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Cross-collateralization Cross-default Agreement

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Sectors: Health Products and Services
Governing Law: Maryland, View Maryland State Laws
Effective Date: December 10, 2001
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THIRD AMENDED AND RESTATED CROSS-COLLATERALIZATION
AND CROSS-DEFAULT AGREEMENT


BY AND AMONG


PHC, INC.
PHC OF MICHIGAN, INC.
PHC OF UTAH, INC.
PHC OF VIRGINIA, INC.
(collectively, "Borrower")


AND


HELLER HEALTHCARE FINANCE, INC.
("Lender")


December 6, 2001


Prepared by and after recording,
return to:
Katherine R. Lofft, Esq.
Heller Healthcare Finance, Inc.
2 Wisconsin Circle, 4th Floor
Chevy Chase, Maryland 20815


THIRD AMENDED AND RESTATED CROSS-COLLATERALIZATION
AND CROSS-DEFAULT AGREEMENT


THIS THID AMENDED AND RESTATED CROSS-COLLATERALIZATION AND CROSS-DEFAULT AGREEMENT made as of the 6th day of December, 2001, is executed by and among PHC, INC., a Massachusetts corporation ("PHC"), PHC OF MICHIGAN, INC., a Massachusetts corporation having its principal place of business at 200 Lake Street, Suite 102, Peabody, Massachusetts 01960 ("PHCM"), PHC OF UTAH, INC., a Massachusetts corporation ("PHCU"), PHC OF VIRGINIA, INC., a Massachusetts corporation ("PHCVA" and collectively with PHCM and PHCU, the "Borrower"), and HELLER HEALTHCARE FINANCE, INC. f/k/a HCFP Funding, Inc., a Delaware corporation having its principal office at 2 Wisconsin Circle, 4th Floor, Chevy Chase, Maryland 20815 ("HHF"), the assignee of HealthCare Financial Partners-Funding II, L.P. ("HCFPII")) (collectively, the "Lender").


RECITALS


WHEREAS, Borrower, together with PHC of Rhode Island, Inc. ("PHCRI") and Pioneer Counseling of Virginia, Inc. ("Pioneer" and, collectively with Borrower and PHCRI, the "Original Borrower"), and HCFP Funding, Inc. ("HCFP Funding"), HCFPII and U.S. Bank National Association entered into that certain Cross-Collateralization and Cross-Default Agreement (the "Agreement") dated as of July 13, 1998, and recorded in the official records of the Macomb County, Michigan registrar of deeds (the "Macomb County Records") at Liber 09402 Page 208 on March 7, 2000, pursuant to which Original Borrower agreed, among other things, to cross-collateralize the Loans (as defined therein) with one another and to provide for the cross-default of the Loans with one another (as amended and restated by that certain Amended and Restated Cross-Collateralization and Cross-Default Agreement dated as of May 26, 2000 by and among the Original Borrower and HHF and by that certain Second Amended and Restated Cross-Collateralization and Cross-Default Agreement dated as of March ___, 2001 by and among PHC, Original Borrower and HHF, as amended and restated hereby and as it may be further amended, restated, supplemented or modified from time to time, the "Agreement").


WHEREAS, Borrower is currently indebted to Lender pursuant to the following existing loans (collectively, the "Existing Loans"):


(a) a secured term loan (as it may be increased or decreased from
time to time, the "December 2001 Secured Term Loan") from Lender
to the Original Borrower in the maximum aggregate principal
amount of Two Million Six Hundred Eighty-Eight Thousand Five
Hundred Ninety-Eight and No/100 Dollars ($2,688,598.00), which
December 2001 Secured Term Loan is evidenced by that certain
Consolidating Amended and Restated Secured Term Note dated of
even date herewith and executed by Borrower in favor of Lender
(as it may be amended, modified or restated from time to time,
the "Consolidating Term Note"); and


(b) a revolving credit loan (as it may be increased or decreased from
time to time, the "February 1998 Revolving Loan") from Lender to
the Original Borrower in the original maximum aggregate principal
sum of Four Million and No/100 Dollars ($4,000,000.00), which
February 1998 Revolving Loan is evidenced by that certain Loan
and Security Agreement dated as of February 20, 1998 by and among
the Original Borrowers and HCFP Funding (as it may be amended,
modified or restated from time to time, the "Loan Agreement") and
that certain Revolving Credit Note dated as of February 20, 1998
made by Original Borrowers in favor of HCFP Funding (as it may be
amended, modified or restated from time to time, the "Revolving
Credit Note"), and the maximum aggregate principal sum of which
February 1998 Revolving Loan has been reduced to Three Million
and No/100 Dollars ($3,000,000.00);


WHEREAS, to secure all of the Existing Loans, PHCM has executed that certain Amended and Restated Consolidated Mortgage dated of even date herewith (the "Amended Consolidated Mortgage"), which Consolidated Mortgage, among other things, secures all of the Existing Loans with a lien on the PHCM property described therein;


WHEREAS, Lender has agreed to maintain the Existing Loans, provided that each of the entities comprising Borrower agrees to execute this Agreement providing for, among other things, the cross-collateralization and cross-defaulting of all of the Existing Loans, and that each of the entities comprising Borrower further agrees that this Agreement shall be submitted promptly for recording in the Macomb County Records together with the Amended Consolidated Mortgage; and


WHEREAS, the entities comprising Borrower are all affiliated entities under common control and ownership (except that PHC is a public company) and will receive direct and indirect benefits from the continuance of the Existing Loans and of the financing arrangements represented thereby, which benefits, among others, provide adequate consideration for them to enter into this Agreement.


NOW, THEREFORE, in consideration of the foregoing Recitals, to induce Lender to continue the Existing Loans and the financing arrangements represented thereby and by the other Loan Documents (as defined
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