<PRE>
                      THIRD AMENDMENT TO CREDIT AGREEMENT,

                     FIRST AMENDMENT TO COLLATERAL AGREEMENT

                                       and

                   FIRST AMENDMENT TO PARTICIPATION AGREEMENT


  THIRD AMENDMENT, dated as of March 28, 2001, to the Credit Agreement, dated as
of August 11, 1998 (as amended,  supplemented or otherwise modified from time to
time,  the "Credit  Agreement"),  among  HARBORSIDE  HEALTHCARE  CORPORATION,  a
Delaware corporation (the "Company"), the other entities listed on the signature
pages thereof,  as joint and several borrowers  thereunder (the Company and such
other  entities  being,  collectively,  the  "Borrowers"),  the  banks and other
financial  institutions  or entities  parties  thereto  (the  "Lenders"),  CHASE
SECURITIES INC., as arranger,  MORGAN STANLEY SENIOR FUNDING,  INC. and BT ALEX.
BROWN  INCORPORATED,  as co-arrangers,  MORGAN STANLEY SENIOR FUNDING,  INC., as
syndication agent,  BANKERS TRUST COMPANY, as documentation agent, and THE CHASE
MANHATTAN BANK, as administrative  agent for the Lenders (in such capacity,  the
"Administrative Agent");


  FIRST  AMENDMENT,  dated as of March 28, 2001,  to the  Collateral  Agreement,
dated as of August 11, 1998 (as amended, supplemented or otherwise modified from
time to time,  the  "Collateral  Agreement"),  made by the Company and the other
Borrowers in favor of the Administrative Agent; and

  FIRST AMENDMENT, dated as of March 28, 2001 (together with the amendments to
the Credit Agreement and the Collateral Agreement referred to above, this
"Amendment"), to the Participation Agreement, dated as of August 11, 1998 (as
amended, supplemented or otherwise modified from time to time, the
"Participation Agreement"), among HARBORSIDE OF DAYTON LIMITED PARTNERSHIP, a
Massachusetts limited partnership, HHC 1998-1 TRUST, a Delaware business trust
(the "Trust"), WILMINGTON TRUST COMPANY, a Delaware banking corporation, in its
individual capacity, BTD HARBORSIDE INC., MORGAN STANLEY SENIOR FUNDING, INC.
and CSL LEASING, INC., as investors (the "Investors"), the Lenders and the
Administrative Agent.



                              W I T N E S S E T H:


  WHEREAS,  pursuant to the Credit  Agreement,  the Lenders have agreed to make,
and have made, certain loans and other extensions of credit to the Borrowers;

  WHEREAS,  pursuant to the  Collateral  Agreement,  the Borrowers  have granted
Liens in favor of the  Administrative  Agent,  for the  benefit  of the  Secured
Parties referred to therein, on their properties to secure their obligations and
liabilities to the Secured  Parties upon the terms and subject to the conditions
set forth therein;

  WHEREAS, pursuant to the Participation Agreement, the Investors have agreed to
make, and have made, certain investments in the Trust; and

  WHEREAS,  the Borrowers  and (in the case of  amendments to the  Participation
Agreement)  the  Trust  have  requested,   and,  upon  this  Amendment  becoming
effective,  the Required Lenders (as defined in each of the Credit Agreement and
the Participation  Agreement) will have agreed,  to amend certain  provisions of
the Credit Agreement,  the Collateral Agreement and the Participation  Agreement
and to grant certain  waivers and consents,  in each case in the manner provided
for in this Amendment.

  NOW,   THEREFORE,   in  consideration  of  the  premises  and  the  agreements
hereinafter set forth, the parties hereto hereby agree as follows:

SECTION 1. Defined Terms. Terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.

SECTION 2. Amendments to the Credit Agreement and Waiver.

2.1. Amendments to Subsection 1.1 of the Credit Agreement.
          (a)  The definition of "Adjustment Date" in subsection 1.1 of the
               Credit Agreement is hereby deleted in its entirety.

          (b)  The  definition of  "Applicable  Margin" in subsection 1.1 of the
               Credit Agreement is hereby amended in full to read as follows:

               "Applicable Margin":  for Term Loans,  Revolving Credit Loans and
               Swing Line Loans of the Types set forth below, the rate per annum
               set forth under the relevant  column heading  opposite such Loans
               below:

                                             Alternate
                                             Base Rate          Eurodollar
                                             Loans              Loans

               Term Loans:                        3.00%         4.00%
               Revolving Credit Loans:            3.00%         4.00%
               Swing Line Loans:                  3.00%         Not applicable

          (c)  The  definition  of "Excess Cash Flow" in  subsection  1.1 of the
               Credit   Agreement  is  hereby  amended  by  deleting  the  words
               "subsections  3.4(b)(i),  (ii), (iii) and (iv)" in clause (b)(ii)
               thereof and  substituting in lieu thereof the words  "subsections
               3.3(c) and 3.4(b)(i), (ii), (iii) and (iv)".

          (d)  The  definition  of "Preferred  Stock" in  subsection  1.1 of the
               Credit Agreement is hereby amended in full to read as follows:

               "Preferred Stock": the collective  reference to (a) the Company's
               exchangeable  preferred  stock,  provided that (i) such preferred
               stock shall not have a scheduled redemption date earlier than the
               date that is one year after the Scheduled  Termination Date, (ii)
               the terms of such preferred stock are  substantially as set forth
               with respect to preferred  stock in the Offering  Memorandum  and
               (iii) substantially  final drafts of the documentation  governing
               any such preferred stock,  showing the terms thereof,  shall have
               been  furnished to the Arranger and the  Co-Arrangers  at least 5
               days prior to the date of  issuance of such  preferred  stock and
               (b) the  Company's  exchangeable  preferred  stock  issued to the
               Investors  and/or one or more of their Affiliates or designees as
               part of the Recapitalization Transaction,  provided that (i) such
               preferred  stock,  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 (other than the  occurrence of a
               change of control or the sale of all or substantially  all of the
               Company's  assets),  does  not  mature  and  is  not  mandatorily
               redeemable,  pursuant to a sinking fund  obligation or otherwise,
               and is not  redeemable  at the option of the holder  thereof,  in
               whole or in part,  on or prior to the date that is one year after
               the Scheduled  Termination  Date,  (ii) no cash dividends will be
               paid in respect of such  preferred  stock  until the date that is
               one year after the Scheduled Termination Date and (iii) the other
               terms and  conditions  of such  preferred  stock  are  reasonably
               satisfactory to the Administrative Agent.

          (e)  The definition of "Scheduled  Termination Date" in subsection 1.1
               of the  Credit  Agreement  is hereby  amended  in full to read as
               follows:

                  "Scheduled Termination Date":  March 31, 2004.

          (f)  Subsection  1.1 of the  Credit  Agreement  is hereby  amended  by
               inserting  the  following  new  definition  in  the   appropriate
               alphabetical order:
               "Recapitalization Transaction": as defined in the Third Amendment
               to Credit Agreement,  First Amendment to Collateral Agreement and
               First Amendment to Participation Agreement, dated as of March 28,
               2001,  among the Company and the other  Borrowers,  the Trust and
               the Administrative Agent.

2.2. Amendment to Subsection 1.2(b) of the Credit Agreement. Subsection 1.2(b)
of the Credit Agreement is hereby amended by inserting the following sentence at
the end thereof:

For the avoidance of doubt, the amount set forth on the Company's  balance sheet
as a liability in respect of long term accrued  interest in connection  with the
Recapitalization Transaction shall be disregarded for purposes of all accounting
definitions and financial covenant calculations.

2.3.  Amendment to Subsection 2.1(b) of the Credit Agreement.  Subsection 2.1(b)
of the Credit  Agreement is hereby  amended by deleting the number  "$2,000,000"
therein and substituting in lieu thereof the number "$1,000,000".

2.4. Amendment to Subsection 2.2 of the Credit Agreement. Subsection 2.2 of the
Credit Agreement is hereby amended in its entirety to read as follows:

2.2 Commitment  Fee. The Company agrees to pay to the  Administrative  Agent for
the account of each Lender (other than any Non-Funding  Lender) a commitment fee
from and  including  the Closing  Date to and  including  the  Termination  Date
computed  at the rate of 0.50%  per  annum on the  average  daily  amount of the
Available Revolving Credit Commitment of such Lender during the period for which
payment is made (whether or not the Company shall have  satisfied the applicable
conditions  to borrow  or for the  issuance  of a Letter of Credit  set forth in
Section 5). Such  commitment  fee shall be payable  quarterly  in arrears on the
last day of each March,  June,  September  and December  and on the  Termination
Date,  commencing  on the  later  of (a) the  first  such  date to  occur  on or
following  the  Closing  Date (or,  if earlier,  the  Termination  Date) and (b)
September 30, 1998.

2.5.  Amendment to Subsection 2.4(a) of the Credit Agreement.  Subsection 2.4(a)
of the Credit  Agreement is hereby amended by deleting the number  "$10,000,000"
therein and substituting in lieu thereof the number "$1,000,000".

2.6.  Amendment to Subsection 3.2(a) of the Credit Agreement.  Subsection 3.2(a)
of the Credit  Agreement is hereby  amended by deleting the number  "$2,000,000"
therein and substituting in lieu thereof the number "$1,000,000".

2.7. Amendment to Subsection 3.3 of the Credit Agreement. Subsection 3.3 of the
Credit Agreement is hereby amended by adding the following paragraph (c) at the
end thereof:

          (c)  The Revolving  Credit  Commitment of each Revolving Credit Lender
               shall be reduced in five consecutive semi-annual  installments on
               the dates set forth below,  commencing on December 31, 2001, each
               of which  reductions shall be in an amount equal to such Lender's
               Revolving  Credit  Percentage  multiplied by the amount set forth
               below opposite such installment:

                  Installment Date                   Reduction Amount

                  December 31, 2001                  $5,000,000
                  June 30, 2002                               $2,500,000
                  December 31, 2002                  $2,500,000
                  June 30, 2003                               $2,500,000
                  December 31, 2003                  $2,500,000

               To the  extent,  if  any,  that  the  sum of  the  amount  of the
               Revolving  Credit Loans,  Swing Line Loans,  L/C Obligations then
               outstanding, amounts then available to be drawn under outstanding
               Letters of Credit and Revolving  Synthetic Lease Obligations then
               outstanding   exceeds   the  amount  of  the   Revolving   Credit
               Commitments  as then  reduced,  the  Company,  as  agent  for the
               Borrowers,  shall be  required  to apply an amount  equal to such
               excess  amount  to  prepay  the  obligations   hereunder  in  the
               following  order:  first, to payment of the Swing Line Loans then
               outstanding,  second,  to payment of the  Revolving  Credit Loans
               then  outstanding,  third, to payment of any L/C Obligations then
               outstanding,   fourth,  to  cash  collateralize  any  outstanding
               Letters  of  Credit  on  terms  reasonably  satisfactory  to  the
               Administrative  Agent,  and,  fifth,  to cash  collateralize  the
               Revolving   Synthetic   Lease   Obligations   and/or   repurchase
               properties subject to the Synthetic Lease Facility.

2.8. Amendments to Subsection 3.4 of the Credit Agreement.

          (a)  Subsection  3.4(a) of the Credit  Agreement is hereby  amended by
               (i) deleting the number "$2,000,000" each time it appears therein
               and substituting in lieu thereof the number "$1,000,000" and (ii)
               inserting  the  following  sentence at the end thereof:  "Partial
               prepayments  of  Swing  Line  Loans  shall  be  in  an  aggregate
               principal amount of $100,000 or a whole multiple thereof."

          (b)  Subsection  3.4(b)(iv) of the Credit  Agreement is hereby amended
               by deleting the words "50% of such Excess Cash Flow"  therein and
               substituting in lieu thereof the words "an amount equal to 50% of
               such  Excess  Cash  Flow  less  the   aggregate   amount  of  all
               prepayments  made during such fiscal year  pursuant to subsection
               3.3".

2.9. Amendment to Subsection 3.5 of the Credit Agreement.  Subsection 3.5 of the
Credit  Agreement is hereby amended by deleting the phrase "from time to time in
effect" each time it appears therein.

2.10. Amendment to Subsection 7.6(g)(ii)(A) of the Credit Agreement.  Subsection
7.6(g)(ii)(A)  of the Credit  Agreement is hereby  amended by deleting the ratio
"3.75 to 1.00" therein and substituting in lieu thereof the ratio "2.5 to 1.00".

2.11. Amendment to Subsection 7.9(a) of the Credit Agreement.  Subsection 7.9(a)
of the Credit Agreement is hereby amended in its entirety to read as follows:

          (a)  At the last day of any fiscal  quarter of the  Company  set forth
               below,  permit the ratio (the "Leverage  Ratio") of  Consolidated
               Indebtedness as of such day to Consolidated EBITDA for the period
               of four fiscal quarters ending on such day to be greater than the
               ratio set forth below for such fiscal quarter:

                  Fiscal Year         Fiscal Quarter             Coverage Ratio

                  2001                Second                     6.50 to 1.00
                                      Third                      6.50 to 1.00
                                      Thereafter                 6.25 to 1.00

2.12.  Waiver of Section 7.9(c) of the Credit  Agreement.  The Required  Lenders
hereby waive (a) compliance with Section 7.9(c) of the Credit  Agreement for the
period of four fiscal  quarters ending December 31, 2000 and (b) any Defaults or
Events of Default  arising under Section 8(c) of the Credit  Agreement from such
non-compliance,  provided, in each case that Consolidated EBITDA for such period
shall be no less than $22,500,000.

2.13.  Amendment to Subsection 7.10 of the Credit Agreement.  Subsection 7.10 of
the Credit  Agreement is hereby amended by deleting the table appearing  therein
and substituting in lieu of such table the following table:

                  Fiscal Year          Fiscal Quarter             Coverage Ratio

                  2001                 Second                     1.25 to 1.00

                  Thereafter                                      1.25 to 1.00;

2.14.  Amendment  to  Subsection  7.11(c)  of the Credit  Agreement.  Subsection
7.11(c) of the Credit  Agreement  is hereby  amended by (a)  deleting the number
"$5,000,000"  in clause (i) therein and  substituting in lieu thereof the number
"$2,500,000"  and (b) deleting the number  "$10,000,000"  in clause (ii) therein
and substituting in lieu thereof the number "$5,000,000".

2.15.  Amendment to Subsection 7.12 of the Credit Agreement.  Subsection 7.12 of
the Credit  Agreement is hereby amended by (a) deleting the word "or" at the end
of clause (b) thereof and  substituting  "," in lieu  thereof and (b) adding the
following clause (d) at the end thereof:

or   (d) the  issuance  by the  Company  on or prior  to July 15,  2001 of up to
     $15,000,000 of Preferred  Stock and warrants to purchase  shares of Class A
     common  stock of the Company to the  Investors  and/or one or more of their
     Affiliates or designees as part of the Recapitalization Transaction.

2.16.  Amendment  to Schedule III to the Credit  Agreement.  Schedule III to the
Credit Agreement is hereby deleted in its entirety.

SECTION 3.  Amendment  to  Collateral  Agreement.  The  definition  of "Borrower
Obligations"  in  Section 1 of the  Collateral  Agreement  is hereby  amended by
inserting  after each  reference  therein to "any Interest Rate  Agreement"  the
words "or any cash management arrangement".

SECTION 4. Amendments to Annex A to the Participation Agreement.

(a)  The  definition  of  "Adjustment  Date"  in  Annex  A to the  Participation
     Agreement is hereby deleted in its entirety.

(b)  The  definition  of  "Applicable  Margin"  in Annex A to the  Participation
     Agreement is hereby amended in full to read as follows:

"Applicable Margin" shall mean as to any Loan of the Types set forth below,  the
     rate per annum set forth under the relevant  column  heading  opposite such
     Loans below:

                                                  Alternate
                                                  Base Rate       Eurodollar
                                                  Loans           Loans

                  Term Synthetic Loans:              3.00%        4.00%
                  Revolving Credit Synthetic Loans:  3.00%        4.00%

(c)  The definition of "Maturity Date" in Annex A to the Participation Agreement
     is hereby amended in full to read as follows:

"Maturity Date" shall mean March 31, 2004.

SECTION 5. Changes of Commitment Amounts.  The Company,  for itself and as agent
for the other  Borrowers,  hereby  notifies  the  Administrative  Agent and each
Lender,  pursuant to subsection 3.3 of the Credit Agreement,  that, effective on
the date hereof,  the total Revolving  Credit  Commitments  shall be permanently
reduced from $150,000,000 to $60,000,000,  and each Lender, by its execution and
delivery of its respective Consent Letter,  hereby consents and agrees that such
permanent  reduction  shall be  effective  on the  date  hereof  and  that  such
reduction  shall be made pro rata according to the respective  Revolving  Credit
Percentages of the Lenders.

SECTION  6.  Consent  to  Recapitalization  Transaction.  Each  Lender,  by  its
execution and delivery of its respective  Consent  Letter,  hereby  consents and
agrees that,  notwithstanding  anything to the contrary in subsection 3.4(b)(i),
7.11 or 7.13 of the Credit  Agreement,  (a) the Company  shall be  permitted  to
exchange (the "Note Exchange") the Senior Subordinated  Discount Notes, in whole
or in part, for new subordinated  discount notes (the "Exchange Notes"), cash in
the amount of up to $15,000,000 and warrants to purchase shares of the Company's
Class A common stock and, upon  consummation of the Note Exchange,  the Exchange
Notes  shall be  deemed  to be  "Permitted  Senior  Subordinated  Debt"  for all
purposes of the Credit  Agreement,  provided that (i) the Note Exchange shall be
consummated by July 15, 2001 on terms and conditions reasonably  satisfactory to
the Administrative  Agent, (ii) the Exchange Notes shall have an accreted amount
on the date of the consummation of the Recapitalization  Transaction (as defined
below) of not more than $71,000,000,  (iii) the non-default interest rate on the
Exchange  Notes  shall not  exceed  12% per  annum,  (iv) cash  interest  on the
Exchange  Notes shall not begin to accrue  prior to August 1, 2004 and the first
semi-annual  cash interest  payment shall not be made prior to February 1, 2005,
(v) the Exchange  Notes shall not have any  scheduled  amortization  or maturity
prior to the date that is one year after the Scheduled Termination Date and (vi)
the  Exchange  Notes shall,  unless  otherwise  agreed to by the  Administrative
Agent,  otherwise  satisfy  the  requirements  set  forth in the  definition  of
"Permanent Senior  Subordinated Debt" in subsection 1.1 of the Credit Agreement,
(b) concurrently  with the consummation of the Note Exchange,  the Company shall
be  permitted to exchange  (the  "Preferred  Stock  Exchange")  its  outstanding
Preferred  Stock,  in whole or in part,  for warrants to purchase the  Company's
Class A common  stock,  and the  terms and  conditions  of the  Preferred  Stock
Exchange shall be reasonably  satisfactory to the Administrative  Agent, and (c)
concurrently  with the consummation of the Note Exchange and the Preferred Stock
Exchange, the Company shall be permitted to issue (the "New Preferred Issuance")
new exchangeable  preferred stock and warrants to purchase the Company's Class A
common stock to the Investors  and/or their  Affiliates  or  designees,  and the
terms  and  conditions  of  the  New  Preferred  Issuance  shall  be  reasonably
satisfactory to the Administrative Agent (the Note Exchange, the Preferred Stock
Exchange   and   the   New   Preferred   Issuance   being,   collectively,   the
"Recapitalization  Transaction"). The Company hereby agrees that, on or prior to
the date of consummation of the Recapitalization  Transaction,  it shall furnish
to the Administrative  Agent  satisfactory  evidence that the aggregate fees and
expenses to be incurred by the Company or any of its  Subsidiaries in connection
with the  Recapitalization  Transaction shall not exceed $3,000,000.  Failure by
the Company to  consummate  the  Recapitalization  Transaction  on the foregoing
terms by July 15,  2001 shall  constitute  an Event of Default  under the Credit
Agreement.  Each Lender, by its execution and delivery of its respective Consent
Letter, hereby further consents and agrees that, notwithstanding anything to the
contrary in subsection 6.1(a) of the Credit Agreement,  the accountants'  report
as to the Company's financial  statements for the fiscal year ended December 31,
2000 may  contain a  qualification  arising  from the fact that  failure  by the
Company to consummate  the  Recapitalization  Transaction  by July 15, 2001 will
result in an Event of Default under the Credit Agreement.

SECTION  7.  Additional   Borrowings,   Acquisitions  and  Fee.  To  induce  the
Administrative Agent to enter into this Amendment, and the Lenders and Investors
to execute  and deliver  Consent  Letters,  each of the Trust and each  Borrower
covenants  and agrees  that,  from and after the date  hereof and so long as the
Commitments  remain  in  effect,  any  Loan,  Note  or  L/C  Obligation  remains
outstanding  and  unpaid,  any amount  (unless  cash in an amount  equal to such
amount  has been  deposited  to a cash  collateral  account  established  by the
Administrative  Agent) remains available to be drawn under any Letter of Credit,
any  Synthetic  Lease  Obligation  remains  outstanding  and unpaid or any other
amount is owing to any Lender,  any Investor or the  Administrative  Agent under
the Credit Agreement,  any of the other Credit Documents or any of the documents
evidencing  the  Synthetic  Lease  Facility  (the   "Synthetic   Lease  Facility
Documents"):

(a)  the  Borrowers  will not be  entitled  to  utilize  the  credit  facilities
     provided  for in the  Credit  Agreement  if,  after  giving  effect to such
     utilization,  the  sum  of  (i)  the  aggregate  principal  amount  of  all
     outstanding  Loans,  (ii) the aggregate  undrawn amount of all  outstanding
     Letters of Credit issued after March 30, 1999,  (iii) the aggregate  amount
     of all  outstanding  L/C Obligations in respect of Letters of Credit issued
     after  March  30,  1999 and  (iv) the  aggregate  principal  amount  of all
     Synthetic Lease Obligations shall exceed $60,000,000;

(b)  the Borrowers  shall use the proceeds of Revolving  Credit Loans solely (i)
     for general  corporate  purposes other than  acquisitions,  (ii) to finance
     capital expenditures permitted under the Credit Agreement, (iii) to finance
     up to $7,500,000 in the aggregate for the purpose of effecting acquisitions
     and (iv) to finance the Brevard Acquisition (as defined below);

(c)  the Company  shall not,  and shall not permit any of its  Subsidiaries  to,
     directly  or  indirectly,  acquire  any  other  Person  (whether  through a
     purchase  of  stock,  merger,  consolidation  or  otherwise)  or all or any
     substantial  portion of the assets, or any business or product line, of any
     other Person;  provided that the Company and its  Subsidiaries may (i) make
     acquisitions permitted by subsection 7.6(g) of the Credit Agreement so long
     as the aggregate cash  Acquisition  Consideration  given  subsequent to the
     date  hereof in  connection  with all such  acquisitions  shall not  exceed
     $7,500,000  and (ii)  acquire the 100-bed  Brevard  facility in  Rockledge,
     Florida so long as the Acquisition  Consideration therefor is not in excess
     of $4,375,000 (the "Brevard Acquisition");

(d)  the Company  shall not,  and shall not permit any of its  Subsidiaries  to,
     directly or indirectly,  create,  incur or assume any Indebtedness,  except
     (i)  Indebtedness,  in an  aggregate  principal  amount  not to exceed  the
     amounts set forth in the proviso to clause (c) above,  (ii) Indebtedness of
     the Company and its  Subsidiaries  owing to any  Investor or any  Affiliate
     thereof in an aggregate principal amount at any one time outstanding not in
     excess  of  $15,000,000,   (iii)  the  original  issuance,  accretions  and
     refinancings  of the  Exchange  Notes,  provided  that  (A)  the  aggregate
     principal  amount of the  refinancing  Indebtedness is no more than 106% of
     the aggregate  principal amount of the Indebtedness  being refinanced,  (B)
     the maturity of the refinancing Indebtedness is no shorter than that of the
     Indebtedness   being  refinanced  and  (C)  the  refinancing   Indebtedness
     satisfies  the  requirements  set forth in clause (b) of the  definition of
     "Permanent Senior  Subordinated  Debt" and (iv)  Indebtedness  permitted by
     subsections  7.1(a)  (without any increase in the  principal  amount of the
     Indebtedness  being  refinanced  or any  shortening  of the maturity of any
     principal amount thereof), 7.1(c), 7.1(e)(ii),  7.1(f), 7.1(g), 7.1(j), and
     7.1(m) of the Credit Agreement;

(e)  commencing  on (and  including)  the date  hereof  to (but  excluding)  the
     Termination  Date, the Company shall pay to the  Administrative  Agent, for
     the ratable account of the Lenders under the Synthetic  Lease  Facility,  a
     fee on the aggregate  unpaid  principal amount of Loans under the Synthetic
     Lease  Facility  calculated  at a rate per  annum  equal to the  Applicable
     Margin in effect under the Credit  Agreement for Eurodollar  Loans less the
     Applicable  Margin  in  effect  under  the  Synthetic  Lease  Facility  for
     Eurodollar  Loans  thereunder,  payable in arrears on each Interest Payment
     Date; and

(f)  any  failure  by any  Borrower  or the  Trust  to  comply  with  any of the
     covenants and  agreements  set forth in this Section 7 shall  constitute an
     Event of Default under the Credit Agreement.

SECTION 8. Conditions to Effectiveness. This Amendment shall become effective as
of the date set forth  above  (the  "Amendment  Effective  Date")  when (a) each
Borrower and, with respect to the amendments to the Participation Agreement, the
Trust  shall  have  executed  and  delivered  to the  Administrative  Agent this
Amendment,  (b) the Required Lenders (as defined in each of the Credit Agreement
and the  Participation  Agreement)  shall have  executed  and  delivered  to the
Administrative  Agent  Consent  Letters  (or  facsimile  transmissions  thereof)
consenting to the execution of this  Amendment by the  Administrative  Agent and
(c) the Company  shall have paid to the  Administrative  Agent,  for the ratable
account of each Lender which shall have executed and  delivered  its  respective
Consent Letter to the Administrative  Agent by 5:00 p.m. (New York City time) on
Wednesday,  March 28, 2001,  an amendment fee in an amount equal to 0.25% of the
sum of each such Lender's Revolving Credit Commitment then outstanding (it being
understood  that such  amendment fee shall be calculated  after giving effect to
the permanent  reduction of Revolving Credit  Commitments set forth in Section 3
of this Amendment).

SECTION 9.  Representation and Warranties.  The  representations  and warranties
made by the  Borrowers  in the  Credit  Documents  are true and  correct  in all
material  respects on and as of the Amendment  Effective Date,  before and after
giving effect to the  effectiveness  of this Amendment,  as if made on and as of
the Amendment  Effective  Date,  except to the extent such  representations  and
warranties  expressly  relate to a  specific  earlier  date,  in which case such
representations and warranties were true and correct in all material respects as
of such earlier date.

SECTION 10.  Payment of Expenses.  The Company  agrees to pay or  reimburse  the
Administrative  Agent for all of its out-of-pocket costs and reasonable expenses
incurred in connection with this Amendment and any other  documents  prepared in
connection herewith and the transactions contemplated hereby, including, without
limitation,   the  reasonable   fees  and   disbursements   of  counsel  to  the
Administrative Agent.

SECTION 11.  Reference to and Effect on the Credit  Documents.  On and after the
Amendment  Effective  Date, (a) each reference in the Credit  Agreement to "this
Agreement",  "hereunder",  "hereof"  or words of like  import  referring  to the
Credit  Agreement,  and each  reference  in the other  Credit  Documents to "the
Credit Agreement",  "thereunder", "thereof" or words of like import referring to
the Credit  Agreement,  shall mean and be a reference to the Credit Agreement as
amended  hereby,  (b)  each  reference  in the  Collateral  Agreement  to  "this
Agreement",  "hereunder",  "hereof"  or words of like  import  referring  to the
Collateral  Agreement,  and each reference in the other Credit  Documents and in
the  Synthetic  Lease  Facility   Documents  to  "the   Collateral   Agreement",
"thereunder",  "thereof"  or words of like import  referring  to the  Collateral
Agreement,  shall mean and be a reference to the Collateral Agreement as amended
hereby  and  (c)  each  reference  in  the  Participation   Agreement  to  "this
Agreement",  "hereunder",  "hereof"  or words of like  import  referring  to the
Participation  Agreement,  and  each  reference  in the  other  Synthetic  Lease
Facility Documents and in the Credit Documents to "the Participation Agreement",
"thereunder",  "thereof" or words of like import referring to the  Participation
Agreement,  shall mean and be a  reference  to the  Participation  Agreement  as
amended  hereby.  On and after the Amendment  Effective Date (as defined below),
the provisions of Section 5 of the Second  Amendment,  dated as of September 25,
2000, to the Credit  Agreement shall cease to be of any further force or effect.
The execution, delivery and effectiveness of this Amendment shall not, except as
expressly  provided herein,  operate as waiver of any right,  power or remedy of
any Lender,  any  Investor or the  Administrative  Agent under any of the Credit
Documents or any of the Synthetic Lease Facility Documents.  Except as expressly
amended herein, all of the provisions of the Credit Agreement,  the other Credit
Documents and the  Synthetic  Lease  Facility  Documents are and shall remain in
full force and effect in accordance with the terms thereof and are hereby in all
respects ratified and confirmed.

SECTION 12.  Counterparts.  This Amendment may be executed by one or more of the
parties to this  Amendment  on any number of separate  counterparts,  and all of
said counterparts  taken together shall be deemed to constitute one and the same
instrument.  Delivery  of an  executed  signature  page  of  this  Amendment  by
facsimile  transmission  shall be effective  as delivery of a manually  executed
counterpart  hereof.  A set of the  copies of this  Amendment  signed by all the
parties  shall be lodged  with the  Company,  the  Trust and the  Administrative
Agent.

SECTION 13.  Governing Law. This Amendment and the rights and obligations of the
parties hereto shall be governed by, and construed and interpreted in accordance
with, the law of the State of New York.



IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be duly
executed and delivered by their respective  proper and duly authorized  officers
as of the day and year first above written.

                        HARBORSIDE HEALTHCARE CORPORATION



                          By: ______________________________________
                               Title:


                          BAY TREE NURSING CENTER CORP.
                          BELMONT NURSING CENTER CORP.
                          COUNTRYSIDE CARE CENTER CORP.
                          HARBORSIDE HEALTH I CORPORATION
                          HARBORSIDE TOLEDO CORP.
                          KHI CORP.
                          MARYLAND HARBORSIDE CORP.
                          NEW JERSEY HARBORSIDE CORP.
                          OAKHURST MANOR NURSING CENTER      CORP.
                          ORCHARD RIDGE NURSING CENTER CORP.
                          SAILORS, INC.
                          SUNSET POINT NURSING CENTER CORP.
                          WEST BAY NURSING CENTER CORP.



                          By: ______________________________________
                               Title:







                          HARBORSIDE ACQUISITION LIMITED PARTNERSHIP IV
                          HARBORSIDE ACQUISITION LIMITED PARTNERSHIP V
                          HARBORSIDE ACQUISITION LIMITED PARTNERSHIP VI
                          HARBORSIDE ACQUISITION LIMITED PARTNERSHIP VII
                          HARBORSIDE ACQUISITION LIMITED PARTNERSHIP VIII
                          HARBORSIDE ACQUISITION LIMITED PARTNERSHIP IX
                          HARBORSIDE ACQUISITION LIMITED PARTNERSHIP X
                          HARBORSIDE ATLANTRIX LIMITED PARTNERSHIP
                          HARBORSIDE CONNECTICUT LIMITED PARTNERSHIP
                          HARBORSIDE HEALTHCARE BALTIMORE LIMITED PARTNERSHIP
                          HARBORSIDE HEALTHCARE NETWORK LIMITED PARTNERSHIP
                          HARBORSIDE MASSACHUSETTS LIMITED PARTNERSHIP
                          HARBORSIDE NORTH TOLEDO LIMITED PARTNERSHIP
                          HARBORSIDE OF CLEVELAND LIMITED PARTNERSHIP
                          HARBORSIDE OF DAYTON LIMITED PARTNERSHIP
                          HARBORSIDE OF FLORIDA LIMITED PARTNERSHIP
                          HARBORSIDE OF OHIO LIMITED PARTNERSHIP
                          HARBORSIDE REHABILITATION LIMITED PARTNERSHIP
                          HARBORSIDE RHODE ISLAND LIMITED PARTNERSHIP
                          RIVERSIDE RETIREMENT LIMITED PARTNERSHIP

                          By:  HARBORSIDE HEALTH I CORPORATION,
                               as General Partner

                          By: ______________________________________
                               Title:




                          HARBORSIDE FUNDING LIMITED PARTNERSHIP

                          By:  HARBORSIDE HEALTHCARE LIMITED PARTNERSHIP,
                          as General Partner

                          By:  KHI CORP., as General Partner



                          By: _____________________________________
                               Title:



                          BRIDGEWATER ASSISTED LIVING LIMITED PARTNERSHIP

                          By:  NEW JERSEY HARBORSIDE CORP.,
                               as General Partner



                          By: _____________________________________
                               Title:



                          HARBORSIDE NEW HAMPSHIRE LIMITED PARTNERSHIP
                          HARBORSIDE TOLEDO LIMITED  PARTNERSHIP
                            HHCI LIMITED PARTNERSHIP



                          By:  HARBORSIDE TOLEDO CORP.,
                               as General Partner



                          By: _____________________________________
                               Title:



                          HARBORSIDE HEALTHCARE ADVISORS LIMITED PARTNERSHIP
                          HARBORSIDE HEALTHCARE LIMITED PARTNERSHIP
                          HARBORSIDE HOMECARE LIMITED PARTNERSHIP

                          By:  KHI CORP., as General Partner



                          By: ______________________________________
                               Title:



                          HARBORSIDE PROPERTIES TRUST I,
                         a Massachusetts business trust



                          By: ______________________________________
                               Name: _________________________, in his
                          capacity as trustee and not individually



                          HHC 1998-1 TRUST

                          By:  Wilmington Trust Company, not in its
                                   individual capacity but solely as Trustee



                          By: ______________________________________
                               Title:



                          THE CHASE MANHATTAN BANK,
                             as Administrative Agent



                          By: ______________________________________
                               Title:







                                 CONSENT LETTER

                        HARBORSIDE HEALTHCARE CORPORATION
                                CREDIT AGREEMENT,
                              COLLATERAL AGREEMENT
                                       and
                             PARTICIPATION AGREEMENT
                           DATED AS OF AUGUST 11, 1998


To:   The Chase Manhattan Bank, as Administrative Agent
      270 Park Avenue
      New York, New York 10017


Ladies and Gentlemen:

     Reference is made to (a) the Credit Agreement,  dated as of August 11, 1998
(as amended,  supplemented or otherwise  modified from time to time, the "Credit
Agreement"),  among Harborside  Healthcare  Corporation,  a Delaware corporation
(the  "Company"),  the other entities listed on the signature pages thereof,  as
joint and several  borrowers  thereunder  (the  Company and such other  entities
being,   collectively,   the   "Borrowers"),   the  banks  and  other  financial
institutions or entities parties thereto (the "Lenders"), Chase Securities Inc.,
as  arranger,   Morgan  Stanley  Senior  Funding,   Inc.  and  BT  Alex.   Brown
Incorporated,   as  co-arrangers,   Morgan  Stanley  Senior  Funding,  Inc.,  as
syndication agent,  Bankers Trust Company, as documentation agent, and The Chase
Manhattan Bank, as administrative  agent for the Lenders (in such capacity,  the
"Administrative  Agent"), (b) the Collateral  Agreement,  dated as of August 11,
1998 (as amended,  supplemented  or otherwise  modified  from time to time,  the
"Collateral Agreement"), made by the Company and the other Borrowers in favor of
the Administrative Agent and (c) the Participation Agreement, dated as of August
11, 1998 (as amended,  supplemented or otherwise modified from time to time, the
"Participation  Agreement"),  among Harborside of Dayton Limited Partnership,  a
Massachusetts  limited partnership,  HHC 1998-1 Trust, a Delaware business trust
(the "Trust"),  Wilmington Trust Company, a Delaware banking corporation, in its
individual  capacity,  BTD Harborside Inc., Morgan Stanley Senior Funding,  Inc.
and CSL Leasing,  Inc.,  as  investors  (the  "Investors"),  the Lenders and the
Administrative  Agent.  Unless otherwise defined herein,  capitalized terms used
herein and defined in the Credit Agreement are so used as so defined.

     The  Borrowers  and the  Trust  have  requested  that the  Lenders  and the
Investors  amend  the  Credit  Agreement,   the  Collateral  Agreement  and  the
Participation  Agreement and grant certain waivers and consents, in each case on
the terms  described in the amendment in the form  attached  hereto as Exhibit A
(the "Amendment").

     Pursuant  to  subsection  9.1 of the  Credit  Agreement,  Section 19 of the
Collateral  Agreement  and  Section  13.5 of the  Participation  Agreement,  the
undersigned hereby consents to the execution by the Administrative  Agent of the
Amendment.


                    Very truly yours,

                    -----------------------------------------------------
                    (NAME OF LENDER OR INVESTOR)


                    By:___________________________________________________
                          Name:
                          Title:



Dated as of March 28, 2001



</PRE>