINATED DEBT AND
                  INDEBTEDNESS, IF ANY, RELATING TO THE PREFERRED STOCK;

                                       3
<PAGE>   4

                           (III)    INDEBTEDNESS OF A LOAN PARTY OR A SUBSIDIARY
                  IF AND TO THE EXTENT PERMITTED BY SECTION 8.2.2;

                           (IV)     ACCOUNTS PAYABLE TO TRADE CREDITORS AND
                  CURRENT OPERATING EXPENSES(OTHER THAN FOR MONEY BORROWED)
                  NINETY PERCENT (90%) OF WHICH ARE AGED NOT MORE THAN 45 DAYS
                  FROM THE DUE DATE, OR, IF AGED OUTSIDE OF THE PRECEDING
                  PARAMETERS, THAT ARE BEING PROPERLY CONTESTED, BUT IN EACH
                  CASE INITIALLY INCURRED IN THE ORDINARY COURSE OF BUSINESS AND
                  EITHER PAID WITHIN SUCH TIME PERIOD OR, IF BEING PROPERLY
                  CONTESTED AT THE TIME AND IN THE MANNER CONTEMPLATED IN THE
                  DEFINITION OF THE TERM "PROPERLY CONTESTED";

                           (V)      OBLIGATIONS TO PAY RENTALS PERMITTED BY
                  SECTION 8.2.16;

                           (VI)     PERMITTED PURCHASE MONEY INDEBTEDNESS;

                           (VII)    CONTINGENT LIABILITIES ARISING OUT OF
                  ENDORSEMENTS OF CHECKS AND OTHER NEGOTIABLE INSTRUMENTS FOR
                  DEPOSIT OR COLLECTION IN THE ORDINARY COURSE OF BUSINESS;

                           (VIII)   CAPITALIZED LEASE OBLIGATIONS TO THE EXTENT
                  THE UNDERLYING CAPITAL LEASE IS PERMITTED BY THE TERMS OF
                  SECTION 8.2.9;

                           (IX)     INDEBTEDNESS IN RESPECT TO DEFERRED TAXES;

                           (X)      INDEBTEDNESS EXISTING ON THE CLOSING DATE
                  AND DESCRIBED IN EXHIBIT T ATTACHED HERETO; AND

                           (XI)     INDEBTEDNESS NOT INCLUDED IN PARAGRAPHS (I)
                  THROUGH (X) ABOVE WHICH BY ITS TERMS IS UNSECURED AND DOES NOT
                  EXCEED AT ANY TIME, IN THE AGGREGATE, THE SUM OF FIVE HUNDRED
                  THOUSAND DOLLARS ($500,000).

         1.4      AMENDMENT TO DISTRIBUTIONS. SECTION 8.2.8 of the Loan
Agreement is hereby amended to read in its entirety as follows:

                  8.2.8    DISTRIBUTIONS. DECLARE OR MAKE, OR PERMIT ANY OF
THEIR RESPECTIVE SUBSIDIARIES TO DECLARE OR MAKE, ANY DISTRIBUTIONS (INCLUDING,
WITHOUT LIMITATION, THE REDEMPTION OF ANY SUNTRUST WARRANT OR ANY OTHER
OUTSTANDING OPTION TO PURCHASE, OR WARRANT TO SUBSCRIBE FOR, ANY SHARES OF THE
CAPITAL STOCK OF ANY LOAN PARTY) EXCEPT THAT SO LONG AS NO DEFAULT OR EVENT OF
DEFAULT EXISTS, (A) ANY SUBSIDIARY OF ANY LOAN PARTY MAY MAKE DISTRIBUTIONS TO
ANY LOAN PARTY, (B) ANY LOAN PARTY MAY MAKE DISTRIBUTIONS TO ANY OTHER LOAN
PARTY, AND (C) HOLDINGS MAY PAY REGULARLY SCHEDULED DISTRIBUTIONS ON THE
PREFERRED STOCK, BUT ONLY IF AND TO THE EXTENT PERMITTED UNDER THE JUNIOR
SUBORDINATED DEBT SUBORDINATION AGREEMENT.

                                       4
<PAGE>   5

         1.5      AMENDMENT TO PREFERRED STOCK LIMITATIONS. SECTION 8.2.18 of
the Loan Agreement is hereby amended to read in its entirety as follows:

                  8.2.18   LIMITS ON PREFERRED STOCK. ISSUE ANY ADDITIONAL
SHARES OF PREFERRED STOCK, UNLESS ANY LIABILITIES OR OBLIGATIONS WITH RESPECT
THERETO ARE SUBORDINATED TO THE OBLIGATIONS IN THE MANNER SET FORTH IN THE
JUNIOR SUBORDINATED DEBT SUBORDINATION AGREEMENT OR OTHERWISE IN A MANNER
SATISFACTORY TO AGENT.

         1.6      AMENDMENT TO TOTAL INDEBTEDNESS TO EBITDA. SECTION 8.3.3 of
the Loan Agreement shall be amended in its entirety to read as follows:

                  8.3.3    TOTAL INDEBTEDNESS TO EBITDA. AS OF THE LAST DAY OF
EACH FISCAL QUARTER SET FORTH BELOW (THE "CALCULATION DATE"), A RATIO OF (I)
HOLDINGS' TOTAL INDEBTEDNESS ON SUCH CALCULATION DATE, TO (II) HOLDINGS' EBITDA
FOR THE TWELVE CALENDAR MONTH PERIOD ENDING ON SUCH CALCULATION DATE, OF NOT
GREATER THAN THE RATIO SET FORTH BELOW ON THE CALCULATION DATE CORRESPONDING
THERETO:

                           CALCULATION DATE                   RATIO
                           ----------------                   -----

                  (I)      DECEMBER 31, 1998         (I)      6.00 TO 1.0

                  (II)     MARCH 31, 1999            (II)     6.00 TO 1.0

                  (III)    JUNE 30, 1999             (III)    4.00 TO 1.0

                  (IV)     SEPTEMBER 30, 1999        (IV)     4.00 TO 1.0

                  (V)      DECEMBER 31, 1999         (V)      3.50 TO 1.0

                  (VI)     MARCH 31, 2000            (VI)     3.50 TO 1.0

                  (VII)    JUNE 30, 2000             (VII)    3.50 TO 1.0

                  (VIII)   SEPTEMBER 30, 2000        (VIII)   3.50 TO 1.0

                  (IX)     DECEMBER 31, 2000         (IX)     3.50 TO 1.0

                  (X)      MARCH 31, 2001            (X)      3.50 TO 1.0

                  (XI)     JUNE 30, 2001             (XI)     3.50 TO 1.0

                  (XII)    SEPTEMBER 30, 2001        (XII)    3.00 TO 1.0
                           AND ON THE LAST DAY OF
                           EACH THEREAFTER OCCURRING
                           FISCAL QUARTER;

                                       5
<PAGE>   6

PROVIDED, HOWEVER, THAT, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
HEREIN, (A) HOLDINGS' EBITDA FOR PURPOSES OF THE DECEMBER 31, 1998 CALCULATION
DATE SHALL BE THE AMOUNT EQUAL TO (I) HOLDINGS' EBITDA FOR THE THREE MONTHS
ENDING DECEMBER 31, 1998, MULTIPLIED BY (II) FOUR; (B) HOLDINGS' EBITDA FOR
PURPOSES OF THE MARCH 31, 1999 CALCULATION DATE SHALL BE THE AMOUNT EQUAL TO (I)
HOLDINGS' EBITDA FOR THE SIX MONTHS ENDING MARCH 31, 1999, MULTIPLIED BY (II)
TWO; AND (C) HOLDINGS' EBITDA FOR PURPOSES OF THE JUNE 30, 1999 CALCULATION DATE
SHALL BE THE AMOUNT EQUAL TO (I) HOLDINGS' EBITDA FOR THE NINE MONTHS ENDING
JUNE 30, 1999, MULTIPLIED BY (II) FOUR, AND DIVIDED BY (III) THREE.

         1.7      AMENDMENT TO OTHER DEFAULTS. Section 10.1.6 is hereby amended
in its entirety to read as follows:

                  10.1.6   OTHER DEFAULTS. (A) THERE SHALL OCCUR ANY DEFAULT OR
EVENT OF DEFAULT ON THE PART OF ANY LOAN PARTY UNDER ANY AGREEMENT, DOCUMENT OR
INSTRUMENT TO WHICH LOAN PARTY IS A PARTY OR BY WHICH ANY LOAN PARTY OR ANY
PROPERTY OF ANY LOAN PARTY IS BOUND, CREATING OR RELATING TO ANY INDEBTEDNESS IN
EXCESS OF $250,000 (OTHER THAN THE OBLIGATIONS AND THE SUNTRUST SUBORDINATED
DEBT, BUT INCLUDING THE SUBORDINATED DEBT OTHER THAN THE SUNTRUST SUBORDINATED
DEBT) IF THE PAYMENT OR MATURITY OF SUCH INDEBTEDNESS IS OR COULD BE ACCELERATED
IN CONSEQUENCE OF SUCH EVENT OF DEFAULT OR IF DEMAND FOR PAYMENT OF SUCH
INDEBTEDNESS IS MADE BY THE HOLDER OR HOLDERS THEREOF, OR (B) THERE SHALL OCCUR
ANY DEFAULT OR EVENT OF DEFAULT ON THE PART OF ANY LOAN PARTY UNDER ANY OF THE
SUNTRUST SUBORDINATED DEBT DOCUMENTS IF THE PAYMENT OR MATURITY OF SUCH
INDEBTEDNESS IS OR COULD BE ACCELERATED IN CONSEQUENCE OF SUCH DEFAULT OR EVENT
OF DEFAULT OR IF DEMAND FOR PAYMENT OF SUCH INDEBTEDNESS IS MADE BY THE HOLDER
OR HOLDERS THEREOF.

         1.8      AMENDMENT TO OTHER REMEDIES. The first sentence of SECTION
10.3 is hereby amended in its entirety to read as follows:

         10.3     OTHER REMEDIES. AFTER THE OCCURRENCE, AND DURING THE
CONTINUATION OF AN EVENT OF DEFAULT, AGENT ON BEHALF OF LENDERS MAY, AND AT THE
REQUEST OF REQUIRED LENDERS SHALL, EXERCISE FROM TIME TO TIME THE FOLLOWING
RIGHTS AND REMEDIES:

         1.9      AMENDMENT TO NOTICE PROVISION. SECTION 12.8 is hereby amended
by replacing the address for Agent with the following:

                                        FLEET CAPITAL CORPORATION
                                        5950 SHERRY LANE
                                        SUITE 300
                                        DALLAS, TEXAS 75225
                                        ATTENTION: LOAN ADMINISTRATION MANAGER
                                        FACSIMILE NO.: (214) 706-7066

         1.10     AMENDMENT TO EXHIBITS. Exhibit E to the Loan Agreement shall
be amended in its entirety by substituting the attached Exhibit E.

                                       6
<PAGE>   7

         1.11     CONSENT TO ASSIGNMENT TO SUNTRUST. By their execution hereof,
Holdings and Agent hereby consent to the sale and assignment, on or about the
date hereof, to SunTrust of an aggregate amount of Revolving Loan and Term Loan
Commitments aggregating $2,500,000.

         SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENTS. The
amendments to the Loan Agreement contained in SECTION 1 of this Fourth Amendment
shall be effective only upon the satisfaction of each of the conditions set
forth in this SECTION 2. If each condition set forth in this SECTION 2 has not
been satisfied by January 25, 2000, this Fourth Amendment and all obligations of
Lenders contained herein shall, at the option of Lenders, terminate.

         2.1      DOCUMENTATION. Agent and Lenders shall have received, in form
and substance acceptable to Agent and Lenders and their counsel a duly executed
copy of this Fourth Amendment, copies of the SunTrust Subordinated Debt
Documents, and any other documents, instruments and certificates as Agent and
Lenders and their counsel shall require in connection therewith prior to the
date hereof, all in form and substance satisfactory to Agent and Lenders and
their counsel.

         2.2      SUNTRUST SUBORDINATION AGREEMENT. SunTrust shall have executed
and delivered, and each Loan Party shall have acknowledged, the SunTrust
Subordination Agreement expressly subordinating the obligations of the Loan
Parties under the SunTrust Subordinated Debt Documents to the Obligations, in
form and substance satisfactory to Agent and Lenders and their counsel.

         2.3      CORPORATE EXISTENCE AND AUTHORITY. Agent and Lenders shall
have received such resolutions, certificates and other documents as Agent and
Lenders shall request relative to the authorization, execution and delivery by
each Loan Party of this Fourth Amendment.

         2.4      NO DEFAULT. No Default or Event of Default shall exist.

         2.5      NO LITIGATION. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of this Fourth Amendment, the Loan Agreement or the consummation of the
transactions contemplated hereby.

         SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWERS. To induce Agent
and Lenders to enter into this Fourth Amendment, each Borrower hereby represents
and warrants to Agent and Lenders as follows:

         3.1      REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty of any Loan Party contained in the Loan Agreement
and the other Loan Documents, as amended hereby, is true and correct on the date

                                       7
<PAGE>   8

hereof and will be true and correct after giving effect to the amendments set
forth in SECTION 1 hereof.

         3.2      NO OUTSTANDING JUNIOR SUBORDINATED DEBT OR PREFERRED STOCK. As
of the date hereof, there is no outstanding Indebtedness with respect to the
Junior Subordinated Debt Documents and no Preferred Stock is outstanding.

         3.3      CORPORATE AUTHORITY; NO CONFLICTS. The execution, delivery and
performance by each Borrower of this Fourth Amendment and all documents,
instruments and agreements contemplated herein are within each Borrower's
respective corporate powers, have been duly authorized by necessary action,
require no action by or in respect of, or filing with, any court or agency of
government and do not violate or constitute a default under any provision of
applicable Law or any material agreement binding upon any Loan Party or result
in the creation or imposition of any Lien upon any of the assets of any Loan
Party except as permitted in the Loan Agreement, as amended hereby.

         3.4      ENFORCEABILITY. This Fourth Amendment constitutes the valid
and binding obligation of each of the Borrowers enforceable in accordance with
its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditor's rights generally,
and (ii) the availability of equitable remedies may be limited by equitable
principles of general application.

         3.5      NO DEFENSES. No Loan Party has any defenses to payment,
counterclaims or rights of set off with respect to the Obligations.

         SECTION 4. MISCELLANEOUS.

         4.1      REAFFIRMATION OF LOAN DOCUMENTS; EXTENSION OF LIENS. Any and
all of the terms and provisions of the Loan Agreement and the Loan Documents
shall, except as amended and modified hereby, remain in full force and effect.
Borrowers hereby extend the Liens securing the Obligations until the Obligations
have been paid in full, and agree that the amendments and modifications herein
contained shall in no manner affect or impair the Obligations or the Liens
securing the payment and performance thereof.

         4.2      PARTIES IN INTEREST. All of the terms and provisions of this
Fourth Amendment shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.

         4.3      LEGAL EXPENSES. The Borrowers hereby agree to pay promptly
following receipt of an invoice detailing all reasonable fees and expenses of
counsel to Agent and Lenders incurred by Agent or any Lender, in connection with
the preparation, negotiation and execution of this Fourth Amendment and all
related documents.

                                       8
<PAGE>   9

         4.4      COUNTERPARTS. This Fourth Amendment may be executed in
counterparts, and all parties need not execute the same counterpart. However, no
party shall be bound by this Fourth Amendment until all parties have executed a
counterpart. Facsimiles shall be effective as originals.

         4.5      COMPLETE AGREEMENT. THIS FOURTH AMENDMENT, THE LOAN AGREEMENT
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

         4.6      HEADINGS. The headings, captions and arrangements used in this
Fourth Amendment are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify or modify the terms of this Fourth Amendment,
nor affect the meaning thereof.

                           ( Signature Pages Follow )

                                       9
<PAGE>   10

         IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be duly executed by their respective authorized officers on the
date and year first above written.

BORROWERS:

RAMSAY YOUTH SERVICES, INC.
BETHANY PSYCHIATRIC HOSPITAL, INC.
BOUNTIFUL PSYCHIATRIC HOSPITAL, INC.
EAST CAROLINA PSYCHIATRIC SERVICES CORPORATION
GREAT PLAINS HOSPITAL, INC.
GULF COAST TREATMENT CENTER, INC.
HAVENWYCK HOSPITAL, INC.
H. C. CORPORATION
HSA HILL CREST CORPORATION
HSA OF OKLAHOMA, INC.
MICHIGAN PSYCHIATRIC SERVICES, INC.
RAMSAY EDUCATIONAL SERVICES, INC.
RAMSAY LOUISIANA, INC.
RAMSAY MANAGED CARE, INC.
RAMSAY YOUTH SERVICES OF ALABAMA, INC.
RAMSAY YOUTH SERVICES OF FLORIDA, INC.
RAMSAY YOUTH SERVICES OF SOUTH CAROLINA, INC.
RHCI SAN ANTONIO, INC.
TRANSITIONAL CARE VENTURES, INC.
TRANSITIONAL CARE VENTURES (TEXAS), INC.

By: /s/ Marcio Cabrera
   --------------------------------
        Marcio Cabrera
        Executive Vice President

H. C. PARTNERSHIP
By:  H.C. CORPORATION, General Partner
By:  HSA HILL CREST CORPORATION, General Partner

By: /s/ Marcio Cabrera
   --------------------------------
        Marcio Cabrera
        Executive Vice President

                                       10
<PAGE>   11

                           CONSENT AND REAFFIRMATION

         The undersigned (the "GUARANTOR") hereby (i) acknowledges receipt of a
copy of the foregoing Fourth Amendment to Loan and Security Agreement (the
"FOURTH AMENDMENT"); (ii) consents to Borrowers' execution and delivery thereof;
(iii) agrees to be bound thereby; and (iv) affirms that nothing contained
therein shall modify in any respect whatsoever its guaranty of the obligations
of the Borrowers to Lenders pursuant to the terms of that certain Guaranty dated
March 19, 1999 (the "GUARANTY") and reaffirms that the Guaranty is and shall
continue to remain in full force and effect. Although Guarantor has been
informed of the matters set forth herein and has acknowledged and agreed to
same, Guarantor understands that the Lenders have no obligation to inform
Guarantor of such matters in the future or to seek Guarantor's acknowledgment or
agreement to future amendments or waivers, and nothing herein shall create such
duty.

         IN WITNESS WHEREOF, the undersigned has executed this Consent and
Reaffirmation on and as of the date of the Fourth Amendment.

GUARANTOR:

RAMSAY YOUTH SERVICES PUERTO RICO, INC.,
a Puerto Rico corporation

By: /s/ Marcio Cabrera
   --------------------------------
        Marcio Cabrera
        Executive Vice President

                                             Accepted in Dallas, Texas:

                                             FLEET CAPITAL CORPORATION
                                             ("Agent" and a "Lender")

                                             By: /s/ Dennis M. Hansen
                                                --------------------------
                                             Name:    Dennis M. Hansen
                                             Title:   Senior Vice President

                                             SUNTRUST BANK
                                            (a "Lender")

                                             By: /s/ William H. Craword
                                                --------------------------
                                             Name: William H. Crawford
                                             Title:

                                       11
<PAGE>   12

                             [REPLACEMENT EXHIBIT E

                                TO BE PROVIDED BY

                                   BORROWER]

                                       12

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