SECOND AMENDMENT


  SECOND AMENDMENT,  dated as of September 25, 2000 (this  "Amendment"),  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").


                              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;
and

  WHEREAS,  the Borrowers  have  requested,  and, upon this  Amendment  becoming
effective, the Required Lenders will have agreed, to amend certain provisions of
the Credit Agreement and to grant certain  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.
                            -----------------------------------

  2.1.  Amendment to Subsection 1.1 of the Credit  Agreement.  Subsection 1.1 of
the Credit  Agreement is hereby  amended by deleting the table  appearing in the
definition of  "Applicable  Margin" and  substituting  in lieu of such table the
following table:

                                    Alternate
                                     Base Rate              Eurodollar
                                      Loans                   Loans

     Term Loans:                      2.25%                    3.25%
     Revolving Credit Loans:          2.25%                    3.25%
     Swing Line Loans:                2.25%               Not applicable;

 2.2. Amendments to Subsection 7.9 of the Credit Agreement.
     -----------------------------------------------------

(a) Subsection  7.9(a) of the Credit Agreement is hereby amended by deleting the
  ratio "6.50 to 1.00" under the column  titled  "Ratio"  (corresponding  to the
  First Fiscal Quarter of Fiscal Year 2001) and substituting in lieu thereof the
  ratio "5.75 to 1.00".

(b) Subsection  7.9(c) of the Credit Agreement is hereby amended by deleting the
  number   "$24,700,000"   under  the  column   titled   "Consolidated   EBITDA"
  (corresponding  to  the  Fourth  Fiscal  Quarter  of  Fiscal  Year  2000)  and
  substituting in lieu thereof the number "$23,200,000".

  2.3.  Amendment to Schedule III to the Credit  Agreement.  Schedule III to the
Credit  Agreement  is hereby  amended  in its  entirety  to read as set forth in
Schedule III hereto.

  SECTION 3. 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 $250,000,000 to $150,000,000, and each Lender, by its execution and
delivery of its respective  Lender 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 4. Consent and Release of Certain  Collateral.  In connection with the
acquisition by HHC Beachwood,  Inc., HHC Broadview,  Inc. and HHC Westbay,  Inc.
(each an affiliate of  Investcorp)  of the four  nursing  home  facilities  that
Harborside of Cleveland Limited Partnership  ("Cleveland") currently leases from
the  current  owners  of such  facilities,  which  acquisition  is to be  funded
principally  by a  mortgage  insured  by the  Department  of  Housing  and Urban
Development (the "HUD Transaction"),  each Lender, by its execution and delivery
of its respective  Lender Consent  Letter,  hereby  consents and agrees that the
Liens in favor of the Administrative Agent, on behalf of the Secured Parties, in
the  Medicare/Medicaid  provider  agreements  and nursing home licenses owned by
Cleveland as well as any right, privilege,  estate or benefit pertaining thereto
(the "Released  Collateral") shall be released and the Administrative  Agent, on
behalf of the Secured  Parties,  shall execute and deliver such  instruments and
documents necessary to release the Lien on the Released  Collateral,  including,
without  limitation any Uniform  Commercial  Code  amendment,  release,  partial
release or termination statements; provided, however, that (a) in no event shall
the foregoing  release be construed as a release of the security interest of the
Administrative  Agent, for the benefit of the Secured  Parties,  in any Accounts
(as defined in the Collateral Agreement) and (b) in the event that the foregoing
mortgage insured by the Department of Housing and Urban Development is repaid in
full,  the Company  shall  execute and deliver,  and cause its  Subsidiaries  to
execute and deliver, to the Administrative Agent, for the benefit of the Secured
Parties,  all  such  instruments  and  documents  as  are  necessary,  or in the
reasonable  opinion of the  Administrative  Agent desirable,  to obtain a legal,
valid and enforceable  security interest in favor of the  Administrative  Agent,
for the benefit of the Secured Parties, in the Released Collateral, and for such
security interest to constitute, subject to the existence of Permitted Liens and
the provisions of the  Intercreditor  Agreement,  perfected first priority liens
on, and security  interests in, such Released  Collateral.  Each Lender,  by its
execution and delivery of its Lender Consent Letter,  hereby further consents to
the  encumbrance  of the Released  Collateral  with Liens required in connection
with the HUD Transaction.

  SECTION   5.   Additional   Borrowings   and   Acquisitions.   To  induce  the
Administrative  Agent to enter into this  Amendment,  and the Lenders to execute
and deliver Lender  Consent  Letters,  each Borrower  covenants and agrees that,
from and after the date hereof and until March 31, 2001:

(a) it 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 $58,450,000;

(b)  Harborside  of  Dayton  Limited   Partnership,   a  Massachusetts   limited
  partnership  and a  Borrower  under the Credit  Agreement,  shall not make any
  request pursuant to Section 1.2 of the  Participation  Agreement,  dated as of
  August 11, 1998, among the Company,  the Trust, the Synthetic  Investors,  the
  Lenders and the  Administrative  Agent,  that loans or advances be made to the
  Trust under the Synthetic Lease Facility;

(c) the  Borrowers  shall use the proceeds of Revolving  Credit Loans solely (i)
  for general  corporate  purposes other than  acquisitions  and (ii) to finance
  capital expenditures permitted under the Credit Agreement;

(d) 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 acquire the 100-bed Brevard
  facility  in  Rockledge,  Florida  so  long as the  Acquisition  Consideration
  therefor is not in excess of $4,375,000;

(e) 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 amount set
  forth in the proviso to clause (d) 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 and (iii) Indebtedness permitted by subsections 7.1(c), 7.1(g) and
  7.1(m) of the Credit Agreement; and

(f) any  failure  by any  Borrower  to  comply  with  any of the  covenants  and
  agreements  set forth in this Section 5 shall  constitute  an Event of Default
  under the Credit Agreement.

  SECTION 6.  Inspection  of Property;  Discussions;  Appraisals.  To induce the
Administrative  Agent to enter into this  Amendment,  and the Lenders to execute
and deliver Lender Consent Letters,  each Borrower  covenants and agrees that it
shall:

(a) permit representatives of the Administrative Agent (for itself and on behalf
  of any Lender) upon reasonable  notice,  and at the reasonable  expense of the
  Company,  to visit and  inspect  any  properties  of the  Company,  any of its
  Subsidiaries  or the Trust and  examine and make  abstracts  from any of their
  respective books and records, and to discuss the business,  operations, assets
  and financial and other  condition of such Persons with officers and employees
  thereof and with their  independent  certified  public  accountants with prior
  reasonable  notice to, and coordination  with, the chief financial  officer or
  the treasurer of the Company; and

(b) pay,  promptly  upon  the  request  of the  Administrative  Agent,  for  the
  reasonable costs and expenses in connection with any appraisal  ordered by the
  Administrative Agent, in its discretion, to determine the current market value
  of  all  skilled  nursing  facilities  owned  by  the  Company,   any  of  its
  Subsidiaries and the Trust.

  SECTION 7. Conditions to Effectiveness.  This Amendment shall become effective
as of the date set forth above (the  "Amendment  Effective  Date") when (a) each
Borrower  shall have  executed and  delivered to the  Administrative  Agent this
Amendment,  (b) the Required  Lenders  shall have  executed and delivered to the
Administrative Agent Lender Consent Letters (or facsimile transmissions thereof)
consenting to the execution of this Amendment by the  Administrative  Agent, (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  Lender
Consent Letter,  an amendment fee in an amount equal to 0.10% 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) and (d) the HUD Transaction  shall have been  consummated on or prior
to December 31, 2000.

  SECTION 8.  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 9. 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 10. Reference to and Effect on the Credit Documents.  On and after the
Amendment  Effective  Date,  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.  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 or the  Administrative  Agent  under any of the
Credit Documents.  Except as expressly amended herein,  all of the provisions of
the Credit Agreement and the other Credit 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 11. 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 and the Administrative Agent.

  SECTION 12.  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



                       THE CHASE MANHATTAN BANK,
                         as Administrative Agent



                       By: ______________________________________
                            Title:





                               Schedule III to the
                                Credit Agreement



                                    Pricing and Commitment Fee Grid


                                                        Applicable
                                           Applicable   Margin for
                                           Margin for   Eurodollar    Commitment
                Leverage Ratio             ABR Loans    Loans             Fee
                --------------             ---------    -------       ----------
Greater than or equal to 5.5                  2.250%     3.250%        0.500%

Less than 5.5 to 1.0, but greater than or
equal to 5.0 to 1.0                           2.000%     3.000%        0.500%

Less than 5.0 to 1.0, but greater than or
equal to 4.5 to 1.0                           1.750%     2.750%        0.500%

Less than 4.5 to 1.0, but greater than or
equal to 4.0 to 1.0                           1.500%     2.500%        0.375%

Less than 4.0 to 1.0, but greater than or
equal to 3.5 to 1.0                           1.250%     2.250%        0.375%

Less than 3.5 to 1.0, but greater than or
equal to 3.0 to 1.0                           1.000%     2.000%        0.300%

Less than 3.0 to 1.0                          0.750%     1.750%        0.250%





                              LENDER CONSENT LETTER

               HARBORSIDE HEALTHCARE CORPORATION CREDIT 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 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"). Unless otherwise defined herein, capitalized terms used
herein and defined in the Credit Agreement are so used as so defined.

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

                  Pursuant  to  subsection  9.1 of  the  Credit  Agreement,  the
undersigned Lender hereby consents to the execution by the Administrative  Agent
of the Second Amendment.


               Very truly yours,

               ------------------------------------------------------
               (NAME OF LENDER)

               By:___________________________________________________
                   Name:
                   Title:



Dated as of September 25, 2000