Exhibit 10.26

                           FIRST AMENDED CONSOLIDATING
                     AMENDED AND RESTATED SECURED TERM NOTE

$2,335,541.59                                                       May 2, 2003


     FOR VALUE RECEIVED, and intending to be legally bound, the undersigned, PHC
OF MICHIGAN, INC., a Massachusetts corporation ("Borrower"), promises to pay, in
lawful money of the United States,  to the order of HELLER  HEALTHCARE  FINANCE,
INC.  f/k/a HCFP  FUNDING,  INC., a Delaware  corporation,  its  successors  and
assigns  ("Lender"),  the principal sum of TWO MILLION THREE HUNDRED THIRTY-FIVE
THOUSAND  FIVE  HUNDRED  FORTY-ONE  AND  59/100  DOLLARS   ($2,335,541.59)  (the
"Principal  Sum") together with interest,  costs of collection and other fees as
further  set forth in this First  Amended  Consolidating  Amended  and  Restated
Secured Term Note, to be paid in accordance with the terms set forth below. This
First Amended Consolidating Amended and Restated Secured Term Note (as it may be
amended,  modified,  restated or  supplemented  from time to time,  this "Note")
amends and  restates  in its  entirety  that  certain  Consolidated  Amended and
Restated Secured Term Note in the aggregate principal amount of Two Million Five
Hundred  Seventy-Five   Thousand  Five  Hundred  Forty-Two  and  No/100  Dollars
($2,575,542.00)  dated December 6, 2001 (the  "December  2001 Note")  previously
made by Borrower in favor of Lender.

     1. Principal and Interest.

          (a)  Each  of  Lender  and  Borrower  agrees  that,  as  of  the  date
     immediately  prior to the date set forth above,  the outstanding and unpaid
     principal  amount of the December  2001 Note was One Million  Eight Hundred
     Thirty-Five   Thousand   Five   Hundred   Forty-One   and  59/100   Dollars
     ($1,835,541.59)   (the  "Outstanding   Principal  Amount").   Borrower  has
     requested that Lender agree to increase such  outstanding  principal amount
     by, and to make an advance of new funds to Borrower hereunder in, an amount
     equal to Five Hundred Thousand and No/100 Dollars  ($500,000.00).  Thus, as
     of the Effective  Date (as defined  below),  and after giving effect to the
     Advance (as defined below),  the outstanding  Principal Sum hereunder shall
     be Two Million Three Hundred  Thirty-Five  Thousand Five Hundred  Forty-One
     and 59/100 ($2,335,541.59).

          (b)  Beginning  April  30,  2003,  and on the last  day of each  month
     thereafter through and including October 31, 2004, Borrower promises to pay
     to Lender the Principal Sum by making a monthly  installment  payment equal
     to the amount set forth on  Schedule  1  attached  hereto and  incorporated
     herein by  reference  opposite  such  date,  and by making a final  balloon
     payment of all outstanding  unpaid Principal Sum, together with all accrued
     and unpaid interest,  fees and charges hereunder, on November 30, 2004 (the
     "Maturity  Date").  The term of this  Note  shall not be  further  extended
     unless the term of the Loan and Security Agreement dated as of February 20,
     1998 by and among  Borrower,  the other  entities  identified  therein as a
     "Borrower" and Lender, pursuant to which, among other things, the Revolving
     Borrowers  and Lender  entered  into a revolving  credit  arrangement  in a
     principal amount not to exceed  $3,000,000.00 (as the agreement has been or
     may be  amended,  modified  or  restated  from  time  to  time,  the  "Loan
     Agreement") is further extended to the same date.

          (b) In addition to repayment of the Principal Sum,  Borrower  promises
     to pay to Lender  interest on the Principal Sum on a monthly basis from the
     date  of  this  Note  until  the  Maturity  Date.  Interest  shall  be at a
     fluctuating  rate per annum  compounded  daily (on the basis of the  actual
     number of days elapsed over a year of 360 days) equal to the Prime Rate (as
     defined  below) plus three and one-half  percent  (3.5%) (the "Base Rate"),
     provided that after an Event of Default the interest rate shall be equal to

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     the Base Rate plus five percent (5%) (the  "Default  Interest  Rate").  For
     purposes  of the  foregoing,  the term  "Prime  Rate"  means  that  rate of
     interest  designated  as  such  by  Citibank,  N.A.  (the  "Bank"),  or any
     successor to the Bank, as the rate may from time to time fluctuate.  If the
     Bank ceases to designate such a base lending rate,  Lender shall reasonably
     select  an  alternate,   nationally   recognized  commercial  bank  as  the
     designator of such interest rate. Accrued interest shall be payable monthly
     in arrears on the last  Business Day (as defined  below) of each month from
     the date of this Note through and  including the Maturity  Date.  After the
     Maturity Date, and until the entire Principal Sum plus any other amount due
     and  unpaid  hereunder  shall  be paid in  full,  without  limiting  any of
     Lender's  other  rights  and  remedies,  all  outstanding  amounts  owed by
     Borrower  hereunder shall bear interest,  payable on demand, at the Default
     Interest  Rate;  provided  that in no event shall the  interest  payable by
     Borrower hereunder exceed the maximum lawful rate.

          (c) Repayment of Borrower's obligations under this Note is secured by,
     among other things,  the  Collateral  defined and described in Section 6 of
     this Note.

     2.  Additional  Payments.  Borrower  further  promises  to pay  to  Lender,
immediately  upon demand any and all other sums and charges that may at the time
become  due  and  payable  under  this  Note,  and  all  reasonable   costs  and
disbursements  in  connection  with  the  preparation  of this  Note  and in the
collection  of any  payments  due  under  this Note and in any  action,  suit or
proceeding  to  protect,  sustain or enforce  the rights and  remedies of Lender
under this Note.

     3. Conditions Precedent; Prepayment.

          (a) Borrower hereby acknowledges that the Outstanding Principal Amount
     has previously  been made  available to Borrower by Lender.  This Note, and
     Lender's  obligation to make an additional advance to Borrower hereunder in
     a  principal  amount  equal to Five  Hundred  Thousand  and No/100  Dollars
     ($500,000.00)   (the   "Advance"),   shall  become   effective   only  upon
     satisfaction,  in  Lender's  sole  discretion,  of  all  of  the  following
     conditions (the date of satisfaction of all of such conditions, in Lender's
     sole discretion, the "Effective Date"):

          (i)  Lender shall have received an original of this Note duly executed
               by an authorized officer of Borrower;

          (ii) Lender shall have received updated Schedules to this Note and the
               Loan Agreement,  which updated Schedules shall be satisfactory to
               Lender;

         (iii) Lender  shall  have  received  payment  in  full  of the  Fee (as
               defined below);

          (iv) Lender shall be satisfied that it has a perfected  first priority
               security  interest in the  Collateral,  with only such exceptions
               thereto as shall have been approved by it;

          (v)  Borrower shall have provided Lender with resolutions of the Board
               of  Directors,  members or partners,  as the case may be, of each
               Borrower,  authorizing the execution, delivery and performance of
               this  Note,  the  Amendment,  the  Fourth  Amended  and  Restated
               Revolving  Credit  Note and  otherwise  in such  form as shall be
               reasonably satisfactory to Lender;


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          (vi) all  representations,  warranties and covenants  contained in the
               Loan  Agreement  or  otherwise  in any  document  entered into or
               executed in connection with the Loan Agreement (collectively with
               the Loan Agreement,  the "Revolving  Loan  Documents") or in this
               Note or otherwise made in writing in connection with this Note or
               in any documents entered into in connection with the transactions
               contemplated by this Note  (collectively,  the "Loan  Documents")
               of, by or on behalf of Borrower  shall be true and correct in all
               material respects; and

         (vii) no Event of Default shall have  occurred or be  continuing  under
               this Note or the other Loan Documents or under the Loan Agreement
               or the other Revolving Loan Documents.

          (b) All outstanding  principal,  interest,  fees and other amounts due
     under this Note shall be prepaid in full  simultaneously  with repayment of
     all Obligations under the Loan Agreement and/or the termination of the Loan
     Agreement.

          (c)  Borrower  may  prepay  all  or any  part  of  the  Principal  Sum
     outstanding  without  penalty,  together  with all interest  accrued on the
     Principal Sum and all other sums that are payable pursuant to this Note.

     4. Payment  Office.  The Principal  Sum, the interest on the Principal Sum,
and any other amounts payable under this Note are payable in lawful money of the
United States of America at the office of Lender, at 2 Wisconsin Circle,  Fourth
Floor,  Chevy Chase,  Maryland  20815,  Attention:  Katherine  R. Lofft,  Senior
Counsel,  or at such other place as Lender may  specify in writing to  Borrower.
Any  payment  by other  than  immediately  available  funds  shall be subject to
collection.  Interest  shall continue to accrue until the funds by which payment
is made are  available to Lender for its use. Any payment  stated to be due on a
day on which  banks in  Maryland  are  required  or  permitted  to be closed for
business  shall be due and  payable on the next  business  day (each such day, a
"Business  Day") and such extension of time shall be included in the computation
of interest in connection with such payment.

     5.  No  Presentment;  Acceleration.  On  the  Maturity  Date  or  upon  the
occurrence  of an Event of  Default  (as  defined  in  Section  10  below),  the
outstanding Principal Sum, accrued and unpaid interest on the Principal Sum, and
all other sums owed by  Borrower to Lender in  connection  with this Note or the
other Loan Documents shall immediately  become due and payable.  Borrower hereby
expressly  waives any  presentment  for payment,  demand for payment,  notice of
nonpayment or dishonor, protest and notice of protest of any kind.

     6. Security Agreement.

          (a) This Note shall  constitute  a security  agreement as that term is
     used in the UCC and Borrower hereby grants to Lender,  to secure Borrower's
     obligations  under  this Note and the other Loan  Documents,  and under the
     Loan Agreement and the Revolving Loan Documents, a security interest in the
     following (collectively, the "Collateral"):

          (i)  all of Borrower's  now-owned  and  hereafter  acquired or arising
               accounts,  contract rights,  general intangibles,  chattel paper,
               documents and instruments,  as such terms are defined in the UCC,
               including, without limitation, all obligations for the payment of
               money  arising out of  Borrower's  sale of goods or  rendition of
               services ("Accounts"),  accounts receivable and rights to payment
               of every kind and  description,  and all of  Borrower's  contract
               rights,  chattel paper,  documents and  instruments  with respect
               thereto,  and all of Borrower's  rights,  remedies,  security and
               liens, in, to and in respect of the Accounts,  including, without

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               limitation, rights of stoppage in transit, replevin, repossession
               and  reclamation  and  other  rights  and  remedies  of an unpaid
               vendor, lienor or secured party, guaranties or other contracts of
               surety  ship with  respect  to the  Accounts,  deposits  or other
               security for the obligation of any Account Debtor, and credit and
               other insurance  ("Account  Debtor" means any person obligated on
               any  Account  of  Borrower,  including  without  limitation,  any
               Insurer and any Medicaid/Medicare payor);

          (ii) all  moneys,  securities  and  other  property  and the  proceeds
               thereof,  now or hereafter held or received by, in transit to, in
               possession  of,  or under  the  control  of Lender or a bailee or
               Affiliate  of  Lender,   from  or  for   Borrower,   whether  for
               safekeeping,   pledge,  custody,   transmission,   collection  or
               otherwise,  and all of Borrower's  deposits (general or special),
               balances,  sums and  credits  with  Lender  at any time  existing
               ("Affiliate"  means,  with  respect to a  specified  person,  any
               person  directly or  indirectly  controlling,  controlled  by, or
               under common control with the specified person, including without
               limitation its stockholders and any affiliates. A person shall be
               deemed to control a corporation if the person possesses, directly
               or indirectly,  the power to direct or cause the direction of the
               management and business of the  corporation  whether  through the
               ownership of voting securities, by contract, or otherwise);

         (iii) all  of  Borrower's  right,  title  and  interest  in,  to and in
               respect of all goods  relating to, or which by sale have resulted
               in, Accounts,  including, without limitation, all goods described
               in invoices or other documents or instruments with respect to, or
               otherwise  representing  or  evidencing,  any  Account,  and  all
               returned, reclaimed or repossessed goods;

          (iv) all of Borrower's now or hereafter acquired deposit accounts into
               which  Accounts  are  deposited,  including  the Lockbox  Account
               ("Lockbox  Account"  means an account  maintained  by Borrower at
               Bank One Arizona, N.A. or another bank acceptable to Lender (or a
               successor financial  institution),  into which all collections of
               Accounts are paid directly);

          (v)  all of  Borrower's  now owned and  hereafter  acquired or arising
               general   intangibles  and  other  property  of  every  kind  and
               description  with  respect  to,  evidencing  or  relating  to its
               Accounts,  accounts  receivable  and  other  rights  to  payment,
               including,  but not limited to, all existing and future  customer
               lists, choses in action,  claims, books,  records,  ledger cards,
               contracts,  licenses,  formulae,  tax and other types of refunds,
               returned and unearned insurance premiums, rights and claims under
               insurance policies, and computer programs, information, software,
               records, and data, as the same relates to the Accounts;

          (vi) all of Borrower's other general intangibles  (including,  without
               limitation, any proceeds from insurance policies after payment of
               prior interests),  patents, unpatented inventions, trade secrets,
               copyrights, contract rights, goodwill, literary rights, rights to
               performance,  rights under  licenses,  choses-in-action,  claims,
               information  contained  in  computer  media  (such as data bases,
               source and object  codes,  and  information  therein),  things in
               action,  trademarks and trademarks applied for (together with the
               goodwill  associated  therewith) and derivatives  thereof,  trade
               names, including the right to make, use, and vend goods utilizing
               any of the  foregoing,  and  permits,  licenses,  certifications,
               authorizations   and  approvals,   and  the  rights  of  Borrower

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               thereunder,  issued by any governmental,  regulatory,  or private
               authority,  agency,  or entity  whether  now  owned or  hereafter
               acquired,  together  with  all  cash and  non-cash  proceeds  and
               products thereof;

          (vii)all of Borrower's  now owned or hereafter  acquired  inventory of
               every  description which is held by Borrower for sale or lease or
               is furnished by Borrower under any contract of service or is held
               by Borrower as raw  materials,  work in process or materials used
               or consumed in a business,  wherever located, and as the same may
               now and hereafter from time to time be constituted, together with
               all cash and non-cash proceeds and products thereof;

        (viii) all  of  Borrower's  now owned or hereafter  acquired  machinery,
               equipment,   computer  equipment,   tools,  tooling,   furniture,
               fixtures,  goods, supplies,  materials,  work in process, whether
               now owned or hereafter  acquired,  together  with all  additions,
               parts, fittings,  accessories,  special tools,  attachments,  and
               accessions  now and  hereafter  affixed  thereto  and/or  used in
               connection therewith,  all replacements thereof and substitutions
               therefor,  and  all  cash  and  non-cash  proceeds  and  products
               thereof;

          (ix) the Real Property; and

          (x)  the proceeds (including, without limitation,  insurance proceeds)
               of all of the foregoing.

          (b) Upon the  occurrence of an Event of Default under this Note or the
     other Loan  Documents,  or an Event of Default  under any of the  Revolving
     Loan  Documents,  Lender,  in addition to all other  rights,  options,  and
     remedies granted to Lender under this Note or at law or in equity, may take
     any of the following steps:

          (i)  declare this Note, and all amounts owed to Lender  hereunder,  to
               be immediately due and payable;

          (ii) exercise all other  rights  granted to it under this Note and all
               rights under the UCC in effect in the applicable  jurisdiction(s)
               and under any other applicable law; and

          (iii)exercise  all rights and  remedies  under all Loan  Documents  or
               Revolving  Loan  Documents now or hereafter in effect,  including
               but not limited to:

                    (A) the right to take possession of, send notices regarding,
               and collect  directly the  Collateral,  with or without  judicial
               process;

                    (B)  the  right  to (by  its  own  means  or  with  judicial
               assistance) enter any of Borrower's  premises and take possession
               of the  Collateral,  or render it  unusable,  or  dispose  of the
               Collateral  on such premises in compliance  with  subsection  (c)
               below,  without any liability for rent,  storage,  utilities,  or
               other sums,  and Borrower shall not resist or interfere with such
               action; and

                    (C) the right to require  Borrower at Borrower's  expense to
               assemble all or any part of the  Collateral and make it available
               to Lender at any place designated by Lender.

<PAGE>
          (c)  Borrower  agrees  that a notice  received by it at least five (5)
     days before the time of any intended  public sale,  or the time after which
     any private  sale or other  disposition  of the  Collateral  is to be made,
     shall be deemed to be reasonable notice of such sale or other  disposition.
     If permitted by applicable law, any perishable Collateral that threatens to
     decline rapidly in value or that is sold on a recognized market may be sold
     immediately  by Lender  without  prior notice to  Borrower.  At any sale or
     disposition  of  Collateral,   Lender  may  (to  the  extent  permitted  by
     applicable law) purchase all or any part of the  Collateral,  free from any
     right of redemption by Borrower, which right is hereby waived and released.
     Borrower  covenants and agrees not to interfere with or impose any obstacle
     to  Lender's  exercise  of its  rights  and  remedies  with  respect to the
     Collateral following an Event of Default.

          (d) Lender shall have the right to proceed  against all or any portion
     of the  Collateral  to  satisfy  in  any  order  (i)  the  liabilities  and
     obligations  of  Borrower  to Lender  under  this  Note and the other  Loan
     Documents or (ii) upon the occurrence of an Event of Default under the Loan
     Agreement or the Revolving Loan Documents,  the liabilities and obligations
     of Borrower  under the Revolving  Loan  Documents.  All rights and remedies
     granted Lender under this Note or under any of the other Loan Documents, or
     otherwise  available at law or in equity,  shall be deemed  concurrent  and
     cumulative,  and not alternative remedies,  and Lender may proceed with any
     number of remedies at the same time until the Principal  Sum, all interest,
     costs,  expenses and other  charges due under,  and all other  existing and
     future  liabilities and obligations of Borrower to Lender under,  this Note
     are satisfied in full. The exercise of any one right or remedy shall not be
     deemed a waiver or release of any other right or remedy,  and Lender,  upon
     the occurrence of an Event of Default, may proceed against Borrower, and/or
     the Collateral, at any time, under any agreement, with any available remedy
     and in any order.

     7.  Use of  Funds.  Borrower  covenants  and  agrees  that  the loan of the
Principal  Sum, or any portion of the Principal  Sum,  shall be used for working
capital or other commercial purposes of Borrower.

     8.  Representations.  Each entity  comprising  Borrower hereby warrants and
represents to Lender that:

          (a) Borrower is a corporation duly organized, validly existing, and in
     good  standing  under  the laws of the State of  Massachusetts,  is in good
     standing as a foreign corporation in the State of Michigan and in any other
     jurisdiction in which the character of the properties owned or leased by it
     or the nature of its business makes such qualification  necessary,  has the
     corporate  power and  authority to own its assets and transact the business
     in which it is engaged,  and has  obtained all  certificates,  licenses and
     qualifications required under all laws, regulations,  ordinances, or orders
     of public  authorities  necessary for the ownership and operation of all of
     its properties and transaction of all of its business.

          (b) Borrower  has full  corporate  power and  authority to enter into,
     execute and  deliver  this Note,  and to incur and perform its  obligations
     under this Note and the other Loan  Documents,  all of which have been duly
     authorized by all  necessary  corporate  action.  No consent or approval of
     shareholders of, or lenders to, Borrower, and no consent,  approval, filing
     or registration with any governmental  authority is required as a condition
     to the validity of this Note or the other Loan Documents or the performance
     by Borrower of its obligations under this Note or the other Loan Documents.


<PAGE>
          (c) This Note, when issued and delivered for value  received,  and all
     other  Loan  Documents  constitute  the valid and  binding  obligations  of
     Borrower,  enforceable against Borrower in accordance with their respective
     terms.

          (d) The  execution and delivery by Borrower of this Note and the other
     Loan Documents do not, and the performance of Borrower's  obligations under
     this Note and the other Loan  Documents will not,  violate,  conflict with,
     constitute  a  default  under,  or  result  in the  creation  of a lien  or
     encumbrance  (other  than  a  lien,  security  interest,  charge  or  other
     encumbrance in favor of Lender) upon the property of Borrower under (i) any
     provision of Borrower's  certificate of incorporation  or bylaws,  (ii) any
     provision of any law, rule or regulation  applicable to Borrower,  or (iii)
     any of the following (A) any indenture or other  agreement or instrument to
     which Borrower is a party or by which Borrower or its property is bound, or
     (B) any judgment,  order or decree of any court,  arbitration  tribunal, or
     governmental  entity  applicable  to Borrower or  Borrower's  properties or
     assets.

          (e)  There  are  no  actions,  suits,  proceedings  or  investigations
     pending, including, without limitation, any condemnation proceeding, or, to
     the  knowledge of  Borrower,  threatened,  against or  adversely  affecting
     Borrower's  properties or assets or the validity or  enforceability of this
     Note or the other Loan  Documents or the ability of Borrower to perform any
     obligations under this Note or the other Loan Documents. Borrower is not in
     default with respect to any order,  writ,  injunction,  decree or demand of
     any  court,   arbitration   tribunal  or  governmental   authority   having
     jurisdiction over Borrower.

          (f) The audited financial  statements of Borrower previously delivered
     to Lender are true,  correct and complete and fairly  present the financial
     condition of Borrower and the results of Borrower's  operations and changes
     in financial condition as of the dates and for the periods referred to, and
     have  been  prepared  in  accordance  with  generally  accepted  accounting
     principles.  There are no material  unrealized or anticipated  liabilities,
     direct or  indirect,  fixed or  contingent,  of Borrower as of the dates of
     such  financial   statements  that  are  not  reflected  in  the  financial
     statements or the notes thereto.  There has been no material adverse change
     in the business, properties, condition (financial or otherwise) of Borrower
     since the date of Borrower's last financial statements delivered to Lender.
     Borrower's fiscal year ends on June 30.

          (g) Borrower is not in default under or with respect to any obligation
     in any respect that could be adverse to its business, operations,  property
     or  financial  condition,  or that could  adversely  affect the  ability of
     Borrower  to  perform  its  obligations  under  this Note or the other Loan
     Documents.  No Event of Default or event that, with the giving of notice or
     lapse of time, or both, could become an Event of Default,  has occurred and
     is continuing:

          (h)  Borrower  has good and  marketable  title to its  properties  and
     assets, including the Collateral and the properties and assets reflected in
     the financial statements in described in paragraph (f) above, subject to no
     lien, mortgage, pledge, encumbrance or charge of any kind. Borrower has not
     agreed or consented to cause any of its properties or assets, whether owned
     now or hereafter acquired,  to be subject in the future (upon the happening
     of a contingency or otherwise) to any lien, mortgage,  pledge,  encumbrance
     or charge of any kind.


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          (i)  Borrower has filed, or has obtained extensions for the filing of,
               all federal, state and other tax returns which are required to be
               filed,  and has paid all taxes shown as due on those  returns and
               all  assessments,  fees  and  other  amounts  due as of the  date
               hereof.  All tax  liabilities  of Borrower  were, as of March 31,
               2003 and are now, adequately provided for on Borrower's books. No
               tax liability has been asserted by the Internal  Revenue  Service
               or other taxing authority against Borrower for taxes in excess of
               those already paid.

          (j) The use of the  proceeds  of the Loan and  Borrower's  issuance of
     this  Note  will  not,  directly  or  indirectly,  violate  or  result in a
     violation of the Securities  Act of 1933 or the Securities  Exchange Act of
     1934, as amended,  or any regulations  issued pursuant  thereto,  including
     without limitation  Regulations U, T, or X of the Board of Governors of the
     Federal  Reserve  System.  Borrower  is  not  engaged  in the  business  of
     extending  credit for the purpose of the  purchasing  or  carrying  "margin
     stock" within the meaning of those regulations.  No part of the proceeds of
     the Loan will be used to  purchase  or carry any margin  stock or to extend
     credit to others for such purpose.

          (k) Borrower is not an  investment  company  within the meaning of the
     Investment  Company  Act of  1940,  as  amended,  nor is  it,  directly  or
     indirectly,  controlled  by or acting on behalf of any  Person  which is an
     investment company within the meaning of that Act.

          (l)  Borrower is not in violation of any statute,  rule or  regulation
               of any governmental authority (including, without limitation, any
               statute,  rule or regulation relating to employment  practices or
               to   environmental,   occupational   and  health   standards  and
               controls).   Borrower  has  obtained   all   licenses,   permits,
               franchises,  and other governmental  authorizations necessary for
               the ownership of its  properties and the conduct of its business.
               Borrower is current with all reports and documents required to be
               filed with any state or federal securities  commission or similar
               governmental  authority  and  is  in  full  compliance  with  all
               applicable rules and regulations of such commissions.

          (m) No  use,  exposure,  release,  generation,  manufacture,  storage,
     treatment, transportation or disposal of hazardous material has occurred or
     is  occurring  on or from the Real  Property or any other real  property on
     which the  Collateral  is located  (together  with the Real  Property,  the
     "Premises") or which is owned, leased or otherwise occupied by Borrower, or
     has occurred  off the  Premises as a result of any action of Borrower.  All
     hazardous material used, treated, stored, transported to or from, generated
     or handled on the  Premises,  or off the  Premises  by  Borrower,  has been
     disposed of on or off the  Premises by or on behalf of Borrower in a lawful
     manner.  There are no  underground  storage  tanks  present on or under the
     Premises owned or leased by Borrower. No other environmental, public health
     or safety hazards exist with respect to the Premises.

          (n) The only places of business of  Borrower,  and the places where it
     keeps  and  intends  to keep the  Collateral  and  records  concerning  the
     Collateral,  are at the  addresses set forth in Schedule  8(n),  which also
     lists the owner of record of each such property.

          (o) Borrower  exclusively  owns or possesses  all the patents,  patent
     applications,  trademarks,  trademark  applications,  service marks,  trade
     names,  copyrights,  franchises,  licenses,  and rights with respect to the
     foregoing  necessary  for the  current and  planned  future  conduct of its
     business,  without any  conflict  with the rights of others.  A list of all
     such intellectual  property (indicating the nature of Borrower's interest),

<PAGE>
     as well as all  outstanding  franchises  and  licenses  given by or held by
     Borrower,  is attached as Schedule 8(o).  Borrower is not in default of any
     obligation or  undertaking  with respect to such  intellectual  property or
     rights.

          (p) The identity of the  stockholders  of record of all classes of the
     outstanding  stock of  Borrower,  together  with the  respective  ownership
     percentages held by such stockholders, are as set forth on Schedule 8(p).

          (q)  Neither  this  Note nor any  other  Loan  Document  nor any other
     agreement, document, certificate, or statement furnished to Lender by or on
     behalf of Borrower in connection with the transactions  contemplated hereby
     contains any untrue statement of material fact or omits to state a material
     fact  necessary  to make the  statements  contained  in this Note or in the
     other Loan Documents or such other  documents not  misleading.  There is no
     fact  known  to  Borrower  that  adversely  affects  or in the  future  may
     adversely affect the business,  operations,  affairs or financial condition
     of Borrower, or any of its properties or assets.

          (r)  Borrower  does  not own or hold  any  equity  or  long-term  debt
     investments  in, have any  outstanding  advances  to, have any  outstanding
     guarantees for the obligations of, or have any outstanding borrowings from,
     any  Person.  Borrower  is not a party to any  contract  or  agreement,  or
     subject to any corporate restriction, which adversely affects its business.

          (s) Within  five (5) years  before the date of this Note,  neither the
     business,  property or assets, or operations of Borrower has been adversely
     affected  in any  way by any  casualty,  strike,  lockout,  combination  of
     workers,  or order of the United  States of  America or other  governmental
     authority,  directed against  Borrower.  There are no pending or threatened
     labor disputes,  strikes,  lockouts,  or similar  occurrences or grievances
     against Borrower or its business.

          (t) Within five (5) years  before the date of this Note,  Borrower has
     not conducted  business  under or used any other name  (whether  corporate,
     partnership or assumed) except as listed on Schedule 8(t).  Borrower is the
     sole owner of all names  listed on that  Schedule  and any and all business
     done and invoices issued in such names are Borrower's sales,  business, and
     invoices.  Each trade name of  Borrower  represents  a division  or trading
     style of Borrower and not a separate Person or independent Affiliate.

          (u) Borrower is not engaged in any joint venture or  partnership  with
     any other Person.

     10. Affirmative and Negative Covenants.  Borrower covenants and agrees that
until this Note shall be repaid in full,  it shall be bound by, and shall comply
fully with, all of the affirmative  and negative  covenants set forth in Article
VI and  Article VII of the Loan  Agreement,  all of which  covenants  are hereby
incorporated by reference into this Note.

     11. Events of Default.  The following events are each an "Event of Default"
under this Note:

          (a) Borrower  fails to make any payment of principal when due or fails
     to make any payment of interest,  fees or other  amounts owed to or for the
     account of Lender under this Note and such payment  remains unpaid for five
     (5) Business Days after the date such payment is due; or

          (b) Borrower has made any  representations or warranties in this Note,
     the other Loan Documents,  any financial  statement  delivered to Lender or
     otherwise  in  connection  with this Note or the related  transaction  that
     contains any untrue  statement of a material  fact or omits a material fact

<PAGE>
     necessary to make the statements contained in this Note or in such document
     or financial statement not misleading; or

          (c)  Borrower  shall  fail to  perform  or  observe,  or  cause  to be
     performed or observed, any other term, obligation,  covenant,  condition or
     agreement  contained in this Note or the other Loan  Documents and any such
     failure shall have continued for a period of thirty (30) days after written
     notice of such failure; or

          (d)  Borrower  shall (i) apply for,  or  consent  in  writing  to, the
     appointment of a receiver,  trustee or liquidator; or (ii) file a voluntary
     petition seeking relief under the Bankruptcy  Code, or be unable,  or admit
     in writing Borrower's inability,  to pay their debts as they become due; or
     (iii) make a general assignment for the benefit of creditors;  or (iv) file
     a petition  or an answer  seeking  reorganization  or an  arrangement  or a
     readjustment of debt with creditors,  apply for, take advantage,  permit or
     suffer to exist the commencement of any insolvency,  bankruptcy, suspension
     of payments, reorganization, debt arrangement,  liquidation, dissolution or
     similar event,  under the law of the United States or of any state in which
     Borrower  is a  resident;  or (v) file an  answer  admitting  the  material
     allegations  of a petition filed against  Borrower in any such  bankruptcy,
     reorganization  or  insolvency  case or  proceeding or (vi) take any action
     authorizing, or in furtherance of, any of the foregoing; or

          (e) Either (i) an involuntary  case is commenced  against Borrower and
     the  petition  is not  contested  within ten (10) days or is not  dismissed
     within sixty (60) days after the commencement of the case or (ii) an order,
     judgment or decree shall be entered by any court of competent  jurisdiction
     on  the  application  of  a  creditor  adjudicating  Borrower  bankrupt  or
     insolvent,  or appointing a receiver,  trustee or liquidator of Borrower or
     of all or  substantially  all of the  assets  of  Borrower  and the  order,
     judgment or decree  shall  continue  unstayed and in effect for a period of
     sixty (60) days or shall not be  discharged  within  thirty (30) days after
     the expiration of any stay of such order, judgment, or decree; or

          (f) Any  obligation  of Borrower for the payment of borrowed  money is
     not paid when due or within any applicable grace period, or such obligation
     becomes or is declared to be due and payable before the expressed  maturity
     of the  obligation,  or there shall have  occurred an event that,  with the
     giving of notice or lapse of time, or both, would cause any such obligation
     to  become,  or allow any such  obligation  to be  declared  to be, due and
     payable;

          (g)  One or more  final  judgments  against  Borrower  or  attachments
     against its  property  not fully and  unconditionally  covered by insurance
     shall be rendered by a court of record and shall remain unpaid, unstayed on
     appeal, undischarged,  unbonded and undismissed for a period of twenty (20)
     days;

          (h) Borrower ceases any material portion of its business operations as
     currently conducted;

          (i) There  shall  occur a  material  adverse  change in the  financial
     condition or business prospects of Borrower,  or Lender in good faith shall
     deem  itself  insecure  as a  result  of acts or  events  bearing  upon the
     financial  condition  of  Borrower  or the  repayment  of this Note,  which
     default shall have continued unremedied for a period of ten (10) days after
     written notice from Lender; or

          (j) An Event of  Default  occurs  under  the Loan  Agreement  or other
     Revolving Loan Documents.


<PAGE>
     12. Lender's Rights.

          (a)  Upon  the  occurrence  of an Event of  Default,  Lender  may,  in
     addition  to its rights and  remedies  set forth in Sections 5 and 6 above,
     proceed,  to the extent permitted by law, to protect and enforce its rights
     either by suit in equity or by  action  at law,  or both,  whether  for the
     specific  performance of any covenant,  condition or agreement contained in
     this Note or in aid of the exercise of any power  granted in this Note,  or
     proceed to enforce  the  payment of this Note or to enforce any other legal
     or equitable  right of Lender.  No right or remedy in this Note,  the other
     Loan Documents or in other agreement or instrument to the benefit of Lender
     is intended  to be  exclusive  of any other  right or remedy,  and each and
     every such right or remedy shall be cumulative  and shall be in addition to
     every  other  right and remedy  given  under this Note or now or  hereafter
     existing at law or in equity or by statute or otherwise.  Without  limiting
     the generality of the foregoing,  if the outstanding  Principal Sum, or any
     of the other  obligations of Borrower to Lender shall not be paid when due,
     Lender shall not be required to resort to any particular security, right or
     remedy or to proceed in any particular order of priority,  and Lender shall
     have the  right at any time  and  from  time to time,  in any  commercially
     reasonable manner and in any order, to enforce its security  interests with
     respect to the Collateral,  liens, rights and remedies,  or any of them, as
     it deems  appropriate in the  circumstances,  and apply the proceeds of any
     Collateral  to such  obligations  of Borrower as it  determines in its sole
     discretion.

          (b) If an Event of Default has occurred as provided above and Borrower
     has not paid the all amounts outstanding, including all principal, together
     with interest accrued on such amounts, upon demand by Lender, then Borrower
     shall pay to Lender  interest  on such  outstanding  amounts  at a rate per
     annum equal to the  Default  Interest  Rate from the date such  outstanding
     amounts are due until the date this Note is paid in full. Borrower promises
     to pay all costs of collection,  including  reasonable  attorneys' fees, if
     this Note is  referred  to an attorney  for  collection  after the Event of
     Default.

     13. No  Defenses.  Borrower's  obligations  under  this  Note  shall not be
subject to any set-off, counterclaim or defense to payment that Borrower now has
or may have in the future.

     14. No Waiver.  No failure or delay on the part of Lender in exercising any
right,  power or privilege under this Note or the other Loan Documents,  nor any
course of dealing between Borrower and Lender,  shall operate as a waiver of the
right, power or privilege,  nor shall a single or partial exercise of any right,
power or privilege preclude any other or further exercise of, or the exercise of
any other, right, power or privilege.

     15. Writing  Required.  No modification or waiver of any provisions of this
Note or any other Loan  Documents,  and no consent to any departure by Borrower,
shall in any event be  effective,  without  respect  to any  course  of  dealing
between the  parties,  unless the  modification  or waiver shall be in a writing
executed by Lender and then such waiver or consent  shall be  effective  only in
the  specific  instance  and for the  purpose for which  given.  No notice to or
demand on Borrower in any case shall  thereby  entitle  Borrower to any other or
further notice or demand in the same, similar or other circumstances.

     16. Usury Limitation. Notwithstanding anything contained to the contrary in
this Note,  Lender  shall  never be  entitled  to  receive,  collect or apply as
interest  any amount in excess of the maximum  rate of interest  permitted to be
charged by applicable law. If Lender  receives,  collects or applies as interest
any such excess, the amount that would be excessive interest shall be applied to
the  reduction of the  Principal  Sum; and if the Principal Sum is paid in full,

<PAGE>

any remaining  excess shall be paid to Borrower.  In determining  whether or not
the  interest  paid or payable in any specific  case exceeds the highest  lawful
rate, Lender and Borrower shall to the maximum extent permitted under applicable
law: (i) characterize any  non-principal  payment as an expense,  fee or premium
rather  than as  interest;  and (ii)  "spread"  the  total  amount  of  interest
throughout the entire term of the obligation so that the interest rate is deemed
to have been uniform throughout the entire term.

     17.  Notices.  Any notice or demand given under this Note shall be given by
delivering  it, sending by fax (with a confirming  copy by regular mail),  or by
mailing it by certified or registered  mail,  postage  prepaid,  return  receipt
requested, or sent by prepaid overnight courier service addressed to Borrower at
200 Lake Street, Suite 102, Peabody, Massachusetts 01960 Attention: Paula Wurts,
Chief  Financial  Officer,  telephone (978)  536-2777,  fax (978) 536-2677.  Any
notice  to be given to  Lender  under  this  Note  shall be given by  personally
delivering  it,  sending it by fax (with a  confirming  copy by  regular  mail),
mailing it by certified mail, return receipt requested, or sending it by prepaid
overnight courier service,  addressed to Lender at: 2 Wisconsin  Circle,  Fourth
Floor,  Chevy  Chase,  Maryland  20815  Attention:  Katherine  R. Lofft,  Senior
Counsel, telephone (301) 961-1640, fax (301) 664-9866, or at such other place as
Lender may specify in writing to Borrower.  Each party may designate a change of
address by notice to the other given in accordance with this Section 16 at least
fifteen (15) days before such change of address is to become effective. A notice
given under this Note shall be deemed  received upon receipt if it is personally
delivered or sent by telecopier or overnight  courier  service and five (5) days
after it is deposited in the U.S. mail if it is sent by regular mail.

     18. Section Headings.  The headings of the several  paragraphs of this Note
are inserted  solely for  convenience of reference and are not a part of and are
not  intended  to  govern,  limit  or aid in the  construction  of any  term  or
provision.

     19.  Severability.  If any term,  provision,  covenant or condition of this
Note or the  application of such term,  provision,  covenant or condition to any
party or circumstance shall be found by a court of competent jurisdiction to be,
to any extent,  invalid or  unenforceable,  the  remainder  of this Note and the
application  of such  term,  provision,  covenant,  or  condition  to parties or
circumstances  other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term,  provision,  covenant or condition
shall be valid  and  enforced  to the  fullest  extent  permitted  by law.  Upon
determination that any such term,  provision,  covenant or condition is invalid,
illegal or unenforceable,  Lender may, but is not obligated to, advance funds to
Borrower  under this Note  until  Borrower  and Lender  amend this Note so as to
effect the original  intent of the parties as closely as possible in a valid and
enforceable manner.

     20.  Survival of Terms.  All  covenants,  agreements,  representations  and
warranties made in this Note or in any financial  statements  delivered pursuant
to this Note shall  survive  Borrower's  execution  and delivery of this Note to
Lender and shall  continue  in full force and effect so long as this Note or any
other  obligation  under this Note shall be outstanding  and unpaid or any other
obligation of Borrower to Lender or its affiliates  under this Note shall remain
unperformed.

     21.  Indemnity.  Borrower  hereby  agrees to  indemnify  and hold  harmless
Lender,   its   partners,   officers,   agents  and   employees   (collectively,
"Indemnitee")  from and against  any  liability,  loss,  cost,  expense,  claim,
damage,  suit,  action  or  proceeding  ever  suffered  or  incurred  by  Lender
(including  reasonable  attorneys'  fees and expenses)  arising from  Borrower's
failure to observe,  perform or  discharge  any of its  covenants,  obligations,
agreements  or  duties  under  this  Note  or  from  the  breach  of  any of the

<PAGE>
representations  or  warranties  contained in this Note.  In addition,  Borrower
shall  defend  Indemnitee  against and save it  harmless  from all claims of any
Person with respect to the Collateral. Notwithstanding any contrary provision in
this Agreement,  the obligations of Borrower under this Section 21 shall survive
the payment in full of the all  obligations  under this Note and the termination
of this Note.

     22. Governing Law; Consent to Jurisdiction.  THIS NOTE IS TO BE GOVERNED BY
AND  CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF  MARYLAND  WITHOUT
RESPECT TO ANY OTHERWISE  APPLICABLE  CONFLICTS-OF-LAWS  PRINCIPLES,  BOTH AS TO
INTERPRETATION  AND PERFORMANCE,  AND THE PARTIES EXPRESSLY CONSENT AND AGREE TO
THE  NON-EXCLUSIVE  JURISDICTION  OF THE COURTS OF THE STATE OF MARYLAND AND THE
UNITED STATES  DISTRICT  COURT FOR THE DISTRICT OF MARYLAND AND TO THE LAYING OF
VENUE IN  MARYLAND,  WAIVING  ALL CLAIMS OR  DEFENSES  BASED ON LACK OF PERSONAL
JURISDICTION,  IMPROPER VENUE,  INCONVENIENT FORUM OR THE LIKE.  BORROWER HEREBY
CONSENTS TO SERVICE OF PROCESS BY MAILING A COPY OF THE SUMMONS TO BORROWER,  BY
CERTIFIED OR REGISTERED MAIL,  POSTAGE PREPAID,  TO BORROWER'S ADDRESS SET FORTH
IN SECTION 17 ABOVE. BORROWER FURTHER WAIVES ANY CLAIM FOR CONSEQUENTIAL DAMAGES
IN RESPECT OF ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY LENDER IN GOOD FAITH.

     23.  Waiver  of Trial by Jury.  EACH OF  BORROWER  AND  LENDER  HEREBY  (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUES TRIABLE OF RIGHT
BY A JURY,  AND (B) WAIVES  ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT  THAT
ANY SUCH RIGHT SHALL NOW HEREAFTER EXIST.  THIS WAIVER OF RIGHT TO TRIAL BY JURY
IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY,  BY EACH OF BORROWER AND LENDER,
AND THIS WAIVER IS INTENDED TO  ENCOMPASS  INDIVIDUALLY  EACH  INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE  ACCRUE.  EACH PARTY
IS HEREBY  AUTHORIZED  AND  REQUESTED  TO SUBMIT  THIS NOTE TO ANY COURT  HAVING
JURISDICTION  OVER THE  SUBJECT  MATTER AND THE  PARTIES TO THIS NOTE,  SO AS TO
SERVE AS CONCLUSIVE EVIDENCE OF THE FOREGOING WAIVER OF THE RIGHT TO JURY TRIAL.
FURTHER,  EACH OF BORROWER AND LENDER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR
AGENT OF THE OTHER PARTY HAS  REPRESENTED,  EXPRESSLY  OR  OTHERWISE,  THAT SUCH
OTHER  PARTY  WILL NOT  SEEK TO  ENFORCE  THIS  WAIVER  OF  RIGHT TO JURY  TRIAL
PROVISION.

     24. Confession of Judgment.  BORROWER  IRREVOCABLY  AUTHORIZES AND EMPOWERS
ANY ATTORNEY OF RECORD,  OR THE  PROTHONOTARY,  CLERK OR SIMILAR  OFFICER OF ANY
COURT IN ANY COUNTY OF THE STATE OF MARYLAND OR OF BALTIMORE CITY, MARYLAND,  OR
IN THE UNITED STATES  DISTRICT  COURT FOR THE DISTRICT OF MARYLAND,  AS ATTORNEY
FOR BORROWER, AS WELL AS FOR ANY PERSONS CLAIMING UNDER, BY OR THROUGH BORROWER,
TO APPEAR FOR  BORROWER  IN ANY SUCH COURT IN ANY SUCH  ACTION  BROUGHT  AGAINST
BORROWER AT THE SUIT OF LENDER TO CONFESS  JUDGMENT AGAINST BORROWER IN FAVOR OF
LENDER  IN THE  FULL  AMOUNT  DUE ON THIS  NOTE  (INCLUDING  PRINCIPAL,  ACCRUED
INTEREST  AND ANY AND ALL  CHARGES,  FEES AND  COSTS)  PLUS  ATTORNEYS  FEES FOR
FIFTEEN  PERCENT  (15%) OF THE AMOUNT DUE,  PLUS COURT COSTS,  ALL WITHOUT PRIOR
NOTICE OR OPPORTUNITY OF BORROWER FOR PRIOR HEARING. BORROWER WAIVES THE BENEFIT
OF ANY AND EVERY  STATUTE,  ORDINANCE,  OR RULE OF COURT  WHICH MAY BE  LAWFULLY
WAIVED  CONFERRING UPON BORROWER ANY RIGHT OR PRIVILEGE OF EXEMPTION,  HOMESTEAD
RIGHTS, STAY OF EXECUTION,  OR SUPPLEMENTARY  PROCEEDINGS,  OR OTHER RELIEF FROM
THE ENFORCEMENT OR IMMEDIATE ENFORCEMENT OF A JUDGMENT OR RELATED PROCEEDINGS ON
A JUDGMENT.  THE  AUTHORITY AND POWER TO APPEAR FOR AND ENTER  JUDGMENT  AGAINST
BORROWER  SHALL NOT BE EXHAUSTED  BY ONE OR MORE  EXERCISES  THEREOF,  OR BY ANY
IMPERFECT  EXERCISE  THEREOF,  AND SHALL  NOT BE  EXTINGUISHED  BY ANY  JUDGMENT
ENTERED  PURSUANT  THERETO;  SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR
MORE  OCCASIONS  FROM TIME TO TIME, IN THE SAME OR DIFFERENT  JURISDICTIONS,  AS
OFTEN AS LENDER SHALL DEEM NECESSARY, CONVENIENT AND PROPER.

     25.  Reaffirmation of Guaranty.  Each Guarantor,  by its signature below as
such,  for  valuable  consideration,  the receipt and  sufficiency  of which are
hereby acknowledged, hereby declares to and agrees with Lender that its guaranty
of Borrower's obligations under this Note (the "Guaranty") is and shall continue
in full  force  and  effect  for the  benefit  of Lender  and that  there are no

<PAGE>

offsets,  claims,  counterclaims,  crossclaims or defenses of the Guarantor with
respect to the Guaranty.  The Guaranty,  and Guarantor's  obligations thereunder
for the benefit of Lender,  are not released,  diminished or impaired in any way
by this Note or the transactions  contemplated hereby. Guarantor hereby ratifies
and confirms the Guaranty in all respects.  Guaranty  hereby  acknowledges  that
without the foregoing consent and reaffirmation, Lender would not consent to the
terms and provisions of this Note.






                         [SIGNATURES ON FOLLOWING PAGE]


<PAGE>

     IN WITNESS WHEREOF,  intending to be legally bound, and intending that this
First Amended Consolidating Amended and Restated Secured Term Note constitute an
instrument   executed  under  seal,  Borrower  has  caused  this  First  Amended
Consolidating  Amended and Restated  Secured Term Note to be executed under seal
as of the date first written above.


                                        BORROWER:

                                        PHC OF MICHIGAN, INC., a Massachusetts
                                        corporation


                                        By:  /s/    Bruce A. Shear       (SEAL)
                                             __________________________________
                                             Name:  Bruce A. Shear
                                             Title: President



GUARANTORS:

PHC, INC., a Massachusetts corporation


By: /s/ Bruce A. Shear             (SEAL)
    ______________________________________
Name:   Bruce A. Shear
Title:  President



By: /s/ Bruce A. Shear             (SEAL)
    ______________________________________

BRUCE A. SHEAR This guarantee is subject to the
limitations of the Original guarantee dated May
26, 2000 in the amount of $150,000.



<PAGE>
                                    Exhibit A

                             Principal Amortization

              Payment Date                     Amount of Principal Repayment

         April 30, 2003                              $55,000
         May 31, 2003                                $55,000
         June 30, 2003                               $55,000
         July 31, 2003                               $55,000
         August 31, 2003                             $55,000
         September 30, 2003                          $55,000
         October 31, 2003                            $55,000
         November 30, 2003                           $55,000
         December 31, 2003                           $60,000
         January 31, 2004                            $60,000
         February 28, 2004                           $60,000
         March 31, 2004                              $60,000
         April 30, 2004                              $60,000
         May 31, 2004                                $60,000
         June 30, 2004                               $60,000
         July 31, 2004                               $60,000
         August 31, 2004                             $60,000
         September 30, 2004                          $60,000
         October 31, 2004                            $60,000
         November 30, 2004                           All then outstanding
                                                     Principal Sum, and accrued
                                                     and unpaid interest, fees
                                                     and charges