T-3 1 0001.txt FORM T-3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM T-3 APPLICATION FOR QUALIFICATION OF INDENTURE UNDER THE TRUST INDENTURE ACT OF 1939 Harborside Healthcare Corporation -------------------------------------------------------------------------------- (Name of applicant) One Beacon Street Boston, Massachusetts 02108 -------------------------------------------------------------------------------- (Address of principal executive offices) Securities to be Issued Under the Indenture to be Qualified: Title of Class Amount 12% Senior Subordinated Discount Up to an aggregate principal amount Notes due 2007 (maturing August 1, 2007) at maturity of $100,285,000 and related Note Guarantees Approximate date of proposed public offering: As soon as practicable after this -------------------------------------------- Application for Qualification becomes effective. Name and address of agent for service: ------------------------------------- Stephen L. Guillard President and Chief Executive Officer Harborside Healthcare Corporation One Beacon Street Boston, Massachusetts 02108 With copies to: -------------- E. Michael Greaney, Esq. Joerg H. Esdorn, Esq. Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166 The Applicant hereby amends this Application for Qualification on such date or dates as may be necessary to delay its effectiveness until (i) the 20th day after the filing of an amendment which specifically states that it shall supersede this Application for Qualification or (ii) such date as the Securities and Exchange Commission, acting pursuant to Section 307(c) of the Trust Indenture Act of 1939, may determine upon the written request of the Applicant. GENERAL 1. General Information. ------------------- (a) The Applicant, Harborside Healthcare Corporation, is a corporation. (b) The Applicant was organized under the laws of the State of Delaware. 2. Securities Act Exemption Applicable. ----------------------------------- The Applicant intends to offer, upon the terms and subject to the conditions set forth in an Offering Memorandum and Consent Solicitation Statement (the "Offer to Exchange") and an accompanying letter of transmittal and consent (the "Consent and Letter of Transmittal") filed as exhibits hereto, to exchange (the "Exchange Offer"): (1) (a) $100,285,000 principal amount at maturity of its 12% Senior Subordinated Discount Notes due 2007 (the "New Notes") to be issued pursuant to the indenture to be qualified under this Form T-3 (the "New Indenture"), (b) $15,000,000 in cash and (c) 1,854,422 warrants (the "Warrants"), each to purchase one share of the Applicant's Class A Common Stock, par value $0.01 per share, at an exercise price of $0.01 per share, for all the Applicant's outstanding 11% Senior Subordinated Discount Notes due 2008 (the "Old Notes") properly tendered for exchange and not withdrawn; and (2) 618,141 Warrants for all outstanding shares of the Applicant's 13-1/2% Exchangeable Preferred Stock Mandatorily Redeemable 2010 (the "Old Preferred Stock") properly tendered for exchange and not withdrawn. The Applicant's obligations under the New Notes will be unconditionally guaranteed by the Applicant's subsidiaries listed in Item 9 below, all of which currently unconditionally guarantee the Applicant's obligations under the Old Notes. In conjunction with the Exchange Offer, the Applicant also intends to conduct a consent solicitation (the "Consent Solicitation"), upon the terms and subject to the conditions set forth in the Offer to Exchange and the Consent and Letter of Transmittal, to solicit consents ("Consents") from registered holders (each a "Holder" and collectively the "Holders") of: (a) Old Notes to certain amendments (the "Proposed Indenture Amendments") to the Indenture pursuant to which the Old Notes were issued, dated as of July 31, 1998, between HH Acquisition Corp., as predecessor to the Applicant, and United States Trust Company of New York, as trustee (the "Existing Trustee"), as amended by the First Supplemental Indenture, dated as of August 11, 1998, among the Applicant, the subsidiaries of the Applicant listed on the signature pages thereto and the Existing Trustee (as so amended, the "Existing Indenture"); and (b) shares of Old Preferred Stock to certain amendments (the "Proposed Certificate Amendments") to the Certificate of Designation of the Company pursuant to 2 which the Old Preferred Stock was issued, dated August 11, 1998 (the "Existing Certificate of Designation"). No tenders of or Consents with respect to Old Notes or shares of Old Preferred Stock will be accepted before the effective date of this Application for Qualification. The Exchange Offer is being made by the Applicant in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), afforded by Section 3(a)(9) thereof. There have not been and there are not to be any sales of New Notes or Warrants by the Applicant or by or through an underwriter at or about the same time as the Exchange Offer. The Applicant will sell 1,854,422 Warrants, along with 15,000 shares of the Applicant's new 13% Convertible Exchangeable Preferred Stock Mandatorily Redeemable 2008 to be authorized at the consummation of the Exchange Offer, pursuant to Section 4(2) of the Securities Act, to Investcorp S.A. (which controls a majority of the voting power of the Applicant), or one or more of its affiliates and/or designees for an aggregate amount of $15,000,000 in cash. No cash payment has been made or will be made by any Holder of Old Notes or Old Preferred Stock. The Applicant has engaged United States Trust Company of New York to act as exchange agent (the "Exchange Agent") in connection with the Exchange Offer and the Consent Solicitation and MacKenzie Partners, Inc. to act as information agent (the "Information Agent") in connection with the Exchange Offer and the Consent Solicitation. The Exchange Agent and the Information Agent will be paid fees of approximately $4,000 and $7,000, respectively, and will be reimbursed for out-of-pocket expenses. The Exchange Agent will assist the Applicant by reviewing documentation submitted by tendering Holders to determine compliance with the requirements of the Exchange Offer and the Consent Solicitation. The Information Agent will assist the Applicant by contacting Holders of Old Notes and Old Preferred Stock to inquire whether they have received the Offer to Exchange, the Consent and Letter of Transmittal and related materials or have any questions concerning such documents (with answers limited to the information contained in the Offer to Exchange and the Consent and Letter of Transmittal). Pursuant to a letter agreement dated October 9, 2000 (the "DLJ Agreement"), the Applicant engaged Credit Suisse First Boston Corporation, acting through its affiliate Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), to provide general advice with respect to, and in connection with the terms and timing of, any refinancing transaction with respect to the Old Notes and the Old Preferred Stock. Pursuant to the DLJ Agreement, DLJ has received a fee as consideration for its services under the Agreement, which have included (1) advising the Applicant with respect to the structuring of the Exchange Offer and the Consent Solicitation and the terms of the New Notes and the Warrants and (2) assisting in drafting communications to holders of the Old Notes and the Old Preferred Stock setting forth the terms of the Exchange Offer and the Consent Solicitation. DLJ will also be reimbursed for out-of-pocket expenses and is being indemnified against certain liabilities, including liabilities under the federal securities laws. None of the Exchange Agent, the Information Agent and DLJ will solicit any tender of or Consent with respect to Old Notes or shares of Old Preferred Stock from a Holder or make any recommendation to any Holder with respect to the Exchange Offer or the Consent Solicitation. 3 No portion of the fees to be paid or paid to the Exchange Agent, the Information Agent or DLJ is or was contingent on the consummation of the Exchange Offer or the Consent Solicitation. Other than such fees, there has not been and there will not be any consideration that has been or is to be given, directly or indirectly, to any person in connection with the Exchange Offer or the Consent Solicitation. The Applicant has not and will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Old Notes or shares of Old Preferred Stock or deliveries of Consents pursuant to the Exchange Offer or the Consent Solicitation. AFFILIATIONS 3. Affiliates. ---------- The following table lists each affiliate of the Applicant (other than subsidiaries of the Applicant) and sets forth information as of March 15, 2001 regarding each such affiliate's beneficial ownership of the Applicant's voting securities, which consist of Class A Common Stock, Class D Common Stock and Common Stock. As of March 15, 2001, there were 661,332 shares of Class A Common Stock, 20,000 shares of Class D Common Stock and no shares of Common Stock of the Applicant outstanding. Holders of Class A Common Stock and Common Stock are entitled to one vote per share on all matters as to which stockholders may be entitled to vote pursuant to the Delaware General Corporation Law (the "DGCL"). Holders of Class D Common Stock are entitled to 330 votes per share on all matters as to which stockholders may be entitled to vote pursuant to the DGCL.
Class A Class D Percentage ------- ------- ---------- Common Stock Common Stock of Voting ------------ ------------ --------- No. of Percentage No. of Percentage Securities ------ ---------- ------ ---------- ---------- Name of Affiliate Shares of Class Shares of Class Owned ----------------- ------ -------- ------ -------- ----- George Krupp.................... 196,079 29.6% -- --% 2.7% Douglas Krupp................... 196,079 29.6% -- --% 2.7% Stephen L. Guillard............. 177,688 26.9% -- --% 2.4% Damian N. Dell'Anno............. 47,563 7.2% -- --% 0.7% Bruce J. Beardsley.............. -- --% -- --% --% William H. Stephan.............. 400 0.1% -- --% * Steven V. Raso.................. -- --% -- --% --% Christopher J. O'Brien.......... -- --% -- --% --% Lars C. Haegg................... -- --% -- --% --% James O. Egan................... -- --% -- --% --% W. Christian McCollum........... -- --% -- --% --% Sipco Limited................... -- --% 20,000 100.0% 90.1% Investcorp S.A.................. -- --% 20,000 100.0% 90.1% CIP Limited..................... -- --% 18,400 92.0% 76.0% Ballet Limited.................. -- --% 1,840 9.2% 8.4% Denary Limited.................. -- --% 1,840 9.2% 8.4%
4
Class A Class D Percentage ------- ------- ---------- Common Stock Common Stock of Voting ------------ ------------ --------- No. of Percentage No. of Percentage Securities ------ ---------- ------ ---------- ---------- Name of Affiliate Shares of Class Shares of Class Owned ----------------- ------ -------- ------ -------- ----- Gleam Limited.................. -- --% 1,840 9.2% 8.4% Highlands Limited.............. -- --% 1,840 9.2% 8.4% Noble Limited.................. -- --% 1,840 9.2% 8.4% Outrigger Limited.............. -- --% 1,840 9.2% 8.4% Quill Limited.................. -- --% 1,840 9.2% 8.4% Radial Limited................. -- --% 1,840 9.2% 8.4% Shoreline Limited.............. -- --% 1,840 9.2% 8.4% Zinnia Limited................. -- --% 1,840 9.2% 8.4% Investcorp Investment Equity Limited................... -- --% 1,600 8.0% 7.3% --------------- * Less than 0.1%
MANAGEMENT AND CONTROL 4. Directors and Executive Officers. -------------------------------- The following table sets forth the names and complete mailing addresses of and all offices held by all directors and executive officers of the Applicant and all persons chosen to become directors or executive officers. Name Office ---- ------ Stephen L. Guillard (1)................... President, Director Damian N. Dell'Anno (1)................... Executive Vice President, Director Bruce J. Beardsley (1).................... Senior Vice President William H. Stephan (1).................... Senior Vice President, Director Steven V. Raso (1)........................ Senior Vice President John Guida (1)............................ Senior Vice President Robert Haggerty (1)....................... Senior Vice President Susan Davis (1)........................... Senior Vice President K. Scott Griggs (1)....................... Secretary Christopher J. O'Brien (2)................ Director Lars C. Haegg (2)......................... Director James O. Egan (2)......................... Director W. Christian McCollum (2)................. Director --------------- 5 (1) The complete mailing address of this person is c/o Harborside Healthcare Corporation, One Beacon Street, Boston, Massachusetts 02108. (2) The complete mailing address of this person is c/o Investcorp International Inc., 280 Park Avenue, 37th Floor, New York 10017. 5. Principal Owners of Voting Securities. ------------------------------------- The following table sets forth the name and complete mailing address of, and the class, amount and percentage of voting securities owned by, each beneficial owner of 10 percent or more of the Applicant's voting securities as of March 15, 2001.
Percentage Percentage ---------- ---------- of Voting of Voting --------- --------- Securities Securities ---------- ---------- Owned Owned ----- ----- Prior to After -------- ----- Exchange Exchange -------- -------- Name of Beneficial Owner Title of Class Owned Amount Owned Offer Offer ------------------------ -------------------- ------------ ----- ----- Investcorp S.A. (1)............. Class D Common Stock, par 20,000 90.1% 90.1% value $0.01 per share Sipco Limited (2)............... Class D Common Stock, par 20,000 90.1% 90.1% value $0.01 per share CIP Limited (3)................. Class D Common Stock, par 18,400 76.0% 76.0% value $0.01 per share
--------------- (1) The complete mailing address of this entity is 37 rue Notre-Dame, Luxembourg. (2) The complete mailing address of this entity is P.O. Box 1111, West Wind Building, George Town, Grand Cayman, Cayman Islands. (3) The complete mailing address of this entity is P.O. Box 2197, West Wind Building, George Town, Grand Cayman, Cayman Islands. The Applicant is not aware of any other person owning 10 percent or more of the Applicant's voting securities. UNDERWRITERS 6. Underwriters. ------------ (a) The following table sets forth (1) the name and complete mailing address of each person who, within three years prior to the date of the filing of this Application for Qualification, acted as an underwriter of any securities of the Applicant which were outstanding on the date of 6 this Application for Qualification and (2) the title of each class of securities underwritten.
Name of Underwriter Title of Class of Securities Underwritten ------------------- ----------------------------------------- Morgan Stanley & Co. Incorporated (1)........ (a) 11% Senior Subordinated Discount Notes due 2008, maturing August 1, 2008 (b) 13-1/2% Exchangeable Preferred Stock Mandatorily Redeemable 2010, par value $0.01 per share Chase Securities Inc. (2).................... (a) 11% Senior Subordinated Discount Notes due 2008, maturing August 1, 2008 (b) 13-1/2% Exchangeable Preferred Stock Mandatorily Redeemable 2010, par value $0.01 per share BT Alex. Brown Incorporated (2).............. (a) 11% Senior Subordinated Discount Notes due 2008, maturing August 1, 2008 (b) 13-1/2% Exchangeable Preferred Stock Mandatorily Redeemable 2010, par value $0.01 per share
--------------- (1) The complete mailing address of this entity is 1585 Broadway, New York, New York 10036. (2) The complete mailing address of this entity is c/o Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036. (b) No person is acting as a principal underwriter of the securities proposed to be offered pursuant to the New Indenture. CAPITAL SECURITIES 7. Capitalization. -------------- (a) The following tables set forth certain information with respect to each authorized class of securities of the Applicant as of March 15, 2001. Capital Stock
Number Number ------ ------ of Shares of Shares --------- --------- Title of Class Authorized Outstanding -------------- ---------- ----------- Class A Common Stock, par value $0.01 per share............................... 1,200,000 661,332 Class B Common Stock, par value $0.01 per share............................... 6,700,000 5,940,000 Class C Common Stock, par value $0.01 per share............................... 1,580,000 1,304,500 Class D Common Stock, par value $0.01 per share............................... 20,000 20,000 Common Stock, par value $0.01 per share....................................... 9,500,000 -- 13-1/2% Exchangeable Preferred Stock Mandatorily Redeemable 2010, par value $0.01 per share.................................... 250,000 55,715
7 Debt Securities
Amount Amount ------ ------ Title of Class Authorized Outstanding -------------- ---------- ----------- 11% Senior Subordinated Discount Notes due 2008 (maturing August 1, 2008)................... $170,000,000 principal $170,000,000 principal amount at maturity amount at maturity 13-1/2% Subordinated Exchange Debentures due 2010 (maturing August 1, 2010)................... $250,000,000 principal -- amount at maturity
(b) Holders of Class A Common Stock and Common Stock are entitled to one vote per share on all matters as to which stockholders may be entitled to vote pursuant to the DGCL. Holders of Class D Common Stock are entitled to 330 votes per share on all matters as to which stockholders may be entitled to vote pursuant to the DGCL. Holders of Class B Common Stock and Class C Common Stock have no voting rights except as Delaware law may otherwise provide. Pursuant to the Existing Certificate of Designation, the holders of Old Preferred Stock have no voting rights, except as Delaware law may otherwise provide and except that the holders of a majority of the then outstanding Old Preferred Stock, voting separately as a class, will be entitled to elect two additional directors to the Applicant's board of directors in the event that dividends on the Old Preferred Stock are not paid for any six quarterly periods, whether or not consecutive, or upon the occurrence of certain other events, including failure to comply with covenants contained in the Existing Certificate of Designation and failure to pay the mandatory redemption price for the Old Preferred Stock when due. Holders of Old Notes and 13-1/2% Subordinated Exchange Debentures due 2010 have no voting rights. INDENTURE SECURITIES 8. Analysis of Indenture Provisions. -------------------------------- The New Notes will be subject to the New Indenture among the Applicant, the subsidiaries of the Applicant listed on the signature pages thereto, as guarantors (the "Guarantors"), and United States Trust Company of New York, as trustee (the "Trustee"). The following is a general description of certain provisions of the New Indenture to be qualified, and the description is qualified in its entirety by reference to the form of New Indenture filed as an exhibit hereto. Capitalized terms used below and not defined herein have the same meanings as in the New Indenture. (a) Events of Default; Withholding of Notice. The New Indenture ---------------------------------------- will provide that each of the following constitutes an "Event of Default" with respect to the New Notes: (i) default for 30 days in the payment when due of interest on the New Notes (whether or not prohibited by the subordination provisions of the New Indenture); (ii) default in payment when due of the principal of or premium, if any, on the New Notes (whether or not prohibited by the subordination provisions of the New Indenture); 8 (iii) failure by the Applicant for 30 days after receipt of a notice specifying such failure to comply with certain provisions contained in the New Indenture regarding (A) repurchase of the New Notes at the option of the holders of the New Notes upon a Change of Control, (B) Asset Sales, (C) covenant with respect to Restricted Payments, (D) covenant with respect to the Incurrence of Debt or the Issuance of Preferred Stock or (E) covenant with respect to a Merger, Consolidation or Sale of all or Substantially all Assets; (iv) failure by the Applicant for 60 days after receipt of a notice specifying such failure to comply with any of its other agreements in the New Indenture or the New Notes; (v) the failure by the Applicant or any Restricted Subsidiary that is a Significant Subsidiary to pay any Debt within any applicable grace period after final maturity or acceleration by the holders thereof because of a default if the total amount of such Debt unpaid or accelerated at the time exceeds $15.0 million; (vi) any judgment or decree for the payment of money in excess of $15.0 million (net of any insurance or indemnity payments actually received in respect thereof prior to or within 90 days from the entry thereof, or to be received in respect thereof in the event any appeal thereof shall be unsuccessful) is entered against the Applicant or any Significant Subsidiary that is a Restricted Subsidiary and is not discharged, waived or stayed and either (A) an enforcement proceeding has been commenced by any creditor upon such judgment or decree or (B) there is a period of 90 days following the entry of such judgment or decree during which such judgment or decree is not discharged, waived or the execution thereof stayed; (vii) except as permitted by the New Indenture, any Note Guarantee by a Guarantor that is a Significant Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Note Guarantee; and (viii) certain events of bankruptcy or insolvency with respect to the Applicant or any of its Restricted Subsidiaries that is a Significant Subsidiary. The New Indenture will provide that if any event that is or with the passage of time or the giving of notice or both would be an Event of Default (any such event a "Default") occurs and is continuing and is known to the Trustee, the Trustee must mail to each Person in whose name a New Note is registered in the register for the New Notes (each such Person a "Holder") notice of the Default within the earlier of 90 days after it occurs or 30 days after it is known to a trust officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any New Note, the Trustee may withhold notice if and so long as a committee of its trust officers in good faith determines that withholding notice is in the interests of Holders. In addition, the Applicant is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof actually know of any Default that occurred during the previous year. The 9 Applicant also is required to deliver to the Trustee, forthwith upon any Senior Officer obtaining actual knowledge of any such Default, written notice of any event which would constitute certain Defaults, their status and what action the Applicant is taking or proposes to take in respect thereof. (b) Authentication and Delivery of Bonds; Application of Proceeds. ------------------------------------------------------------- The New Notes will be executed on behalf of the Applicant by one or more of the Chairman, President, Chief Executive Officer, Treasurer, Chief Financial Officer, Executive Vice President, Senior Vice President, Vice President, Assistant Vice President, Secretary, Assistant Secretary or any other officer reasonably acceptable to the Trustee (each an "Officer") of the Applicant. The signature of these Officers on the New Notes may be by facsimile or manual signature in the name and on behalf of the Applicant. A New Note shall not be valid until the Trustee or authenticating agent manually signs the certificate of authentication on the New Note. The signature shall be conclusive evidence that the New Note has been authenticated under the New Indenture. Because the New Notes are being issued in exchange for the Old Notes, there will be no proceeds from the issuance of the New Notes. (c) Release or Release and Substitution of Property. The New Notes ----------------------------------------------- will be unsecured, senior subordinated obligations of the Applicant and the Guarantors. (d) Satisfaction and Discharge. Upon the request of the Applicant, -------------------------- the New Indenture will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the New Notes, as expressly provided for in the New Indenture) and the Trustee, at the expense of the Applicant, will execute proper instruments acknowledging satisfaction and discharge of the New Indenture, any security agreements relating thereto, the New Notes and the Note Guarantees when (1) either (i) all the New Notes theretofore authenticated and delivered (other than destroyed, lost or stolen New Notes that have been replaced or paid and New Notes that have been subject to defeasance under the provisions contained in the New Indenture regarding Legal Defeasance or Covenant Defeasance have been delivered to the Trustee for cancellation or (ii) all New Notes not theretofore delivered to the Trustee for cancellation (A) have become due and payable, (B) will become due and payable at maturity within one year or (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and the expense, of the Applicant, and the Applicant has irrevocably deposited or caused to be deposited with the Trustee funds in trust for the purpose in an amount sufficient to pay and discharge the entire Debt on such New Notes not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any, on) and interest on the New Notes to the date of such deposit (in case of New Notes that have become due and payable) or to the Stated Maturity or redemption date, as the case may be; (2) the Applicant has paid or caused to be paid all sums payable under the New Indenture by the Applicant; or (3) the Applicant has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided in the New Indenture relating to the satisfaction and discharge of the New Indenture, the New Notes and the Note Guarantees have been complied with. The Applicant may, at its option and at any time, elect to have all of its and any Guarantor's obligations discharged with respect to the outstanding New Notes and any Note 10 Guarantees, as the case may be ("Legal Defeasance"), and cure all then existing Events of Default, except for (i) the rights of Holders of outstanding New Notes to receive payments in respect of the principal of, premium, if any, and interest on such New Notes when such payments are due from the trust referred to below, (ii) the Applicant's obligations with respect to the New Notes concerning issuing temporary New Notes, registration of New Notes, mutilated, destroyed, lost or stolen New Notes and the maintenance of an office or agency for payment and money for New Note payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Applicant's obligations in connection therewith and (iv) the Legal Defeasance provisions of the New Indenture. In order to exercise Legal Defeasance, (i) the Applicant or the Guarantors must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the New Notes, cash in U.S. dollars, non-callable Government Notes, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding New Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Applicant and the Guarantors must specify whether the New Notes are being defeased to maturity or to a particular redemption date; (ii) the Applicant or the Guarantors shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, (A) the Applicant and the Guarantors have received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Old Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, subject to customary assumptions and exclusions, the Holders of the outstanding New Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing); (iv) such Legal Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the New Indenture) to which the Applicant or any of its Subsidiaries is a party or by which the Applicant or any of its Subsidiaries is bound; (v) the Applicant or the Guarantors must have delivered to the Trustee an opinion of counsel, subject to customary assumptions and exclusions, to the effect that after the 91st day following the deposit, the trust funds will not be part of any "estate" formed by the bankruptcy or reorganization of the Applicant or subject to the "automatic stay" under the Bankruptcy Code or recoverable as a preferential transfer in a bankruptcy case of the Applicant; (vi) the Applicant or the Guarantors must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Applicant or the Guarantors with the intent of preferring the Holders of New Notes over the other creditors of the Applicant or the Guarantors, as applicable, with the intent of defeating, hindering, delaying or defrauding creditors of the Applicant or the Guarantors, as applicable, or others; and (vii) the Applicant must deliver to the Trustee an Officers' Certificate and an opinion of counsel (which opinion of counsel may be subject to customary assumptions and exclusions), each stating that all conditions precedent relating to the Legal Defeasance have been complied with. (e) Statement as to Compliance. The Applicant and each Guarantor -------------------------- will deliver to the Trustee within 120 days after the end of each fiscal year of the Applicant an Officers' 11 Certificate stating that in the course of the performance by the signers of their duties as Officers of the Applicant they would normally have knowledge of any Default or Event of Default and whether or not the signers know of any Default or Event of Default that occurred during such period. If they do have such knowledge, the certificate will describe the Default or Event of Default, its status and what action the Applicant is taking or proposes to take with respect thereto. 9. Other Obligors. -------------- The Applicant's payment obligations under each of the New Notes will be jointly and severally guaranteed on a senior subordinated basis by the Guarantors. The following table sets forth the name of each Guarantor. The complete mailing address of each Guarantor is c/o Harborside Healthcare Corporation, One Beacon Street, Boston, Massachusetts 02108. Name of Guarantor ----------------- Belmont Nursing Center Corp. Bridgewater Assisted Living Limited Partnership 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 Connecticut Limited Partnership Harborside Danbury Limited Partnership Harborside Healthcare Network Limited Partnership Harborside Health I Corporation Harborside Healthcare Advisors Limited Partnership Harborside Healthcare Baltimore Limited Partnership Harborside Healthcare Limited Partnership Harborside Homecare Limited Partnership Harborside Massachusetts Limited Partnership Harborside North Toledo Limited Partnership Harborside Rehabilitation Limited Partnership Harborside of Cleveland Limited Partnership Harborside of Dayton Limited Partnership Harborside of Florida Limited Partnership Harborside of Ohio Limited Partnership Harborside of Rhode Island Limited Partnership Harborside Toledo Corp. KHI Corporation 12 Name of Guarantor ----------------- Maryland Harborside Corp. New Jersey Harborside Corp. Oakhurst Manor Nursing Center Corp. Orchard Ridge Nursing Center Corp. Riverside Retirement Limited Partnership Sailors, Inc. Contents of Application for Qualification. This Application for Qualification ----------------------------------------- comprises-- (a) Pages numbered 1 to 15, consecutively. (b) The statement of eligibility and qualification of each trustee under the indenture to be qualified. (c) The following exhibits in addition to those filed as a part of the statement of eligibility and qualification of each trustee: Exhibit T3A.1..................... Amended and Restated Certificate of ------------- Incorporation of the Applicant, incorporated herein by reference to Exhibit 3.1.1 to Amendment No. 1 to the Applicant's Registration Statement on Form S-4 filed on October 27, 1998 (Registration No. 333-64679). Exhibit T3A.2..................... Certificate of Designation of the ------------- Applicant with respect to the Applicant's 13-1/2% Exchangeable Preferred Stock Mandatorily Redeemable 2010, incorporated herein by reference to Exhibit 3.1.2 to the Applicant's Registration Statement on Form S-4 filed on September 29, 1998 (Registration No. 333-64679). Exhibit T3B....................... Bylaws of the Applicant, incorporated ----------- herein by reference to Exhibit 3.2.2 to the Applicant's Registration Statement on Form S-4 filed on May 1, 1998 (Registration No. 333-51633). Exhibit T3C*...................... Form of New Indenture among the ----------- Applicant, the Guarantors and the Trustee. Exhibit T3E.1..................... Offering Memorandum and Consent ------------- Solicitation Statement. Exhibit T3E.2..................... Consent and Letter of Transmittal. ------------- Exhibit T3E.3..................... Letter to Brokers, Dealers, Commercial ------------- Banks, Trust Companies and Other Nominees. Exhibit T3E.4..................... Letter to Clients for Use by Brokers, ------------- Dealers, Commercial Banks, Trust Companies and Other Nominees. Exhibit T3F*...................... Cross reference sheet showing the ----------- location in the New Indenture of the provisions inserted therein pursuant to Sections 310 through 318(a), inclusive, of the Trust Indenture Act of 1939 (to be included as part of Exhibit T3C). 13 ------------------------- *........To be filed by amendment. 14 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Applicant, Harborside Healthcare Corporation, a corporation organized and existing under the laws of the State of Delaware, has duly caused this Application for Qualification to be signed on its behalf by the undersigned, thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the City of Boston, Commonwealth of Massachusetts, on April 3, 2001. (SEAL) HARBORSIDE HEALTHCARE CORPORATION By: /s/ William H. Stephan ---------------------- Name: William H. Stephan Title: Senior Vice President Chief Financial Officer Attest: /s/ K. Scott Griggs ------------------- Name: K. Scott Griggs Title: Secretary 15 FORM T-1 ============================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE __________________ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) _______ __________________ UNITED STATES TRUST COMPANY OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-3818954 (Jurisdiction of incorporation (I.R.S. employer if not a U.S. national bank) identification No.) 114 West 47th Street 10036-1532 New York, NY (Zip Code) (Address of principal executive offices) __________________ Harborside Healthcare Corporation (Exact name of obligor as specified in its charter) Delaware 04-3307188 (State or other jurisdiction of (I.R.S. employer incorporation or organization) Identification No.) One Beacon Street Boston, Massachusetts 02108 (Address of principal executive offices) (Zip Code) __________________ 12% Senior Subordinated Discount Notes due 2007 (Maturing August 1, 2007) and related Note Guarantees (Title of the indenture securities) ============================================== -2- GENERAL 1. General Information ------------------- Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Reserve Bank of New York (2nd District), New York, New York (Board of Governors of the Federal Reserve System) Federal Deposit Insurance Corporation, Washington, D.C. New York State Banking Department, Albany, New York (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. 2. Affiliations with the Obligor ----------------------------- If the obligor is an affiliate of the trustee, describe each such affiliation. None 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15: Harborside Healthcare Corporation, currently is not in default under any of its outstanding securities for which United States Trust Company of New York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of Form T-1 are not required under General Instruction B. 16. List of Exhibits ---------------- T-1.1 -- Organization Certificate, as amended, issued by the State of New York Banking Department to transact business as a Trust Company, is incorporated by reference to Exhibit T-1.1 to Form T-1 filed on September 15, 1995 with the Commission pursuant to the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990 (Registration No. 33- 97056). T-1.2 -- Included in Exhibit T-1.1. T-1.3 -- Included in Exhibit T-1.1. -3- 16. List of Exhibits ---------------- (cont'd) T-1.4 -- The By-Laws of United States Trust Company of New York, as amended, is incorporated by reference to Exhibit T- 1.4 to Form T-1 filed on September 15, 1995 with the Commission pursuant to the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990 (Registration No. 33-97056). T-1.6 -- The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990. T-1.7 -- A copy of the latest report of condition of the trustee pursuant to law or the requirements of its supervising or examining authority. NOTE ==== As of March 28, 2001, the trustee had 2,999,029 shares of Common Stock outstanding, all of which are owned by its parent company, U.S. Trust Corporation. The term "trustee" in Item 2, refers to each of United States Trust Company of New York and its parent company, U. S. Trust Corporation. In answering Item 2 in this statement of eligibility as to matters peculiarly within the knowledge of the obligor or its directors, the trustee has relied upon information furnished to it by the obligor and will rely on information to be furnished by the obligor and the trustee disclaims responsibility for the accuracy or completeness of such information. __________________ Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, United States Trust Company of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 29th day of March, 2001. UNITED STATES TRUST COMPANY OF NEW YORK, Trustee /s/ James E. Logan -------------------------- By: James E. Logan Vice President Exhibit T-1.6 ------------- The consent of the trustee required by Section 321(b) of the Act. United States Trust Company of New York 114 West 47th Street New York, NY 10036 January 7, 1997 Securities and Exchange Commission 450 5th Street, N.W. Washington, DC 20549 Gentlemen: Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, and subject to the limitations set forth therein, United States Trust Company of New York ("U.S. Trust") hereby consents that reports of examinations of U.S. Trust by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. Very truly yours, UNITED STATES TRUST COMPANY OF NEW YORK /s/ Gerard F. Ganey -------------------------- By: Gerard F. Ganey Senior Vice President EXHIBIT T-1.7 UNITED STATES TRUST COMPANY OF NEW YORK CONSOLIDATED STATEMENT OF CONDITION SEPTEMBER 30, 2000 ------------------ ($ IN THOUSANDS) ASSETS ------ Cash and Due from Banks 119,590 Short-Term Investments 65,126 Securities, Available for Sale 561,915 Loans 2,780,062 Less: Allowance for Credit Losses 17,793 ---------- Net Loans 2,762,269 Premises and Equipment 64,452 Other Assets 262,004 ---------- Total Assets $3,835,356 ========== LIABILITIES ----------- Deposits: Non-Interest Bearing $ 763,271 Interest Bearing 2,060,401 ---------- Total Deposits 2,823,672 Short-Term Credit Facilities 516,480 Accounts Payable and Accrued Liabilities 192,956 ---------- Total Liabilities $3,533,108 ========== STOCKHOLDER'S EQUITY -------------------- Common Stock 14,995 Capital Surplus 126,551 Retained Earnings 162,347 Unrealized Loss on Securities Available for Sale (Net of Taxes) (1,645) ---------- Total Stockholder's Equity 302,248 ---------- Total Liabilities and Stockholder's Equity $3,835,356 ========== I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do hereby declare that this Statement of Condition has been prepared in conformance with the instructions issued by the appropriate regulatory authority and is true to the best of my knowledge and belief. Richard E. Brinkmann, Managing Director & Controller December 22, 2000 EXHIBIT INDEX Exhibit No. Description ----------- ----------- Exhibit T3A.1..................... Amended and Restated Certificate of ------------- Incorporation of the Applicant, incorporated herein by reference to Exhibit 3.1.1 to Amendment No. 1 to the Applicant's Registration Statement on Form S-4 filed on October 27, 1998 (Registration No. 333-64679). Exhibit T3A.2..................... Certificate of Designation of the ------------- Applicant with respect to the Applicant's 13-1/2% Exchangeable Preferred Stock Mandatorily Redeemable 2010, incorporated herein by reference to Exhibit 3.1.2 to the Applicant's Registration Statement on Form S-4 filed on September 29, 1998 (Registration No. 333-64679). Exhibit T3B....................... Bylaws of the Applicant, incorporated ----------- herein by reference to Exhibit 3.2.2 to the Applicant's Registration Statement on Form S-4 filed on May 1, 1998 (Registration No. 333-51633). Exhibit T3C*...................... Form of New Indenture among the ----------- Applicant, the Guarantors and the Trustee. Exhibit T3E.1..................... Offering Memorandum and Consent ------------- Solicitation Statement. Exhibit T3E.2..................... Consent and Letter of Transmittal. ------------- Exhibit T3E.3..................... Letter to Brokers, Dealers, Commercial ------------- Banks, Trust Companies and Other Nominees. Exhibit T3E.4..................... Letter to Clients for Use by Brokers, ------------- Dealers, Commercial Banks, Trust Companies and Other Nominees. Exhibit T3F*...................... Cross reference sheet showing the ----------- location in the New Indenture of the provisions inserted therein pursuant to Sections 310 through 318(a), inclusive, of the Trust Indenture Act of 1939 (to be included as part of Exhibit T3C). _____________________________________ * To be filed by amendment.