EX-10.5 INTEREST RATE SWAP AGREEMENT

EX-10.5 5 g90426exv10w5.txt EX-10.5 INTEREST RATE SWAP AGREEMENT . . . EXHIBIT 10.5 [BANK OF AMERICA LOGO]

Dear Sir/Madam, 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 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. This Confirmation supplements, forms part of, and is subject to, the ISDA Master Agreement dated as of 2nd January 2004, as amended and supplemented from time to time, 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. GENERAL TERMS: The terms of the particular Transaction to which this Confirmation relates are as follows: Notional Amount: USD 30,000,000.00 Trade Date: 23rd April 2004 Effective Date: 23rd April 2004 Termination Date: 15th June 2013, subject to "Other Provisions" FIXED AMOUNTS: Fixed Rate Payer: Party A Fixed Rate Payer Payment Date: The 15th of each June and December, commencing on 15th June 2004 and ending on the Termination Date, subject to adjustment in accordance with the Modified Following Business Day Convention Subject to "Other Provisions" contained herein. Fixed Rate Payer Period End Dates: The 15th of each June and December, commencing on 15th June 2004 and ending on the Termination Date. No adjustment. Fixed Rate: 10.62500 per cent Fixed Rate Day Count Fraction: 30/360 Business Days for Payments: New York and London Business Days for Period End Dates: New York FLOATING AMOUNTS: Floating Rate Payer: Party B Floating Rate Payer Payment Date: The 15th of each June and December, commencing on 15th June 2004 and ending on the Termination Date, subject to adjustment in accordance with the Modified Following Business Day Convention Subject to "Other Provisions" contained herein. Final Calculation Period: For the purposes of Section 4.13. of the Definitions, the Termination Date shall be subject to adjustment in accordance with the Modified Following Business Day Convention Floating Rate for initial

2 Calculation Period: to be determined Floating Rate Option: USD-LIBOR-BBA Designated Maturity: 6 Month Spread: plus 5.51000 per cent Floating Rate Day Count Fraction Actual/360 Reset Dates: Last day of each Calculation Period Business Days for Payments: New York and London Business Days for Period End Dates: New York CALCULATION AGENT: Party A OTHER PROVISIONS: 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 the Termination Date (the "Optional Termination Date"), in accordance with this Additional Optional Termination provision. The cancellation premium owned 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 and London Business Days prior to such Optional Termination Date, on or before 11:00 a.m. New York City time. Party A shall provide written confirmation of any telephonic notice within one New York and London 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: Optional Termination Period Amount 15JUN08 to but excluding 15JUN09 USD 1,593,750.00 15JUN09 to but excluding 15JUN10 USD 1,062,500.00 15JUN10 to but excluding 15JUN11 USD 531,250.00 15JUN11 and thereafter USD 0.00 (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. 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. ACCOUNT DETAILS: Account for payments to USD Party A: Pay to: Bank of America NA New York ABA#: 026009593 For Account of: Bank of America NA Charlotte Account Number: 6550-219386 Swift Code: BOFAUS6SGDS Account for payments to USD Party B: To be advised OFFICES: The Office of Party A for this Transaction is: Charlotte - NC, United States Please send reset notices to fax no. (+1 312) 234 3603 The Office of Party B for this Transaction is: Franklin - TN, United States

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 (fax no. (+1 312) 234 3603). 4 Accepted and confirmed as of the date first written: Bank of America, N.A. Psychiatric Solutions /s/ Dean Walker /s/ Brent Turner - --------------------- ----------------------- Dean Walker Name: Brent Turner Senior Vice President Title: Treasurer Authorised Signatory Our Reference Number: 3224402 Internal Tracking No: 7649771