PHC INC /MA/
SECOND ADMENDMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>exh10_26.txt
<DESCRIPTION>SECOND ADMENDMENT
<TEXT>
10.26

     SECOND AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

     This SECOND AMENDMENT TO REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
(the "Second  Amendment")  is made as of this 16th day of November,  2005 by and
between  CAPITALSOURCE  FINANCE LLC, a Delaware limited liability company,  with
its chief executive office located at 4445 Willard Avenue, Chevy Chase, Maryland
20815 ( the  "Lender")  and  PHC,  INC.,  a  Massachusetts  corporation,  PHC OF
MICHIGAN,   INC.,  a  Massachusetts   corporation,   PHC  OF  NEVADA,   INC.,  a
Massachusetts corporation,  PHC OF UTAH, INC., a Massachusetts corporation,  PHC
OF VIRGINIA, INC., a Massachusetts corporation, WELLPLACE, INC., a Massachusetts
corporation, DETROIT BEHAVIORAL INSTITUTE, INC., a Massachusetts corporation and
NORTH  POINT  -  PIONEER,  INC.,  a  Massachusetts  corporation   (individually,
collectively, and jointly and severally, the "Borrower")

                              W I T N E S S E T H:

     WHEREAS,  Lender and Borrower entered into a certain Revolving Credit, Term
Loan and  Security  Agreement  dated as of the 19th  day of  October,  2004,  as
amended by that  certain  First  Amendment to  Revolving  Credit,  Term Loan and
Security Agreement dated as of September 15, 2005 (as from time to time amended,
restated,  supplemented or otherwise  modified and in effect,  the  "Agreement")
whereby Lender agreed to make loans,  advances and other extensions of credit to
Borrower thereunder;

     WHEREAS,  Lender  and  Borrower  desire to amend the  Agreement  in certain
respects  upon the terms and  conditions  set forth  herein to  provide  for the
foregoing; and

         WHEREAS, Section 12.8 of the Agreement provides that no modification or
amendment of the Agreement shall be effective unless the same shall be in
writing and signed by the parties thereto.

     NOW, THEREFORE, in consideration of the promises and other mutual covenants
contained herein,  the receipt and sufficiency of which is hereby  acknowledged,
Lender and Borrower agree as follows:

1.   Amendment of Agreement.  As of the Effective Date (defined  below),  Lender
     and Borrower hereby agree to amend the Agreement as follows:


     (a)  The  definition of "Term"  contained in Appendix A of the Agreement is
          hereby  amended and restated as follows:  "Term" shall mean the period
          commencing  on the date set forth on the first page  hereof and ending
          on the date that is four (4) years  after the Closing  Date;  provided
          that in the case of the  Revolving  Facility,  the Term is  subject to
          extension  for up to two (2)  additional  periods  of one (1)  year in
          duration as provided in Section 2.2(b).

2.   Conditions to Effectiveness. This Second Amendment shall be effective as of
     the date  first set forth  above on the date (the  "Effective  Date")  upon
     which the following conditions precedent are satisfied:



                                    -- 98 --
<PAGE>
     (a)  Borrower  shall  have  delivered  to Lender an  executed  copy of this
          Second  Amendment  duly executed by an authorized  officer of Borrower
          and each other agreement,  document or instrument reasonably requested
          by the Lender in connection with this Second  Amendment,  each in form
          and substance reasonably satisfactory to Lender; and

     (b)  Lender shall have received all fees,  charges and expenses  payable to
          Lender as required by this Second  Amendment  and in  connection  with
          this Second Amendment and the documentation related hereto, including,
          but not  limited to,  legal fees and  out-of-pocket  costs  (including
          in-house  counsel fees and expenses),  plus a  non-refundable  $15,000
          extension  fee.  Borrower  hereby  authorizes  Lender to  charge  such
          amounts as an Advance under the Revolving Facility.

3.   Effect of Amendment.  Lender and Borrower hereby acknowledge and agree that
     except as provided in this Second  Amendment,  the  Agreement and the other
     Loan  Documents  remain in full force and effect and have not been modified
     or amended in any  respect,  it being the  intention of Lender and Borrower
     that  this  Second  Amendment  and the  Agreement  be read,  construed  and
     interpreted as one and the same instrument.

4.   References to Loan  Documents.  Each of the other Loan Documents are hereby
     modified in such a manner as to be consistent  with all  modifications  and
     agreements  contained herein and to the extent that all references  therein
     to and  descriptions  therein of the Agreement  shall be deemed to refer to
     and describe the Agreement.

5.   Capitalized  Terms.  All  capitalized  terms not otherwise  defined in this
     Second  Amendment  shall have the  meanings  ascribed  to such terms in the
     Agreement.

6.   Benefit.  This Second  Amendment shall inure to the benefit of and bind the
     parties hereto and their respective successors and assigns.

7.   Amendments.  This Second Amendment may not be changed,  modified,  amended,
     restated, waived, supplemented,  discharged,  canceled or terminated orally
     or by any  course of  dealing  or in any  other  manner  other  than by the
     written  agreement of Lender and Borrower.  This Second  Amendment shall be
     considered part of the Agreement for all purposes under the Agreement.

8.   Headings  and  Counterparts.  The  captions  in this Second  Amendment  are
     intended for convenience and reference only and do not constitute and shall
     not be  interpreted  as part of this Second  Amendment and shall not affect
     the  meaning  or  interpretation  of this  Second  Amendment.  This  Second
     Amendment may be executed in one or more  counterparts,  all of which taken
     together  shall  constitute  but one and the same  instrument.  This Second
     Amendment  may be  executed  by  facsimile  transmission,  which  facsimile
     signatures  shall be  considered  original  executed  counterparts  for all
     purposes,  and each party to this Second  Amendment  agrees that it will be
     bound by its own  facsimile  signature  and that it accepts  the  facsimile
     signature of each other party to this Second Amendment.

9.   Governing Law; JURY TRIAL WAIVER.  THIS FIRST  AMENDMENT AND THE RIGHTS AND
     OBLIGATIONS OF THE PARTIES UNDER THIS FIRST  AMENDMENT SHALL BE GOVERNED BY
     AND  CONSTRUED  AND  INTERPRETED  IN  ACCORDANCE  WITH  THE  CHOICE  OF LAW
     PROVISIONS SET FORTH IN THE AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF
     JURY TRIAL AND NOTICE PROVISIONS OF THE AGREEMENT.

10.  Entire Agreement.  This Second Amendment,  the Agreement and the other Loan
     Documents  constitute the entire agreement between the parties with respect
     to the subject matter hereof and thereof and supersede all prior agreements
     and  understandings,  if any,  relating  to the subject  matter  hereof and
     thereof and may not be contradicted  by evidence of prior,  contemporaneous
     or subsequent oral agreements  between the parties.  There are no unwritten
     oral agreements between the parties.

                                    -- 99 --
<PAGE>
11.  Miscellaneous.  Whenever the context and construction so require, all words
     used in the singular number herein shall be deemed to have been used in the
     plural, and vice versa, and the masculine gender shall include the feminine
     and neuter and the neuter shall include the  masculine  and feminine.  This
     Second  Amendment shall inure to the benefit of Lender,  all future holders
     of any  Note,  any of the  Obligations  or any of the  Collateral  and  all
     Transferees, and each of their respective successors and permitted assigns.
     No Borrower may assign,  delegate or transfer this Second  Amendment or any
     of its rights or obligations  under this Second Amendment without the prior
     written consent of Lender.  No rights are intended to be created under this
     Second  Amendment  for the  benefit of any third party  donee,  creditor or
     incidental beneficiary of Borrower.



                            [Signature Pages Follow]





                                    -- 100 --
<PAGE>

                     [Signature Page 1 to Second Amendment]

     IN WITNESS WHEREOF, Lender and Borrower have executed this Second Amendment
as of the date first above written.

LENDER:                                       CAPITALSOURCE FINANCE LLC


                                              By:  /s/ Keith D. Reuben
                                              Name:    Keith D. Reuben
                                              Title:   Managing Directo


BORROWER:                                    PHC, INC.


                                             By:  /s/  Bruce A. Shear
                                             Name:     Bruce Shear
                                             Title:    President


                                             PHC OF MICHIGAN, INC.

                                             By:  /s/  Bruce A. Shear
                                             Name:     Bruce Shear
                                             Title:    President



                                             PHC OF NEVADA, INC.

                                             By:  /s/  Bruce A. Shear
                                             Name:     Bruce Shear
                                             Title:    President



                                             PHC OF UTAH, INC.

                                             By:  /s/  Bruce A. Shear
                                             Name:     Bruce Shear
                                             Title:    President


                                             PHC OF VIRGINIA, INC


                                             By:  /s/  Bruce A. Shear
                                             Name:     Bruce Shear
                                             Title:    President

                                   -- 101 --
<PAGE>
                     [Signature Page 2 to Second Amendment]


                                             WELLPLACE, INC.


                                             By:  /s/  Bruce A. Shear
                                             Name:     Bruce Shear
                                             Title:    President


                                             DETROIT BEHAVIORAL INSTITUTE, INC,


                                             By:  /s/  Bruce A. Shear
                                             Name:     Bruce Shear
                                             Title:    President


                                             NORTH POINT - PIONEER, INC.

                                             By:  /s/  Bruce A. Shear
                                             Name:     Bruce Shear
                                             Title:    President


                                   -- 102 --




</TEXT>
</DOCUMENT>
