-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KEBrosX+1n+2MiLyoDMb8/g3sq2+zPj4+A3mAaGd3Aro8vlGGRuaBaltFFlN7dOm flGzUczAal1d7MToSCvksA== 0000950116-99-000234.txt : 19990217 0000950116-99-000234.hdr.sgml : 19990217 ACCESSION NUMBER: 0000950116-99-000234 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MULTICARE COMPANIES INC CENTRAL INDEX KEY: 0000890925 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 223152527 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22090 FILM NUMBER: 99540454 BUSINESS ADDRESS: STREET 1: 101 EAST STATE STREET STREET 2: OMITTED INTENTIONALLY CITY: KENNETT SQUARE STATE: PA ZIP: 19348 BUSINESS PHONE: (610) 925-4144 MAIL ADDRESS: STREET 1: 411 HACKENSACK AVENUE CITY: HACKENSACK STATE: NJ ZIP: 07601 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1998 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission File Number: 34-22090 THE MULTICARE COMPANIES, INC. (Exact name of registrant as specified in its charter) Delaware 22-3152527 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 101 East State Street Kennett Square, Pennsylvania 19348 (Address, including zip code, of principal executive offices) (610) 444-6350 (Registrant's telephone number including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES [x] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Class Outstanding at February 12, 1999 - ----------------------------- -------------------------------- Common Stock ($.01 Par Value) 100 THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Table of Contents -----------------
Page ---- CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS .............................1 Part I: FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets December 31, 1998 (Unaudited) and September 30, 1998 ................2 Consolidated Statements of Operations Three months ended December 31, 1998 and 1997 (Unaudited) ...........3 Consolidated Statements of Cash Flows Three months ended December 31, 1998 and 1997 (Unaudited) ...........4 Notes to Consolidated Financial Statements ........................5-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ....................................... 8-15 Item 3. Quantitative and Qualitative Disclosures about Market Risk ........16 Part II: OTHER INFORMATION ...........................................................17 SIGNATURES ..................................................................18
THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS Certain oral statements made by management from time to time and certain statements contained herein, including certain statements in "Management's Discussion and Analysis of Financial Condition and Results of Operations" such as statements concerning Medicaid and Medicare programs and the Company's ability to meet its liquidity needs and control costs, certain statements in "Qualitative and Quantitative Disclosures about Market Risk", certain statements in Notes to Unaudited Condensed Consolidated Financial Statements, such as certain Pro Forma Financial Information; and other statements contained herein regarding matters which are not historical facts are forward looking statements (as such term is defined in the Securities Act of 1933) and because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward looking statements. Factors that could cause actual results to differ materially include, but are not limited to those discussed below: 1. Changes in the United States healthcare system, including changes in reimbursement levels under Medicaid and Medicare, implementation of the Medicare prospective payment system and consolidated billing and other changes in applicable government regulations that might affect the profitability of the Company. 2. The Company's substantial indebtedness and significant debt service obligations. 3. The Company's ability to secure the capital and the related cost of such capital necessary to fund its future growth through acquisition and development, as well as internal growth. 4. The Company's continued ability to operate in a heavily regulated environment and to satisfy regulatory authorities, thereby avoiding a number of potentially adverse consequences, such as the imposition of fines, temporary suspension of admission of patients, restrictions on the ability to acquire new facilities, suspension or decertification from Medicaid or Medicare programs, and, in extreme cases, revocation of a facility's license or the closure of a facility, including as a result of unauthorized activities by employees. 5. The occurrence of changes in the mix of payment sources utilized by the Company's customers to pay for the Company's services. 6. The adoption of cost containment measures by private pay sources such as commercial insurers and managed care organizations, as well as efforts by governmental reimbursement sources to impose cost containment measures. 7. The level of competition in the Company's industry, including without limitation, increased competition from acute care hospitals, providers of assisted and independent living and providers of home health care and changes in the regulatory system, such as changes in certificate of need laws in the states in which the Company operates or anticipates operating in the future that facilitate such competition. 8. The Company's ability to identify suitable acquisition candidates, to consummate or complete development projects, or to profitably operate or successfully integrate enterprises into the Company's other operations. 9. The Company and its payors' and suppliers ability to implement a Year 2000 readiness program. These and other factors have been discussed in more detail in the Company's periodic reports, including its Annual Report on Form 10-K for the fiscal year ended September 30, 1998 PART I: FINANCIAL INFORMATION Item 1. Financial Statements THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share data)
December 31, September 30, 1998 1998 ------------ ------------- (Unaudited) Assets ------ Current Assets: Cash and cash equivalents $ 10,384 $ 11,344 Accounts receivable, net 123,388 114,210 Prepaid expenses and other current assets 19,148 16,208 Deferred taxes - current portion 1,702 2,117 ---------- ---------- Total current assets 154,622 143,879 ---------- ---------- Property, plant and equipment, net 718,920 719,112 Goodwill, net 779,766 778,231 Other assets 57,966 57,733 ---------- ---------- $1,711,274 $1,698,955 ========== ========== Liabilities and Stockholders' Equity ------------------------------------ Current Liabilities: Accounts payable $ 33,923 $ 30,188 Accrued liabilities 56,996 60,226 Current portion of long-term debt 31,673 30,647 ---------- ---------- Total current liabilities 122,592 121,061 ---------- ---------- Long-term debt 735,522 725,194 Deferred taxes 104,718 105,023 Due to Genesis Health Ventures, Inc. and other liabilities 17,782 14,439 Stockholders' Equity: Common stock, par value $.01, 100 shares authorized 100 shares issued and outstanding --- --- Additional paid-in-capital 733,000 733,000 Retained earnings (deficit) (2,340) 238 ---------- ---------- Total stockholders' equity 730,660 733,238 ---------- ---------- $1,711,274 $1,698,955 ========== ==========
See accompanying notes to consolidated financial statements. 2 THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (In thousands) Three Months Ended December 31, -------------------- 1998 1997 ---- ---- Net revenues $168,484 $185,778 Expenses: Operating expense 129,812 141,343 Management fee 10,051 11,645 Depreciation and amortization 11,281 11,784 Lease expense 3,124 3,443 Interest expense, net 16,185 14,718 -------- -------- Total expenses 170,453 182,933 -------- -------- Earnings (loss) before income taxes (1,969) 2,845 Income tax provision 609 1,487 -------- -------- Net income (loss) $(2,578) $ 1,358 ======== ======== See accompanying notes to consolidated financial statements. 3 THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Three months ended December 31, --------------------- 1998 1997 ---- ---- Cash flows from operating activities: Net cash provided by (used in) operating activities $ (9,339) $ 12,423 Cash flows from investing activities: Capital expenditures (5,261) (11,391) Other assets and liabilities 2,285 (11,981) -------- ---------- Net cash used in investing activities (2,976) (23,372) Cash flows from financing activities: Proceeds from long-term debt 83,705 1,608,675 Repayments of long-term debt (72,350) (874,373) Equity contribution -- 733,000 Proceeds from sale of therapy business -- 24,000 Purchase of shares in tender offer -- (921,326) Debt and other financing obligation repayments in connection with merger -- (446,794) Severance, option payouts and transaction fees in connection with merger -- (91,205) Debt issuance costs -- (21,582) -------- ---------- Net cash provided by financing activities 11,355 10,395 -------- ---------- Decrease in cash and cash equivalents (960) (554) Cash and cash equivalents at beginning of period 11,344 2,118 -------- ---------- Cash and cash equivalents at end of period $ 10,384 $ 1,564 ======== ==========
See accompanying notes to consolidated financial statements. 4 THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 1998 (Unaudited) (In thousands, except share data) (1) Organization and Basis of Presentation The Multicare Companies, Inc. and Subsidiaries ("Multicare" or the "Company") own, operate and manage skilled eldercare and assisted living facilities which provide long-term care and specialty medical services in selected geographic regions within the eastern and midwestern United States. In addition, the Company operated institutional pharmacies, medical supply companies, outpatient rehabilitation centers and other ancillary healthcare businesses before the Merger (as defined below). As a result of the Merger of Genesis ElderCare Acquisition Corp. with the Company, Genesis Health Ventures, Inc. ("Genesis") owns approximately 44% of Genesis ElderCare Corp., which owns 100% of the outstanding capital stock of the Company. The Company and Genesis have entered into a management agreement pursuant to which Genesis manages the Company's operations. The financial information as of December 31, 1998, and for the three months ended December 31, 1998 and 1997, is unaudited and has been prepared in conformity with the accounting principles and practices as reflected in the Company's audited annual financial statements. The unaudited financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position as of December 31, 1998 and the operating results for the three months ended December 31, 1998 and 1997 and the cash flows for the three months ended December 31, 1998 and 1997. Results for interim periods are not necessarily indicative of those to be expected for the year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto incorporated in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1998. (2) Tender Offer and Merger and Recent Acquisitions On October 9, 1997, Genesis ElderCare Acquisition Corp. ("Acquisition Corp."), a wholly-owned subsidiary of Genesis ElderCare Corp., a Delaware corporation formed by Genesis Health Ventures, Inc. ("Genesis"), The Cypress Group L.L.C. (together with its affiliates, "Cypress"), TPG Partners II, L.P. (together with its affiliates, "TPG"), and Nazem, Inc. (together with its affiliates, "Nazem"), acquired 99.65% of the shares of common stock of Multicare, pursuant to a tender offer commenced on June 20, 1997 (the "Tender Offer"). On October 10, 1997, Genesis ElderCare Corp. completed the merger (the "Merger") of Acquisition Corp. with and into Multicare in accordance with the Agreement and Plan of Merger (the "Merger Agreement") dated as of June 16, 1997 by and among Genesis ElderCare Corp., Acquisition Corp., Genesis and Multicare. Upon consummation of the Merger, Multicare became a wholly-owned subsidiary of Genesis ElderCare Corp. In connection with the Merger, Multicare and Genesis entered into a management agreement (the "Management Agreement") pursuant to which Genesis manages Multicare's operations. The Management Agreement has a term of five years with automatic renewals for two years unless either party terminates the Management Agreement. 5 THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements, Continued. (2) Tender Offer and Merger and Recent Acquisitions, Continued Genesis earns a fee of six percent of Multicare's net revenues for its services under the Management Agreement provided that payment of such fee in respect of any month in excess of the greater of (i) $1,992 and (ii) four percent of Multicare's consolidated net revenues for such month, shall be subordinate to the satisfaction of Multicare's senior and subordinate debt covenants; and provided, further, that payment of such fee shall be no less than $23,900 in any given year. Under the Management Agreement, Genesis is responsible for Multicare's non-extraordinary sales, general and administrative expenses (other than certain specified third-party expenses), and all other expenses of Multicare are paid by Multicare. Genesis also entered into an asset purchase agreement (the "Therapy Sale Agreement") with Multicare and certain of its subsidiaries pursuant to which Genesis acquired all of the assets used in Multicare's outpatient and inpatient rehabilitation therapy business for $24,000 subject to adjustment (the "Therapy Sale") and a stock purchase agreement (the "Pharmacy Sale Agreement") with Multicare and certain subsidiaries pursuant to which Genesis acquired all of the outstanding capital stock and limited partnership interests of certain subsidiaries of Multicare that are engaged in the business of providing institutional pharmacy services to third parties for $50,000 subject to adjustment (the "Pharmacy Sale"). The Company completed the Pharmacy Sale effective January 1, 1998. Genesis ElderCare Corp. (the "Multicare Parent") paid approximately $1,492,000 to (i) purchase the shares pursuant to the Tender Offer and the Merger, (ii) pay fees and expenses incurred in connection with the completion of the Tender Offer, Merger and the financing transactions in connection therewith, (iii) refinance certain indebtedness of Multicare and (iv) make certain cash payments to employees. Of the funds required to finance the foregoing, approximately $733,000 were furnished to Acquisition Corp. as capital contributions by the Multicare Parent from the sale by Genesis ElderCare Corp. of its Common Stock ("Genesis ElderCare Corp. Common Stock") to Cypress, TPG, Nazem and Genesis. Cypress, TPG and Nazem purchased shares of Genesis ElderCare Corp. Common Stock for a purchase price of $210,000, $199,500 and $10,500, respectively, and Genesis purchased shares of Genesis ElderCare Corp. Common Stock for a purchase price of $325,000 in consideration for approximately 44% of the Common Stock of the Multicare Parent. The balance of the funds necessary to finance the foregoing came from (i) the proceeds of loans from a syndicate of lenders in the aggregate amount of $525,000 and (ii) $246,800 from the sale of 9% Senior Subordinated Notes due 2007 (the "9% Notes") sold by Acquisition Corp. on August 11, 1997. In connection with the Merger, Genesis, Cypress, TPG and Nazem entered into an agreement (the "Put/Call Agreement") pursuant to which, among other things, Genesis will have the option, on the terms and conditions set forth in the Put/Call Agreement, to purchase (the "Call") Genesis ElderCare Corp. Common Stock held by Cypress, TPG and Nazem commencing on October 9, 2001 and for a period of 270 days thereafter, at a price determined pursuant to the terms of the Put/Call Agreement. Cypress, TPG and Nazem will have the option, on the terms and conditions set forth in the Put/Call Agreement, to require Genesis to purchase (the "Put") such Genesis ElderCare Corp. Common Stock commencing on October 9, 2002 and for a period of one year thereafter, at a price determined pursuant to the Put/Call Agreement. The prices determined for the Put and Call are based on a formula that calculates the equity value attributable to Cypress', TPG's and Nazem's Genesis ElderCare Corp. Common Stock, plus a portion of the Genesis pharmacy business (the "Calculated Equity Value"). The Calculated Equity Value will be determined based upon a multiple of Genesis ElderCare Corp.'s earnings before interest, taxes, depreciation, amortization and rental expenses, as adjusted ("EBITDAR") after deduction of certain liabilities, plus a portion of the EBITDAR related to the Genesis pharmacy business. The multiple to be applied to EBITDAR will depend on whether the Put or the Call is being exercised. Any payment to Cypress, TPG or Nazem under the Call or the Put may be in the form of cash or Genesis common stock at Genesis' option. 6 (2) Tender Offer and Merger and Recent Acquisitions, Continued Upon exercise of the Call, Cypress, TPG and Nazem will receive at a minimum their original investment plus a 25% compound annual return thereon regardless of the Calculated Equity Value. Any additional Calculated Equity Value attributable to Cypress', TPG's or Nazem's Genesis ElderCare Corp. Common Stock will be determined on the basis set forth in the Put/Call Agreement which provides generally for additional Calculated Equity Value of Genesis ElderCare Corp. to be divided based upon the proportionate share of the capital contributions of the stockholders to Genesis ElderCare Corp. Upon exercise of the Put by Cypress, TPG or Nazem, there will be no minimum return to Cypress, TPG or Nazem; any payment to Cypress, TPG or Nazem will be limited to Cypress', TPG's or Nazem's share of the Calculated Equity Value based upon a formula set forth in the terms of the Put/Call Agreement. Cypress', TPG's and Nazem's rights to exercise the Put will be accelerated upon an event of bankruptcy of Genesis, a change of control of Genesis or an extraordinary dividend or distribution or the occurrence of the leverage recapitalization of Genesis. Upon an event of acceleration or the failure by Genesis to satisfy its obligations upon exercise of the Put, Cypress, TPG and Nazem will have the right to terminate the Stockholders' Agreement and Management Agreement and to control the sale or liquidation of Genesis ElderCare Corp. In the event of such sale, the proceeds from such sale will be distributed among the parties as contemplated by the formula for the Put option exercise price and Cypress, TPG and Nazem will retain a claim against Genesis for the difference, if any, between the proceeds of such sale and the Put option exercise price. The following 1998 pro forma financial information has been prepared as if the Pharmacy Sale had been completed on October 1, 1997. The pro forma financial information does not necessarily reflect the results of operations that would have occurred had the transactions occurred at the beginning of the respective periods presented. Three months ended December 31, 1997 ------------------ Net revenues $166,036 Income before income taxes 1,764 Net income $ 847 7 THE MULTICARE COMPANIES, INC. AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Upon consummation of the Merger, the Company and Genesis entered into the Management Agreement pursuant to which Genesis manages the Company's operations. Under Genesis' management, the Company's strategy is to integrate the talents of case managers, comprehensive discharge planning and, to provide cost effective care management to achieve superior outcomes and return the Company's customers to the community. Genesis' management believes that achieving improved customer outcomes will result in increased utilization of specialty medical services and a broader base of repeat customers in the Company's network. Moreover, the Company believes that this strategy will lead to a high quality payor mix and continued high levels of occupancy. Genesis' management also will focus on the revenue and cost opportunities presented through the further integration of the Company's acquisitions. It is contemplated that the Company will do little, if any, new acquisitions or new construction after the Merger; accordingly, capital expenditures after the Merger have decreased significantly from historical levels. The Tender Offer and Merger On October 9, 1997 Acquisition Corp., Cypress, TPG and Nazem acquired 99.65% of the shares of common stock of Multicare, pursuant to the Tender Offer commenced on June 20, 1997. On October 10, 1997, Genesis ElderCare Corp. completed the Merger of Acquisition Corp. with and into Multicare in accordance with the Merger Agreement. Upon consummation of the Merger, Multicare became a wholly-owned subsidiary of Genesis ElderCare Corp. Multicare is in the business of providing eldercare and specialty medical services in selected geographic regions. In connection with the Merger, Multicare and Genesis entered into the Management Agreement pursuant to which Genesis manages Multicare's operations. The Management Agreement has a term of five years with automatic renewals for two years unless either party terminates the Management Agreement. Genesis is paid a fee of six percent of Multicare's net revenues for its services under the Management Agreement provided that payment of such fee in respect of any month in excess of the greater of (i) $1,991,666 and (ii) four percent of Multicare's consolidated net revenues for such month, shall be subordinate to the satisfaction of Multicare's senior and subordinate debt covenants; and provided, further, that payment of such fee shall be no less than $23,900,000 million in any given year. Under the Management Agreement, Genesis is responsible for Multicare's non-extraordinary sales, general and administrative expenses (other than certain specified third-party expenses), and all other expenses of Multicare are paid by Multicare. Genesis also entered into the Therapy Sale Agreement with Multicare and certain of its subsidiaries pursuant to which Genesis acquired all of the assets used in Multicare's outpatient and inpatient rehabilitation therapy business for $24,000,000 subject to adjustment and the Pharmacy Sale Agreement with Multicare and certain subsidiaries pursuant to which Genesis will acquire all of the outstanding capital stock and limited partnership interest of certain subsidiaries of Multicare that are engaged in the business of providing institutional pharmacy services to third parties for $50,000,000, subject to adjustment. The Company completed the Therapy Sale and the Pharmacy Sale effective October 1, 1997 and January 1, 1998, respectively. Genesis ElderCare Corp. (the "Multicare Parent") paid approximately $1,492,000,000 to (i) purchase the shares pursuant to the Tender Offer and the Merger, (ii) pay fees and expenses incurred in connection with the completion of the Tender Offer, Merger and the financing transactions in connection with therewith, (iii) refinance certain indebtedness of Multicare and (iv) make certain cash payments to employees. Of the funds required to finance the foregoing, approximately $733,000,000 were furnished to Acquisition Corp. as capital contributions by the Multicare Parent from the sale by Genesis ElderCare Corp. of its Common Stock ("Genesis Eldercare Corp. Common Stock") to Cypress, TPG, Nazem and Genesis. Cypress, TPG and Nazem purchased shares of Genesis ElderCare Corp. common stock for a purchase price of $210,000,000, $199,500,000 and $10,500,000, respectively, and Genesis purchased shares of Genesis ElderCare Corp. common stock for a purchase price of $325,000,000 in consideration for approximately 44% of the common stock of the Multicare Parent. The balance of the funds necessary to finance the foregoing came from (i) the proceeds of loans from a syndicate of lenders in the aggregate amount of $525,000,000 and (ii) $250,000,000 from the sale of 9% Senior Subordinated Notes due 2007 (the "9% Notes") sold by Acquisition Corp. on August 11, 1997. 8 Results of Operations Net revenues. Net revenues for the three months ended December 31, 1998 decreased $17.3 million or 9.3% from the same period last year to $168.5 million. The decrease in revenues in the first quarter of fiscal 1999 is comprised of approximately $20.8 million relating to the exclusion of the results of the pharmacy business due to the Pharmacy Sale offset by approximately $3.5 million of internal growth. The internal growth of revenues resulted mainly from increases in payor rates and development and opening of additional beds. The average rate per patient day increased $2 per day from the same period last year. The Company's quality mix of private, Medicare and insurance patient days was 41.4% of patient days for the three months ended December 31, 1998 compared to 43.6% in the similar period of last year. Occupancy rates were 91.1% for the three months ended December 31, 1998 compared to 92.0% in the similar period of last year. Operating Expense. Operating expenses for the three months ended December 31, 1998 decreased $11.5 million or 8.2% from the comparable period last year to $129.8 million. A decrease of $16.3 million relates to the exclusion of results for the pharmacy businesses due to the Pharmacy Sale. The offsetting increase resulted primarily from higher salaries, wages and benefits and expanded nursing staffing levels to support higher patient acuities and more complex product lines such as subacute and Alzheimers care. Facility operating margins were 23.0% and 23.9% for the three months ended December 31, 1998 and 1997, respectively. Management Fee. In connection with the Management Agreement, Genesis manages Multicare's operations for a fee of approximately six percent of Multicare's non-extraordinary (as defined by the Management Agreement) sales and is responsible for Multicare's corporate general and administrative expenses other than certain specified third party expenses. Management fees decreased by $1.6 million or 14% to $10.1 million, due to the exclusion of the results of the pharmacy business due to the Pharmacy Sale. Lease Expense. Lease expense for the three months ended December 31, 1998 decreased 9.3% to $3.1 million. The decrease relates to the sale of certain leased facilities in connection with the Pharmacy Sale. Depreciation and Amortization. Depreciation and amortization expense for the three months ended December 31, 1998 decreased $0.5 or 4.3% from the prior period to $11.3 million. Depreciation decreased due to the sale of certain plant, property, and equipment in connection with the Pharmacy Sale. Interest Expense, net. Interest expense, net for the three months ended December 31, 1998 increased $1.5 million or 10% to $16.2 million from the same period in the prior year. The increase is due to the increase in average debt balance of approximately $58 million in the current year period over the prior period. This is due in part to incremental borrowings incurred to finance the Merger which was not outstanding for the entire prior quarter. Income Tax Expense. The provision for income taxes decreased by $0.9 million to $0.6 million due to lower anticipated pre-tax earnings in the current year. The majority of the tax provision relates to non-deductible goodwill amortization resulting from the Merger which is partially offset in the current year by a tax benefit related to the loss before income taxes. Liquidity and Capital Resources The Company maintains adequate working capital from operating cash flows and lines of credit for continuing operations, debt service, and anticipated capital expenditures. At December 31, 1998 and September 30, 1998, the Company had working capital of $32.0 and $22.8 million, respectively. Cash flow used in operations was $9.3 million for the three months ended December 31, 1998 compared to cash flow provided by operations of $12.4 million in the prior period. Net accounts receivable at December 31, 1998 were $123.4 million compared to $114.2 million as of September 30, 1998. The increase in net accounts receivable is attributable to the timing of third-party interim and settlement payments and the utilization of specialty medical services for higher acuity level patients. Legislative and regulatory action and government budgetary constraints will change the timing of payments and reimbursement rates of the Medicare and Medicaid programs in the future. These changes could have a material adverse effect on the Company's future operating results and cash flows. 9 In connection with the Merger, Multicare entered into three term loans and a revolving credit facility of up to $525 million, in the aggregate (collectively, the "Senior Facilities"), provided by a syndicate of banks and other financial institutions (collectively, the "Lenders") led by Mellon Bank, N.A., as administrative agent (the "Administrative Agent"), pursuant to a certain credit agreement (the "Long Term Credit Agreement") dated as of October 14, 1997. The Senior Facilities were provided for the purpose of (i) refinancing certain short term facilities in the aggregate principal amount of $431.6 million which were funded on October 9, 1997 to acquire the Shares in the Tender Offer, refinance certain indebtedness of Multicare (including the Company's bank credit and lease facilities with NationsBank, N.A. the Company's 7% Convertible Subordinated Debentures and the Company's 12.5% Senior Subordinated Notes) and pay fees and expenses related to the transactions, (ii) funding interest and principal payments on such facilities and on certain remaining indebtedness and (iii) funding working capital and general corporate purposes. The Senior Facilities consist of: (1) a $169 million six year term loan (the "Tranche A Term Facility"); (2) a $148.1 million seven year term loan (the "Tranche B Term Facility"); (3) a $49.2 million term loan maturing on June 1, 2005 (the "Tranche C Term Facility"); (4) a $125 million six year revolving credit facility (the "Revolving Credit Facility") which includes Swing Loans (collectively, the "Swing Loan Facility") in integral principal multiples of $500,000 up to an aggregate unpaid principal amount of $10 million. The Tranche A Term Facility, Tranche B Term Facility and Tranche C Term Facility are subject to amortization in quarterly installments, commencing at the end of the first calendar quarter after the date of the consummation of the Merger. The Revolving Credit Facility will mature on September 30, 2003. All net proceeds received by Multicare from (i) the sale of assets of Multicare or its subsidiaries other than sales in the ordinary course of business (and other than the sales of Multicare's rehabilitation therapy business and pharmacy business to the extent that there are amounts outstanding under the Revolving Credit Facility) and (ii) any sale of common stock or debt securities of Multicare in respect of common stock will be applied as a mandatory prepayment. Fifty percent of Excess Cash Flow must be applied to the Senior Facilities and shall be payable annually. The Long Term Credit Agreement contains a number of covenants that, among other things, restrict the ability of Multicare and its subsidiaries to dispose of assets, incur additional indebtedness, make loans and investments, pay dividends, engage in mergers or consolidations, engage in certain transactions with affiliates and change control of capital stock, prepay debt, make material changes in accounting and reporting practices, create liens on assets, give a negative pledge on assets, make acquisitions and amend or modify documents. In addition, the Long Term Credit Agreement requires that Multicare and its affiliates maintain the Management Agreement as well as comply with certain financial covenants. The Third Amendment to the Credit Facility ("the Amendment"), effective February 12, 1999, made the financial covenants for certain periods less restrictive. The Senior Facilities are secured by a first priority security interest in all of the (i) stock of Multicare, (ii) stock, partnership interests and other equity of all of Multicare's present and future direct and indirect subsidiaries and (iii) intercompany notes among Genesis ElderCare Corp. and any subsidiaries or among any subsidiaries. Loans under the Senior Facilities bear, at Multicare's option, interest at the per annum Prime Rate as announced by the Administrative Agent, or the applicable Adjusted LIBO Rate. Effective with the Amendment on February 12, 1999 the loans under the Tranche A Term Facility bear interest at a rate equal to the Prime Rate plus a margin of .75% or the LIBO Rate plus a margin of 3.0%; loans under the Tranche B Term Facility bear interest at a rate equal to Prime Rate plus 1.5% or LIBO Rate plus a margin of 3.25%; loans under the Tranche C Term Facility bear interest at a rate equal to Prime Rate plus 1.25% or LIBO Rate plus a margin up to 3.5%; loans under the Revolving Credit Facility bear interest at a rate equal to Prime Rate plus .75% or LIBO Rate plus a margin up to 3.0%; and loans under the Swing Loan Facility bear interest at the Prime Rate unless otherwise agreed to by the parties. Subject to meeting certain financial covenants, the above-referenced interest rates will be reduced. On August 11, 1997, Acquisition Corp. sold $250 million principal amount of 9% Senior Subordinated Notes due 2007 (the "9% Notes") which were issued pursuant to the Indenture. Interest on the 9% Notes is payable semiannually on February 1 and August 1 of each year. 10 The 9% Notes are unsecured, general obligations of the issuer, subordinated in right of payment to all existing and future Senior Indebtedness, as defined in the Indenture, of the issuer, including indebtedness under the Senior Facilities. The 9% Notes rank pari passu in right of payment with any future senior subordinated indebtedness of the issuer and are senior in right of payment to all future subordinated indebtedness of the issuer. The 9% Notes are redeemable at the option of the issuer, in whole or in part, at any time on or after August 1, 2002, initially at 104.5% of their principal amount, plus accrued interest, declining ratably to 100% of their principal amount, plus accrued interest, on or after August 1, 2004. The 9% Notes are subject to mandatory redemption at 101%. Upon a Change in Control, as defined in the Indenture, the issuer is required to make an offer to purchase the 9% Notes at a purchase price equal to 101% of their principal amount, plus accrued interest. The Indenture contains a number of covenants that, among other things, restrict the ability of the issuer of the 9% Notes to incur additional indebtedness, pay dividends, redeem capital stock, make certain investments, issue the capital stock of its subsidiaries, engage in mergers or consolidations or asset sales, engage in certain transactions with affiliates, and create dividend and other restrictions affecting its subsidiaries. Upon the consummation of the Merger, Multicare assumed all obligations of Acquisition Corp. with respect to and under the 9% Notes and the related Indenture. On October 9, 1997, Multicare, Genesis and Genesis ElderCare Network Services, Inc., a wholly-owned subsidiary of Genesis, entered into a management agreement (the "Management Agreement") pursuant to which Genesis manages Multicare's operations. The Management Agreement has a term of five years with automatic renewals for two years unless either party terminates the Management Agreement. Genesis is paid a fee of six percent of Multicare's net revenues for its services under the Management Agreement provided that payment of such fee in respect of any month in excess of the greater of (i) $1.992 million and (ii) four percent of Multicare's consolidated net revenues for such month, is subordinate to the satisfaction of Multicare's senior and subordinate debt covenants; and provided, further, that payment of such fee shall be no less than $23.9 million in any given year. At December 31, 1998 $17.4 million is subordinated and due to Genesis. Under the Management Agreement, Genesis is responsible for Multicare's non-extraordinary sales, general and administrative expenses (other than certain specified third-party expenses), and all other expenses of Multicare are paid by Multicare. On October 10, 1997, Genesis entered into the Therapy Sale pursuant to which Genesis acquired all of the assets used in Multicare's outpatient and inpatient rehabilitation therapy business for $24 million, subject to adjustment. On October 10, 1997, Genesis and one of its wholly-owned subsidiaries entered into the Pharmacy Sale pursuant to which Genesis acquired all of the outstanding capital stock and limited partnership interests of certain subsidiaries of Multicare that were engaged in the business of providing institutional pharmacy services to third parties for $50 million, subject to adjustment (the "Pharmacy Sale"). The Company completed the Pharmacy Sale effective January 1, 1998. In February 1998 ElderTrust ("ETT"), a Maryland real estate investment trust sponsored by Genesis, made term loans to subsidiaries of the Company with respect to the lease-up of three assisted living facilities. The loans have a fixed annual rate of interest of 10.5% and mature three years from the date of the loans, subject to the right of the Company to extend the term for up to three one-year extension periods in the event the facility has not reached "stabilized occupancy" (as defined) as of the third anniversary of the loan (or at the end of any extension period, if applicable). ETT is obligated to purchase and leaseback the three facilities that secure the term and construction loans being made to the Company, upon the earlier of the facility reaching stabilized occupancy or the maturity of the loan secured by the facility provided, however, that the Company will not be obligated to sell any facility if the purchase price for the facility would be less than the applicable loan amount. The purchase agreements provide for a cash purchase price in an amount which will result in an annual yield of 10.5% to ETT. If acquired by ETT, these facilities would be leased to the Company under minimum rent leases. The initial term of any minimum rent lease will be ten years, and the Company will have the option to extend the term for up to two five-year extension periods upon 12 months notice to ETT. Minimum rent for the first lease year under any minimum rent lease will be established by multiplying the purchase price for the applicable facility times 10.5%, and the increase each year by an amount equal to the lesser of (i) 5% of the increase in the gross revenues for such facility (excluding any revenues derived from ancillary healthcare services provided by Genesis or its affiliates to residents of the applicable facility) during the immediately preceding year or (ii) one-half of the increase in the Consumer Price Index during the immediately preceding year. During the last four years of the term (as extended, if applicable), the Company is required to make minimum capital expenditures equal to $3,000 per residential unit in each assisted living facility covered by a minimum rent lease. 11 Legislative and regulatory action has resulted in continuing change in the Medicare and Medicaid reimbursement programs which has adversely impacted the Company. The changes have limited, and are expected to continue to limit, payment increases under these programs. Also, the timing of payments made under the Medicare and Medicaid programs is subject to regulatory action and governmental budgetary constraints; in recent years, the time period between submission of claims and payment has increased. Within the statutory framework of the Medicare and Medicaid programs, there are substantial areas subject to administrative rulings and interpretations which may further affect payments made under those programs. Further, the federal and state governments may reduce the funds available under those programs in the future or require more stringent utilization and quality reviews of eldercare centers or other providers. There can be no assurances that adjustments from Medicare or Medicaid audits will not have a material adverse effect on the Company. Pursuant to the Balanced Budget Act of 1997 (the "Balanced Budget Act") commencing with cost reporting periods beginning on July 1, 1998, PPS began to be phased in for skilled nursing facilities at a per diem rate for all covered Part A skilled nursing facility services as well as many services for which payment may be made under Part B when a beneficiary who is a resident of a skilled nursing facility receives covered skilled nursing facility care. The consolidated per diem rate is adjusted based upon the Resource Utilization Group ("RUG"). In addition to covering skilled nursing facility services, this consolidated payment will also cover rehabilitation and non-rehabilitation ancillary services. Physician services, certain nurse practitioner and physician assistant services, among others, are not included in the per diem rate. For the first three cost reporting periods beginning on or after July 1, 1998, the per diem rate will be based on a blend of a facility specific-rate and a federal per diem rate. In subsequent periods, and for facilities first receiving payments for Medicare services on or after October 1, 1995, the federal per diem rate will be used without any facility specific blending. The Balanced Budget Act also required consolidated billing for skilled nursing facilities. Under the Balanced Budget Act, the skilled nursing facility must submit all Medicare claims for Part A and Part B services received by its residents with the exception of physician, nursing, physician assistant and certain related services, even if such services were provided by outside suppliers. Medicare will pay the skilled nursing facilities directly for all services on the consolidated bill and outside suppliers of services to residents of the skilled nursing facilities must collect payment from the skilled nursing facility. Although consolidated billing was scheduled to begin July 1, 1998 for all services, it has been delayed until further notice for beneficiaries in a Medicare Part A stay in a skilled nursing facility not yet using PPS and for the Medicare Part B stay. There can be no assurance that the Company will be able to provide skilled nursing services at a cost below the established Medicare level. Based upon the Company's recent experience with 7 eldercare centers that transitioned to PPS effective July 1, 1998 and based upon the Company's ongoing budget process for its fiscal year ending September 30, 1999, the Company believes that the impact of PPS on the Company's future earnings is likely to be greater than originally anticipated by management due to various factors, including lower than anticipated Medicare per diem revenues, lower than anticipated Medicare Part B revenues caused by a census shift to Medicare patients having a greater length of stay, higher than expected ancillary costs at the centers due to expanded services covered in the Medicare Part A rates, lower than anticipated routine cost reductions and lower than expected revenues for contract therapy services. Based upon assumptions, the Company estimates that the adverse revenue impact of PPS in Fiscal 1999 will be approximately $18 million. The Company estimates that the adverse revenue impact of PPS will be approximately an additional $13 million in Fiscal 2000 and an additional $5 million in each of Fiscal 2001 and 2002. The majority of the Multicare eldercare centers began implementation of PPS on January 1, 1999. The actual impact of PPS on the Company's earnings in Fiscal 1999 will depend on many variables which can not be quantified at this time, including regulatory changes, patient acuity, patient length of stay, Medicare census, referral patterns, and ability to reduce costs. 12 Effective April 10, 1998, regulations were adopted by the Health Care Financing Administration, which revise the methodology for determining the reasonable cost for contract therapy services, including physical therapy, respiratory therapy, occupational therapy and speech language pathology. Under the regulations, the reasonable costs for contract therapy services are limited to geographically-adjusted salary equivalency guidelines. However, the revised salary equivalency guidelines will no longer apply when the PPS system applicable to the particular setting for contract therapy services (e.g. skilled nursing facilities, home health agencies, etc.) goes into effect. The Balanced Budget Act also repealed the Boren Amendment federal payment standard for Medicaid payments to Medicaid nursing facilities effective October 1, 1997. The Boren Amendment required Medicaid payments to certain health care providers to be reasonable and adequate in order to cover the costs of efficiently and economically operated health care facilities. States must now use a public notice and comment period in order to determine rates and provide interested parties a reasonable opportunity to comment on proposed rates and the justification for and the methodology used in calculating such rates. There can be no assurance that budget constraints or other factors will not cause states to reduce Medicaid reimbursement to nursing facilities and pharmacies or that payments to nursing facilities and pharmacies will be made on timely basis. The law also grants greater flexibility to states to establish Medicaid managed care projects without the need to obtain a federal waiver. Although these waiver projects generally exempt institutional care, including nursing facilities and institutional pharmacy services, no assurances can be given that these projects ultimately will not change the reimbursement system for long-term care, including pharmacy services from fee-for-service to managed care negotiated or capitated rates. The Company anticipates that federal and state governments will continue to review and assess alternative health care delivery systems and payment methodologies. In July 1998, the Clinton Administration issued a new initiative to promote the quality of care in nursing homes. This initiative includes, but is not limited to (i) increased enforcement of nursing home safety and quality regulations; (ii) increased federal oversight of state inspections of nursing homes; (iii) prosecution of egregious violations of regulations governing nursing homes; (iv) the publication of nursing home survey results on the Internet; and (v) continuation of the development of the Minimum Data Set ("MDS"), a national automated clinical data system. Accordingly, with this new initiative, it may become more difficult for eldercare facilities to maintain licensing and certification. The Company may experience increased costs in connection with maintaining its licenses and certifications as well as increased enforcement actions. In addition, beginning January 1, 1999, outpatient therapy services furnished by a skilled nursing facility to a resident not under a covered Part A stay or to non-residents who receive outpatient rehabilitation services will be paid according to the Medicare Physician Fee Schedule. The Company believes that its liquidity needs can be met by expected operating cash flow and availability of borrowings under its credit facilities. At January 31, 1999, approximately $97.3 million was outstanding under the Senior facilities, and approximately $21.8 million was available under the credit facilities after giving effect to approximately $5.8 million in outstanding letters of credit issued under the credit facilities. Seasonality The Company's earnings generally fluctuate from quarter to quarter. This seasonality is related to a combination of factors which include the timing of Medicaid rate increases, seasonal census cycles, and the number of calendar days in a given quarter. Impact of Inflation The healthcare industry is labor intensive. Wages and other labor costs are especially sensitive to inflation and marketplace labor shortages. To date, the Company has offset its increased operating costs by increasing charges for its services and expanding its services. Genesis has also implemented cost control measures to limit increases in operating costs and expenses but cannot predict its ability to control such operating cost increases in the future. 13 Year 2000 Compliance The Company has implemented a process to address its Year 2000 compliance issues. The process includes (i) an inventory and assessment of the compliance of essential systems and equipment of the Company and of year 2000 mission critical suppliers and other third parties, (ii) the remediation of non-compliant systems and equipment, and (iii) contingency planning. The Company's Year 2000 compliance work is being performed and paid for by Genesis, manager of the Company's operations under the terms of a long-term management agreement. Genesis is in the process of conducting an inventory, assessment and remediation of its information technology ("IT") systems, equipment and non-IT systems and equipment (embedded technology). It has completed approximately 70% of its internal inventory and approximately 30% of its assessment of the systems and equipment of critical suppliers and other third parties. With respect to the Year 2000 compliance of critical third parties, the Company derives a substantial portion of its revenues from the Medicare and Medicaid programs. Congress' General Accounting Office recently concluded that it is highly unlikely that all Medicare systems will be compliant on time to ensure the delivery of uninterrupted benefits and services into the Year 2000. While the Company does not receive payments directly from Medicare, but from intermediaries, the GAO statement is interpreted to apply as well to these intermediaries. The Company intends to actively confirm the Year 2000 readiness status for each intermediary and to work cooperatively to ensure appropriate continuing payments for services rendered to all government-insured patients. The Company is remediating its critical IT and non-IT systems and equipment. The Company has also begun contingency planning in the event that essential systems and equipment fail to be year 2000 compliant. The Company is planning to be Year 2000 complaint for all its essential systems and equipment by September 30, 1999, although there can be no assurance that it will achieve its objective by such date or by January 1, 2000, or that such potential non-compliance will not have a material adverse effect on the Company's business, financial condition or results of operations. In addition there can be no assurance that all of the Company's critical suppliers, and other third parties will be Year 2000 complaint by January 1, 2000, or that such potential non-compliance will not have a material adverse effect on the Company's business, financial condition or results of operations. The Company's analysis of its Year 2000 issues is based in part on information from third party suppliers; there can be no assurance that such information is accurate or complete. The failure of the Company or third parties to be fully Year 2000 compliant for essential systems and equipment by January 1, 2000 could result in interruptions of normal business work operations. The Company's potential risks include (i) the inability to deliver patient care-related services in the Company's facilities and/or in non-affiliated facilities, (ii) the delayed receipt of reimbursement from the Federal or State governments, private payors, or intermediaries, (iii) the failure of security systems, elevators, heating systems or other operational systems and equipment and (iv) the inability to receive equipment and supplies from vendors. Each of these events could have a material adverse affect on the Company's care-related business, results of operations and financial condition. Contingency plans for the Company's Year 2000-related issues continue to be developed and include, but are not limited to, identification of alternate suppliers, alternate technologies and alternate manual systems. The Company is planning to have contingency plans completed for essential systems and equipment by June 30, 1999; however, there can be no assurance that it will meet this objective by such date or by January 1, 2000. The Year 2000 disclosure set forth above is intended to be a "Year 2000 statement" as such term is defined in the Year 2000 Information and Readiness Disclosure Act of 1998 (the "Year 2000 Act") and, to the extent such disclosure relates to year 2000 processing of the Company or to products or services offered by the Company, is also intended to be "Year 2000 readiness disclosure" as such term is defined in the Year 2000 Act. 14 New Accounting Pronouncements In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("Statement 130"). This Statement requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. This Statement is effective for fiscal years beginning after December 15, 1997 or the Company's fiscal year ending September 30, 1999. The Company plans to adopt this accounting standard as required. The adoption of this standard will have no impact on the Company's earnings, financial condition or liquidity, but will require the Company to classify items of other comprehensive income in a financial statement and display the accumulated balance of other comprehensive income separately in the equity section of the balance sheet. In June 1997, the FASB also issued Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("Statement 131"). Statement 131 supersedes Statement of Financial Standards No. 14, Financial Reporting for Segments of a Business Enterprise, and establishes new standards for reporting information about operation segments in annual financial statements and requires selected information about operating segments in interim financial reports. Statement 131 also establishes standards for related disclosures about products and services, geographic areas and major customers. Statement 131 is effective for periods beginning after December 15, 1997, or the Company's fiscal year end September 30, 1999. This Statement will have no impact on the Company's financial statements, results of operations, financial condition or liquidity. In April 1998, the Accounting Standards Executive Committee issued Statement of Position 98-5, Reporting on the Costs of Start-up Activities ("SOP 98-5"). SOP 98-5 requires costs of start-up activities, including organizational costs, to be expensed as incurred. Start-up activities are defined as those one-time activities related to opening a new facility, introducing a new product or service, conducting business in a new territory, conducting business with a new process in an existing facility, or commencing a new operation. SOP 98-5 is effective for fiscal years beginning after December 15, 1998 or the Company's fiscal year ending September 30, 2000. The Company currently estimates the adoption of SOP 98-5 will result in a change of approximately $2.1 million net of tax which will be recorded as a cumulative effect of a change in accounting principle. In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("Statement 133"). Statement 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. Statement 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure the instrument at fair value. The accounting changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. This Statement is effective for all fiscal quarters beginning after June 15, 1999. The Company intends to adopt this accounting standard as required, in the fourth quarter of fiscal 1999. The adoption of this standard is not expected to have a material impact on the Company's earnings or financial position. 15 Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company is exposed to the impact of interest rate changes. In the normal course of business, the Company employs established policies and procedures to manage its exposure to changes in interest rates. The Company's objective in managing its exposure to interest rate changes is to limit the impact of such changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, the Company primarily uses interest rate swaps to manage net exposure to interest rate changes related to its portfolio of borrowings. Notional amounts of interest rate swap agreements are used to measure interest to be paid or received relating to such agreements and do not represent an amount of exposure to credit loss. The fair value of interest rate swap agreements is the estimated amount the Company would receive or pay to terminate the swap agreement at the reporting date, taking into account current interest rates. The Libor rate as of December 31, 1998 was 5.4%. The estimated amount the Company would pay to terminate its interest rate swap agreements outstanding at December 31, 1998 is approximately $3,668,000. The fair value of the Company's debt, based on quoted market prices or current rates for similar instruments with same maturities was approximately $755,747,000 and $743,332,000 December 31, 1998 and September 30, 1998, respectively. The table below represents the contractual or notional balances of the Company's fixed rate and market sensitive instruments at expected maturity dates and the weighted average interest rates.
Liabilities - -------------------------------------------------------------------------------------------------------------------------- Expected Maturity 1999 2000 2001 2002 2003 Thereafter Total - -------------------------------------------------------------------------------------------------------------------------- Long Term Debt: Fixed Rate $673 $722 $20,278 $13,783 $250,771 $30,243 $316,470 Average Interest Rate 9.1% 9.1% 9.1% 9.0% 9.0% 9.4% 9.1% Variable Rate $31,000 $35,000 $39,000 $42,000 $151,225 $152,500 $450,725 Average Interest Rate Libor +2.6% Libor +2.6% Libor +2.6% Libor +2.6% Libor +2.6% Libor +2.7% Libor + 2.6% - -------------------------------------------------------------------------------------------------------------------------- Interest Rate Derivatives - -------------------------------------------------------------------------------------------------------------------------- Expected Maturity 1999 2000 2001 2002 2003 Thereafter Total - -------------------------------------------------------------------------------------------------------------------------- Interest Rate Swaps: Variable to Fixed $100,000 $100,000 Average Fixed Pay Rate 5.6% 5.6% Average Variable Rate Libor Libor - --------------------------------------------------------------------------------------------------------------------------
16 PART II: OTHER INFORMATION Item 1. Legal Proceedings. Not Applicable. Item 2. Changes in Securities and Use of Proceeds. Not Applicable. Item 3. Defaults Upon Senior Securities. Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable. Item 5. Other Information. Not Applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit No. Description ----------- ----------- 10.1 Amendment No. 1 to Credit Agreement, October 14, 1997 Multicare Inc. from Mellon Bank, N.A., Citicorp. USA Inc., First Union Bank and NationBank, N.A. 10.2 Amendment No. 2 to Credit Agreement, October 14, 1997 Multicare Inc. from Mellon Bank, N.A., Citicorp. USA Inc., First Union Bank and NationBank, N.A. 10.3 Amendment No. 3 to Credit Agreement, October 14, 1997 Multicare Inc. from Mellon Bank, N.A., Citicorp. USA Inc., First Union Bank and NationBank, N.A. 27 Financial Data Schedule. (b) Reports on Form 8-K. Not Applicable. 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. THE MULTICARE COMPANIES, INC. Date: February 12, 1999 /S/ George V. Hager, Jr. ------------------------------------------------- George V. Hager, Jr. Senior Vice President and Chief Financial Officer EX-10 2 EXHIBIT 10.1 Execution Copy AMENDMENT NO. 1 AND WAIVER TO CREDIT AGREEMENT AMENDMENT NO. 1 AND WAIVER TO CREDIT AGREEMENT, dated as of March 5, 1998, (this "Amendment No. 1") by and among: The Multicare Companies, Inc. and certain Subsidiaries identified on the signature pages hereto as "Borrowers"; the institutions identified on the signature pages hereto as "Lenders"; Mellon Bank, N.A. as Issuer of Letters of Credit and as Administrative Agent; Citicorp USA, Inc. as Syndication Agent; First Union National Bank as Documentation Agent; and NationsBank, N.A. as Syndication Agent. Background A Credit Agreement, dated as of October 9, 1997, ("the Original Credit Agreement") was entered into by and among The Multicare Companies, Inc. and certain of its Subsidiaries as Borrowers, Mellon Bank, N.A. as Issuer of Letters of Credit and Administrative Agent, Citicorp USA, Inc. as Syndication Agent, First Union National Bank as Documentation Agent, Nationsbank, N.A. as Syndication Agent, and the Lenders and other Agents identified therein. Terms are used in this Amendment No. 1 as defined in the Original Credit Agreement unless otherwise specified. The Original Credit Agreement requires, among other things, (1) that the Borrowers maintain a December 31 fiscal year, (2) that the Borrowers deliver, among other financial statements, consolidated financial statements of Genesis and its subsidiaries, which for those purposes, was defined to include the Borrowers and (3) that certain dispositions be consummated on or before December 31, 1997. The Borrowers have requested the Agents and the Lenders to modify the terms of the Original Credit Agreement (a) to permit the fiscal year of the Borrowers to be changed to September 30, (b) to replace the requirement that the Borrowers deliver the aforesaid consolidated financial statements (including the Borrowers) with a requirement that the Borrowers deliver the financial statements of Genesis and its regularly consolidated subsidiaries (which currently excludes the Borrowers) and (c) to extend the date by which the Borrowers' institutional pharmacy business must be sold. The Agents and the Lenders are willing to so modify the Original Credit Agreement on the terms and subject to the conditions set forth below. NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows. Agreement 1. Amendments to Original Credit Agreement. The Original Credit Agreement, as of the Amendment No. 1 Effective Date (as defined below), is amended in each of the following respects. 1.1 Excess Cash Flow. Section 1.5(b)(i) of the Original Credit Agreement (Excess Cash Flow) is amended by replacing the date "December 31, 1998" in the second line thereof with the date "September 30, 1998". 1.2 Reference to Fiscal Year in Provision Respecting Fee Calculation. Section 1.9(a) of the Original Credit Agreement (Commitment Fees) is amended by replacing the phrase "for the fiscal year ending December 31, 1997" in the sixth line thereof with the phrase "for the fiscal quarter ending December 31, 1997". 1.3 Delivery of Genesis Annual Financial Statements. Clause (ii) of Section 6.1(a) of the Original Credit Agreement (Annual Financial Statements) is amended in its entirety to read as follows: (ii) statements of income, cash flows and changes in stockholders' equity for Genesis and its consolidated Subsidiaries, on a consolidated basis, for such fiscal year and a balance sheet of Genesis and its consolidated Subsidiaries, on a consolidated basis, as of the close of such fiscal year. 1.4 Delivery of Genesis Quarterly Financial Statements. Clause (ii) of Section 6.1(b) of the Original Credit Agreement (Quarterly Financial Statements) is amended in its entirety to read as follows: (ii) statements of income, cash flows and changes in stockholders' equity for Genesis and its consolidated Subsidiaries, on a consolidated basis, for such fiscal quarter, together with the applicable year- to-date statements and a balance sheet of such Persons, on a consolidated basis, as of the end of such fiscal quarter. 1.5 Fiscal Year of Borrowers. The last sentence of Section 6.4 of the Original Credit Agreement (Maintenance of Records; Fiscal Year) is amended in its entirety to read as follows: "Each Borrower shall maintain, and shall cause the Surety to maintain, a fiscal year end of September 30." 1.6 Date for Sale of Pharmacy. Section 6.18 of the Original Credit Agreement (Certain Dispositions) shall be amended in its entirety to read as follows: -2- The Borrowers shall sell to Genesis and/or one or more of its Subsidiaries (other than Surety or Multicare or any Subsidiary of either of them) their contract therapy business for a cash purchase price of approximately $24,000,000.00 and their institutional pharmacy business for a cash purchase price of approximately $50,000,000.00, each on terms and conditions satisfactory to the Agents. The contract therapy sale shall be consummated on or before December 31, 1997 and the institutional pharmacy sale shall be consummated on or before June 30, 1998. 1.7 Reference to Fiscal Year in Lease Expenditure Provision. Paragraph (c) of Section 8.7 of the Original Credit Agreement (Leases) is amended by replacing the date "December 31, 1997" in the fourth line thereof with the date "September 30, 1997" and by replacing the date "December 31, 1998" in the sixth line thereof with the date "September 30, 1998". 1.8 Reference to Fiscal Year in Capital Expenditure Covenant. Section 8.15 of the Original Credit Agreement (Capital Expenditures) is amended by replacing the date "December 31, 1997" in the fourth line thereof with the date "September 30, 1997". 1.9 Reference to Fiscal Year in Definition of "Applicable Margin". The definition of "Applicable Margin" in Section 11.1 of the Original Credit Agreement (Certain Definitions) is amended by replacing the phrase "for the fiscal year ended December 31, 1997" in the fourth line thereof with the phrase "for the fiscal quarter ended December 31, 1997". 1.10 Definition of "Genesis Group". The definition of "Genesis Group" in Section 11.1 of the Original Credit Agreement (Certain Definitions) is amended in its entirety to read as follows: "Genesis Group" means Genesis and its consolidated Subsidiaries, provided, however, whether or not the Multicare Group shall ever be consolidated with Genesis for GAAP purposes, the "Genesis Group" shall not include the Multicare Group. 2. Representations and Warranties. In order to induce the Lenders, the Issuer and the Agents to agree to amend the Original Credit Agreement, each of the Borrowers, jointly and severally, makes the following representations and warranties, which shall survive the execution and delivery of this Amendment No. 1: -3- (a) The change in the fiscal year of the Borrowers and Surety was made as of September 30, 1997 such that the fiscal year ending September 30, 1998 will include four full fiscal quarters; (b) No Default or Event of Default has occurred and is continuing or would exist immediately after giving effect to the amendments contained herein; and (c) Each of the representations and warranties set forth in the Credit Agreement is true and correct in all material respects both before and after giving effect to the amendments and transactions contemplated hereby as though each such representation and warranty were made at and as of the date hereof and as of the Amendment No. 1 Effective Date. 3. Amendment No. 1 Effective Date. The amendments set forth in Section 1 above and the waivers set forth in Section 4 below shall be effective on the date (the "Amendment No. 1 Effective Date") that each of the following conditions is satisfied: 3.1 Execution of Amendment. Each of the Borrowers and the Required Lenders shall have executed this Amendment No. 1 and the Surety shall have executed the acknowledgement set forth below. 3.2 Other Documents and Information. The Administrative Agent shall have received such other documents and information as it shall reasonably request. 4. Waiver. The Lenders waive any default that might have occurred under those provisions of the Original Credit Agreement amended pursuant to Section 1 above as a direct result of the failure to sell the institutional pharmacy business prior to December 31, 1997 or as a direct result of the change in the fiscal year prior to the Amendment No. 1 Effective Date. In addition, the Lenders waive any default that might have occurred under the Original Credit Agreement amended pursuant to Section 1 above as a direct result of the failure of Multicare to deliver the consolidated financial statements of Genesis and its consolidated Subsidiaries and Multicare and its consolidated Subsidiaries (whether or not all such entities are consolidated under GAAP) as at, and for the period ended, December 31, 1997, so long as the requirements to deliver the financial statements specified in this Amendment No. 1 are satisfied. The aforesaid waivers are limited to their express terms and do not imply (a) any further waiver if the sale is not consummated by June 30, 1998 in accordance with the terms of the Credit Agreement or (b) any other or future waivers. 5. Counterparts. This Amendment No. 1 may be executed in counterparts and by different parties hereto in separate counterparts, each of which, when executed and -4- delivered, shall be deemed to be an original and all of which, when taken together, shall constitute one and the same instrument. A photocopied or facsimile signature shall be deemed to be the functional equivalent of a manually executed original for all purposes. 6. Ratification. The Original Credit Agreement, as amended by this Amendment No. 1, and the other Loan Documents are, and shall continue to be, in full force and effect and are hereby in all respects confirmed, approved and ratified. Without limiting the generality of the foregoing, the undersigned Borrowers and Surety, in their capacity as pledgors under the Pledge Agreement, confirm that the security interest granted pursuant to the Pledge Agreement continues to secure all of the Obligations (as defined in the Pledge Agreement) and the undersigned Surety confirms that the Suretyship Agreement continues to guaranty, and provide a suretyship for, all of the Guaranteed Obligations (as defined in the Suretyship Agreement). 7. Payment of Expenses. Without limiting other payment obligations of the Borrowers set forth in the Loan Documents, the Borrowers hereby, jointly and severally, agree to pay all costs and expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment No. 1 and any other documents or instruments which may be delivered in connection herewith, including, without limitation, the reasonable fees and expenses of its counsel, Drinker Biddle & Reath LLP. 8. Authorization to Agents. Each Lender hereby authorizes the Administrative Agent to take such action (including, without limitation, signing amendments to Loan Documents) as shall be consistent with the purposes hereof and as it shall deem necessary or appropriate to carry out the purposes of this Amendment No. 1. 9. Governing Law. This Amendment No. 1 shall be construed in accordance with, and governed by, the laws of the Commonwealth of Pennsylvania, without regard to choice of law principles. 10. References. From and after the Amendment No. 1 Effective Date, each reference in the Credit Agreement to "this Agreement", "hereof", "hereunder" or words of like import, and all references to the Credit Agreement in any and all Loan Documents, other agreements, instruments, documents, certificates and writings of every kind and nature, shall be deemed to mean the Original Credit Agreement as modified and amended by this Amendment No. 1 and as the same may be further amended, modified or supplemented in accordance with the terms thereof. -5- IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be duly executed as of the date first above written. BORROWERS: THE MULTICARE COMPANIES, INC., a Delaware corporation By____________________________________ Name: James V. McKeon Title: Vice President, Controller and Assistant Secretary Address for notices: 148 West State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Esq. Telephone: (610) 444-6350 Facsimile: (610) 444-3365 ADS APPLE VALLEY LIMITED PARTNERSHIP, a Massachusetts limited partnership, by: ADS Apple Valley, Inc. its General Partner ADS RECUPERATIVE CENTER ADS DARTMOUTH GENERAL LIMITED PARTNERSHIP, a PARTNERSHIP, a Massachusetts general Massachusetts limited partnership, by partnership, by ADS Dartmouth ALF, Inc. ADS Recuperative Center, Inc., its and ADS Senior Housing, Inc., its General Partner General Partners ADS HINGHAM LIMITED CARE 4, L.P., a Delaware limited PARTNERSHIP, a Massachusetts limited partnership, by Institutional Health partnership, by ADS Hingham Nursing Care Services, Inc., its General Facility, Inc., its General Partner Partner -6- CARE HAVEN ASSOCIATES LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its General Partners --------------------- Initials of Signor CUMBERLAND ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Cumberland, Inc., its General Partner GLENMARK PROPERTIES I, LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its General Partners GROTON ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by Health Resources of Groton, Inc., its General Partner MIDDLETOWN (RI) ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Middletown (R.I.), Inc., its General Partner POINT PLEASANT HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner RALEIGH MANOR LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner Address for notices: 148 West State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Esq. Telephone: (610) 444-6350 Facsimile: (610) 444-3365 ROMNEY HEALTH CARE CENTER LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner SISTERVILLE HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner TEAYS VALLEY HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner THE STRAUS GROUP - HOPKINS HOUSE, L.P., a New Jersey limited partnership, by Encare of Wyncote, Inc., its General Partner THE STRAUS GROUP - QUAKERTOWN MANOR, L.P., a New Jersey limited partnership, by Encare of Quakertown, Inc., its General Partner WALLINGFORD ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by Health Resources of Wallingford, Inc., its General Partner -7- WARWICK ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Warwick, Inc., its General Partner By:__________________________ On behalf of each of the foregoing as Vice President, Controller and Assistant Secretary of the General Partner HOLLY MANOR ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by Encare of Mendham, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager MERCERVILLE ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by Breyut Convalescent Center, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager POMPTON ASSOCIATES, L.P., a New Jersey limited partnership, by Pompton Corp., L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager THE STRAUS GROUP - OLD BRIDGE, L.P., a New Jersey limited partnership, by Health Resources of Emery, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager THE STRAUS GROUP - RIDGEWOOD, L.P., a New Jersey limited partnership, by Health Resources of Ridgewood, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager -8- By:__________________________ On behalf of each of the foregoing as Vice President, Controller and Assistant Secretary of the manager Address for notices: 149 West State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Esq. Telephone: (610) 444-6350 Facsimile: (610) 444-3365 ACADEMY NURSING HOME, INC., a Massachusetts corporation ADS APPLE VALLEY, INC., a Massachusetts corporation ADS CONSULTING, INC., a Massachusetts corporation ADS DANVERS ALF, INC., a Delaware corporation ADS DARTMOUTH ALF, INC., a Delaware corporation ADS HINGHAM ALF, INC., a Delaware Corporation ADS HINGHAM NURSING FACILITY, INC., a Massachusetts corporation ADS HOME HEALTH, INC., a Delaware corporation ADS MANAGEMENT, INC., a Massachusetts corporation ADS/MULTICARE, INC., a Delaware corporation ADS RECUPERATIVE CENTER, INC., a Massachusetts corporation ADS SENIOR HOUSING, INC., a Massachusetts corporation ADS VILLAGE MANOR, INC., a Massachusetts corporation ANR, INC., a Delaware corporation APPLEWOOD HEALTH RESOURCES, INC., a Delaware corporation -9- -------------------- Initials of Signor AUTOMATED PROFESSIONAL ACCOUNTS, INC., a West Virginia corporation BERKS NURSING HOMES, INC., a Pennsylvania corporation BETHEL HEALTH RESOURCES, INC., a Delaware corporation BRIGHTWOOD PROPERTY, INC., a West Virginia corporation CENTURY CARE CONSTRUCTION, INC., a New Jersey corporation CENTURY CARE MANAGEMENT, INC., a Delaware corporation CHATEAU VILLAGE HEALTH RESOURCES, INC., a Delaware corporation CHG INVESTMENT CORP., INC., a Delaware corporation CHNR-1, INC., a Delaware corporation COLONIAL HALL HEALTH RESOURCES, INC., a Delaware corporation COLONIAL HOUSE HEALTH RESOURCES, INC., a Delaware corporation COMPASS HEALTH SERVICES, INC., a West Virginia corporation CONCORD HEALTH GROUP, INC., a Delaware corporation CONCORD HOME HEALTH, INC., a Pennsylvania corporation CONCORD PHARMACY SERVICES, INC., a Pennsylvania corporation CONCORD REHAB, INC., a Pennsylvania corporation CONCORD SERVICE CORPORATION, a Pennsylvania corporation CVNR, INC., a Delaware corporation DELM NURSING, INC., a Pennsylvania corporation ELMWOOD HEALTH RESOURCES, INC., a Delaware corporation ENCARE OF MASSACHUSETTS, INC., a Delaware corporation ENCARE OF PENNYPACK, INC., a Pennsylvania corporation ENCARE OF QUAKERTOWN, INC., a Pennsylvania corporation ENCARE OF WYNCOTE, INC., a Pennsylvania corporation ENR, INC., a Delaware corporation GLENMARK ASSOCIATES, INC., a West Virginia corporation GMA - BRIGHTWOOD, INC., a West Virginia corporation -10- -------------------- Initials of Signor GMA CONSTRUCTION, INC., a West Virginia corporation GMA - MADISON, INC., a West Virginia corporation GMA PARTNERSHIP HOLDING COMPANY, INC., a West Virginia corporation GMA - UNIONTOWN, INC., a Pennsylvania corporation HEALTH RESOURCES OF BROADMAN, INC., a Delaware corporation HEALTH RESOURCES OF CEDAR GROVE, INC., a New Jersey corporation HEALTH RESOURCES OF COLCHESTER, INC., a Connecticut corporation HEALTH RESOURCES OF COLUMBUS, INC., a Delaware corporation HEALTH RESOURCES OF CUMBERLAND, INC., a Delaware corporation HEALTH RESOURCES OF EATONTOWN, INC., a New Jersey corporation HEALTH RESOURCES OF FARMINGTON, INC., a Delaware corporation HEALTH RESOURCES OF GARDNER, INC., a Delaware corporation HEALTH RESOURCES OF GLASTONBURY, INC., a Connecticut corporation HEALTH RESOURCES OF GROTON, INC., a Delaware corporation HEALTH RESOURCES OF LAKEVIEW, INC., a New Jersey corporation HEALTH RESOURCES OF LEMONT, INC., a Delaware corporation HEALTH RESOURCES OF LYNN, INC., a New Jersey corporation HEALTH RESOURCES OF KARMENTA AND MADISON, INC., a Delaware corporation HEALTH RESOURCES OF MARCELLA, INC., a Delaware corporation HEALTH RESOURCES OF MIDDLETOWN (R.I.), INC., a Delaware corporation HEALTH RESOURCES OF MORRISTOWN, INC., a New Jersey corporation HEALTH RESOURCES OF NORFOLK, INC., a Delaware corporation HEALTH RESOURCES OF NORWALK, INC., a Connecticut corporation HEALTH RESOURCES OF PENNINGTON, INC., a New Jersey corporation -11- -------------------- Initials of Signor HEALTH RESOURCES OF ROCKVILLE, INC., a Delaware corporation HEALTH RESOURCES OF SOUTH BRUNSWICK, INC., a New Jersey corporation HEALTH RESOURCES OF TROY HILLS, INC., a New Jersey corporation HEALTH RESOURCES OF WALLINGFORD, INC., a Delaware corporation HEALTH RESOURCES OF WARWICK, INC., a Delaware corporation HEALTHCARE REHAB SYSTEMS, INC., a Pennsylvania corporation HORIZON ASSOCIATES, INC., a West Virginia corporation HORIZON MEDICAL EQUIPMENT AND SUPPLY, INC., a West Virginia corporation HORIZON MOBILE, INC., a West Virginia corporation HORIZON REHABILITATION, INC., a West Virginia corporation HR OF CHARLESTON, INC., a West Virginia corporation HRWV Huntington, Inc., a West Virginia corporation INSTITUTIONAL HEALTH CARE SERVICES, INC., a New Jersey corporation LAKEWOOD HEALTH RESOURCES, INC., a Delaware corporation LAUREL HEALTH RESOURCES, INC., a Delaware corporation LEHIGH NURSING HOMES, INC., a Pennsylvania corporation LWNR, INC., a Delaware corporation MABRI CONVALESCENT CENTER, INC., a Connecticut corporation MARKGLEN, INC., a West Virginia corporation MARSHFIELD HEALTH RESOURCES, INC., a Delaware corporation MONTGOMERY NURSING HOMES, INC., a Pennsylvania corporation MULTICARE AMC, INC., a Delaware Corporation MULTICARE HOME HEALTH OF ILLINOIS, INC., a Delaware corporation NATIONAL PHARMACY SERVICE, inc., a Pennsylvania corporation NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC., a Massachusetts corporation -12- -------------------- Initials of Signor PHC OPERATING CORP., a Delaware corporation POCAHONTAS CONTINUOUS CARE CENTER, INC., a West Virginia corporation PRESCOTT NURSING HOME, INC., a Massachusetts corporation PROGRESSIVE REHABILITATION CENTERS, INC., a Delaware corporation PROVIDENCE HEALTH CARE, INC., a Delaware corporation REST HAVEN NURSING HOME, INC, a West Virginia corporation RIDGELAND HEALTH RESOURCES, INC., a Delaware corporation RIVER PINES HEALTH RESOURCES, INC., a Delaware corporation RIVERSHORES HEALTH RESOURCES, INC., a Delaware corporation RLNR, INC., a Delaware corporation ROSE HEALTHCARE, INC., a New Jersey corporation ROSE VIEW MANOR, INC., a Pennsylvania corporation RSNR, INC., a Delaware corporation RVNR, INC., a Delaware corporation SENIOR LIVING VENTURES, INC., a Pennsylvania corporation SCHUYLKILL NURSING HOMES, INC., a Pennsylvania corporation SCHUYLKILL PARTNERSHIP ACQUISITION CORP., a Pennsylvania corporation SENIOR SOURCE, INC., a Massachusetts corporation SNOW VALLEY HEALTH RESOURCES, INC., a Delaware corporation SOLOMONT FAMILY FALL RIVER VENTURE, INC., a Massachusetts corporation SOLOMONT FAMILY MEDFORD VENTURE, INC., a Massachusetts corporation STAFFORD CONVALESCENT CENTER, INC., a Delaware corporation S.T.B. INVESTORS, LTD., a New York corporation -13- Address for notices: 148 West State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Esq. Telephone: (610) 444-6350 Facsimile: (610) 444-3365 SVNR, INC., a Delaware corporation THE ADS GROUP, INC., a Massachusetts corporation TRI-STATE MOBILE MEDICAL SERVICES, INC., a West Virginia corporation WESTFORD NURSING AND RETIREMENT CENTER, INC., a Massachusetts corporation WILLOW MANOR NURSING HOME, INC., a Massachusetts corporation By:___________________________________ On behalf of each of the foregoing as Vice President, Controller and Assistant Secretary -14- BREYUT CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager ENCARE OF MENDHAM, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF BRIDGETON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF CINNAMINSON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF CRANBURY, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF EMERY, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF ENGLEWOOD, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF EWING, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF FAIR LAWN, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF JACKSON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF RIDGEWOOD, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF WEST ORANGE, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager POMPTON CARE, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager ROEPHEL CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager - -------------------- Initials of Signor -15- TOTAL REHABILITATION CENTER, L.L.C., a New Jersey limited liability corporation, by Century Care Management, Inc., its authorized manager By:_______________________ On behalf of each of the foregoing Vice President, Controller and Assistant Secretary of the manager Address for notices: 148 West State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Esq. Telephone: (610) 444-6350 Facsimile: (610) 444-3365 -16- AGENTS, ISSUER AND LENDERS: MELLON BANK, N.A., as a Lender, as Issuer and as Administrative Agent By________________________________ Name: Title: Address for notices: street address: AIM 199-5220 Mellon Independence Center 701 Market Street Philadelphia, Pennsylvania 19106 mailing address: AIM 199-5220 P.O. Box 7899 Philadelphia, Pennsylvania 19101-7899 Attention: Linda Sigler, Loan Administration Telephone: 215-553-4583 Facsimile: 215-553-4789 -17- With a copy to Plymouth Meeting Executive Campus 610 W. Germantown Pike, Suite 200 Plymouth Meeting, Pennsylvania 19462 Attention: Barbara J. Hauswald Vice President Telephone: 610-941-8412 Facsimile: 610-941-4136 With a copy for notices respecting assignments to: MELLON BANK, N.A. One Mellon Bank Center 45th Floor Pittsburgh, PA 15258-0001 Attention: Dean Hazelton Telephone: 412-236-0316 Facsimile: 412-234-4612 -18- CITICORP USA INC., as a Lender and as Syndication Agent By________________________________ Name: Title: Address for notices: 399 Park Avenue 8th Floor, Zone 6 New York, NY 10043 Attention: Margaret A. Brown Telephone: 212-559-0501 Facsimile: 212-793-0289 -19- FIRST UNION NATIONAL BANK, as a Lender and as Documentation Agent By________________________________ Name: Title: Address for notices: One First Union Center TW-5 Charlotte, NC 28288-0735 Attention: Matt MacIver Telephone: 704-374-4187 Facsimile: 704-383-9144 -20- NATIONSBANK, N.A., as a Lender and as a Syndication Agent By_______________________________ Name: Title: Address for notices: 101 North Tryon Street 15th Floor Charlotte, NC 28255 NC1-001-15-11 Attention: Jacquetta Banks Telephone: 704-388-1111 Facsimile: 704-386-8694 With a copy to 100 North Tryon Street 8th Floor Charlotte, NC 28255 NC1-007-0813 Attention: Scott Ward Telephone: 704-388-7839 Facsimile: 704-388-6002 -21- CORESTATES BANK, N.A. By:_______________________________ Name: Title: Address for notices: CoreStates Bank, N.A. 1339 Chestnut Street F.C. 1-8-3-22 P.O. Box 7618 Philadelphia, PA 19101-7618 Attention: Jennifer Leibowitz Telephone: (215) 786-3972 Facsimile: (215) 973-2738 -22- CREDIT LYONNAIS NEW YORK BRANCH By:______________________________ Name: Title: Address for notices: Credit Lyonnais New York Branch 1301 Avenue of the Americas New York, NY 10019 Attention: Evan S. Wasser Telephone: (212) 261-7685 Facsimile: (212) 261-3440 -23- FLEET NATIONAL BANK By:______________________________ Name: Title: Address for notices: Fleet National Bank One Federal Street MA OF 007B Boston, MA 02110 Attention: Carol Paige Telephone: (617) 346-4619 Facsimile: (617) 346-4699 -24- THE INDUSTRIAL BANK OF JAPAN, LIMITED By:_________________________________ Name: Title: Address for notices: The Industrial Bank of Japan, Limited 1251 Avenue of the Americas New York, NY 10020 Attention: Ken Takehisa Telephone: (212) 282-3321 Facsimile: (212) 282-4490 -25- NATIONAL WESTMINSTER BANK Plc By:______________________________ Name: Title: Address for notices: National Westminster Bank Plc 175 Water Street, 26th Floor New York, NY 10038 Attention: Andrew Weinberg Phone: (212) 602-4438 Facsimile: (212) 602-4506 with a copy to: Gleacher NatWest Inc. 660 Madison Avenue, 17th Floor New York, NY 10021 Attention: Field Smith Telephone: (212) 418-4525 Facsimile: (212) 418-4598 -26- THE SAKURA BANK, LIMITED By:______________________________ Name: Title: Address for notices: The Sakura Bank, Limited 277 Park Avenue, 45th Floor New York, NY 10172 Attention: Philip Schubert Telephone: (212) 756-6945 Facsimile: (212) 888-7651 -27- BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:______________________________ Name: Title: Address for notices: Bank of America National Trust & Savings Associations 555 S. Flower Street, 11th Floor Los Angeles, CA 90071 Attention: Lucy Nixon Telephone: (213) 228-9716 Facsimile: (213) 228-2756 -28- BANQUE PARIBAS By:______________________________ Name: Title: Address for notices: Banque Paribas 787 Seventh Avenue New York, NY 10019 Attention: David R. Laffey Telephone: (212) 841-2216 Facsimile: (212) 841-2292 -29- BANKBOSTON, N.A. By:______________________________ Name: Title: Address for notices: BankBoston, N.A. 100 Federal Street, 01-08-06 Boston, MA 02110 Attention: Frank Fama Telephone: (617) 434-4144 Facsimile: (617) 434-0819 -30- THE BANK OF NEW YORK By:______________________________ Name: Title: Address for notices: The Bank of New York One Wall Street, 21st Floor New York, NY 10286 Attention: Walter C. Parelli Telephone: (212) 635-6820 Facsimile: (212) 635-7970 -31- BANK OF TOKYO-MITSUBISHI TRUST COMPANY By:____________________________________ Name: Title: Address for notices: Bank of Tokyo-Mitsubishi Trust Company 1251 Avenue of the Americas, 12th Floor New York, NY 10020-1104 Attention: Ned Komar Telephone: (212) 782-4584 Facsimile: (212) 782-4935 -32- CRESTAR BANK By:______________________________ Name: Title: Address for notices: Crestar Bank 120 E. Baltimore Street, 25th Floor Baltimore, MD 21202 Attention: Leesa McShane Telephone: (410) 986-1672 Facsimile: (410) 986-1670 -33- DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN BRANCH By:______________________________ Name: Title: Address for notices: By:______________________________ Name: Title: Address for notices: Dresdner Bank AG, New York 75 Wall Street, 25th Floor New York, NY 10005-2889 Attention: Felix K. Camacho Telephone: (212) 429-3007 Facsimile: (212) 429-2129 -34- FINOVA CAPITAL CORPORATION By:______________________________ Name: Title: Address for notices: Finova Capital Corporation 311 S. Wacker, Suite 4400 Chicago, IL 60606 Attention: Brian Williamson Telephone: (312) 294-4175 Facsimile: (312) 322-3553 -35- KEY CORPORATE CAPITAL INC. By:______________________________ Name: Angela Mago Title: Vice President Address for notices: Key Corporate Capital Inc. c/o Key Bank, N.A. 127 Public Square Cleveland, OH 44114 Attention: Angela Mago OH-01-27-0605 Telephone: (216) 689-3247 Facsimile: (216) 689-5970 -36- FIRST NATIONAL BANK OF MARYLAND By:______________________________ Name: Title: Address for notices: First National Bank of Maryland 25 S. Charles Street, 18th Floor Baltimore, MD 21201 Attention: Robert H. Hauver Telephone: (410) 244-4246 Facsimile: (410) 244-4388 -37- NATEXIS BANQUE BFCE By:______________________________ Name: Title: By:______________________________ Name: Title: Address for notices: Natexis Banque BFCE 645 Fifth Avenue, 20th Floor New York, NY 10022 Attention: Frank Madden Telephone: (212) 872-5180 Facsimile: (212) 872-5045 -38- NATIONAL CITY BANK OF PENNSYLVANIA By:______________________________ Name: Title: Address for notices: National City Bank of Pennsylvania 20 Stanwix Street, 46-25-191 Pittsburgh, PA 15222 Loc. 46-25-191 Attention: Debra W. Riefner Telephone: (412) 644-8880 Facsimile: (412) 471-4883 -39- THE SANWA BANK, LIMITED By:______________________________ Name: Title: Address for notices: The Sanwa Bank, Limited 55 E. 52nd Street New York, NY 10055 Attention: Christian Kambour Telephone: (212) 339-6232 Facsimile: (212) 754-1304 -40- THE SUMITOMO BANK, LIMITED By:______________________________ Name: Title: By:______________________________ Name: Title: Address for notices: The Sumitomo Bank, Limited One Liberty Place 1650 Market Street, Suite 2860 Philadelphia, PA 19103 Attention: J. Wade Bell Telephone: (215) 636-4440 Facsimile: (215) 636-4446 -41- SUMMIT BANK By:__________________________________________ Name: James P. Andersen Title: Vice President and Regional Manager Address for notices: Summit Bank 250 Moore Street, 2nd Floor Hackensack, NJ 07601 Attention: Christine Clausen Telephone: (201) 646-5080 Facsimile: (201) 646-9497 -42- THE DAI-ICHI KANGYO BANK, LTD. By:______________________________ Name: Title: Address for notices: The Dai-Ichi Kangyo Bank, Ltd. One World Trade Center, 48th Floor New York, NY 10048 Attention: Takayuki Kumagai Telephone: (212) 432-6651 Facsimile: (212) 488-8955 -43- CREDITANSTALT CORPORATE FINANCE, INC. By:______________________________ Name: Title: By:______________________________ Name: Title: Address for notices: Creditanstalt Corporate Finance, Inc. Two Greenwich Plaza Greenwich, CT 06830 Attention: Fiona McKone Telephone: (203) 861-6590 Facsimile: (203) 861-0297 -44- CREDIT SUISSE FIRST BOSTON By:______________________________ Name: Title: By:______________________________ Name: Title: Address for notices: Credit Suisse First Boston 11 Madison Avenue New York, NY 10010 Attention: Robert B. Potter Telephone: (212) 325-9154 Facsimile: (212) 325-8319 -45- FIRST NATIONAL BANK OF CHICAGO By:______________________________ Name: Title: Address for notices: First National Bank of Chicago 1 First National Plaza Chicago, IL 60670 Attention: Tom Harkless Telephone: (312) 732-2478 Facsimile: (312) 732-2016 -46- SCOTIABANC, INC. By:______________________________ Name: Title: Address for notices: ScotiaBanc, Inc. 600 Peachtree Street NE Suite 2700 Atlanta, GA 30308 Attention: Dana Maloney Telephone: (404) 877-1524 Facsimile: (404) 888-8998 -47- CIBC INC. By:______________________________ Name: Title: Address for notices: CIBC Inc. 425 Lexington Avenue, 8th Floor New York, NY 10025 Attention: Judith Kirshner Telephone: (212) 856-4157 Facsimile: (212) 856-2991 -48- AMSOUTH BANK By:______________________________ Name: Title: Address for notices: AmSouth Bank 1900 5th Ave. N. AST7FL Birmingham, AL 35203 Attention: Ken DiFatta Telephone: (205) 801-0358 Facsimile: (205) 326-4790 -49- PFL LIFE INSURANCE COMPANY By:__________________________________________ Name: Title: Address for notices: PFL Life Insurance Company c/o Aegon USA Investment Management, Inc. 4333 Edgewood Road, NE Cedar Rapids, IA 52499 Attention: John Bailey, Securities Analyst Telephone: (319) 369-2811 Facsimile: (319) 369-2666 -50- PEOPLES INTERNAL BOND FUND By:______________________________ Name: Title: Address for notices: Peoples Internal Bond Fund c/o Aegon USA Investment Management, Inc. 4333 Edgewood Road, NE Cedar Rapids, IA 52499 Attention: John Bailey, Securities Analyst Telephone: (319) 369-2811 Facsimile: (319) 369-2666 Payment Advice -------------- Attention: Securities Processing Peoples Internal Bond Fund c/o AEGON USA Investment Management, Inc. 400 W. Market Street Louisville, KY 40202 Fax Number: (502) 560-2068 -51- FLOATING RATE PORTFOLIO By: Chancellor LGT Senior Secured Management, Inc., as attorney in fact By:______________________________ Christopher A. Bondy, Vice President Address for notices: Floating Rate Portfolio c/o Chancellor LGT Senior Secured Management, Inc. 1166 Avenue of the Americas, 27th Floor New York, NY 10036 Attention: Christopher A. Bondy Telephone: (212) 278-9673 Facsimile: (212) 278-9619 -52- PRIME INCOME TRUST By:______________________________ Name: Title: Address for notices: Prime Income Trust c/o Dean Witter Intercapital, Inc. 72nd Floor Two World Trade Center New York, NY 10048 Attention: Louis A. Pistecchia Telephone: (212) 392-5845 Facsimile: (212) 392-5345 -53- DEEPROCK & COMPANY By: Eaton Vance Management as Investment Advisor By:______________________________ Name: Title: Address for notices: State Street Bank & Trust Company Corporate Trust Division One Enterprise Drive North Quincy, MA 02171 Attention: Patrick McEnroe Telephone: (617) 664-5367 Facsimile: (617) 664-5366 Eaton Vance Management Attention: Prime Rate Reserves 24 Federal Street, 6th Floor Boston, MA 02110 Attention: Payson Swaffield Telephone: (617) 654-8486 Telecopier: (617) 695-9594 Reference: -54- ING HIGH INCOME PRINCIPAL PRESERVATION OFFERING, L.P. By:______________________________ Name: Title: Address for notices: Ing High Income Principal Preservation Offering, L.P. c/o Ing Capital Advisors, Inc. 333 S. Grand Avenue, Suite 4250 Los Angeles, CA 90071 Attention: Kathleen Lenarcic Telephone: (213) 346-3971 Facsimile: (213) 346-3995 -55- MASSACHUSETTS MUTUAL LIFE INSURANCE CO. By:____________________________________ Name: Title: Address for notices: Massachusetts Mutual Life Insurance Co. 1295 State Street Springfield, MA 01111 Attention: John Wheeler, Managing Director Telephone: (413) 744-6228 Facsimile: (413) 744-6127 -56- MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By: Merrill Lynch Asset Management, L.P., as Investment Advisor By:______________________________ Name: Title: Address for notices: Merrill Lynch Senior Floating Rate Fund, Inc. c/o Merrill Lynch Asset Management 800 Scudders Mill Road - Area 1B Plainsboro, NJ 08536 Attention: Douglas Henderson Telephone: (609) 282-2059 Facsimile: (609) 282-2550 -57 METROPOLITAN LIFE INSURANCE COMPANY By:______________________________ Name: Title: Address for notices: Metropolitan Life Insurance Company 334 Madison Avenue Convent Station, NJ 07961-0633 Attention: James Dingler Asst. Vice President Telephone: (201) 254-3206 Facsimile: (201) 254-3050 -58- THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By:______________________________ Name: Title: Address for notices: The Northwestern Mutual Life Insurance Company 720 E. Wisconsin Avenue Milwaukee, WI 53202 Attention: David A. Barras Associate Director Telephone: (414) 299-1618 Facsimile: (414) 299-7124 -59- NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION By: New York Life Insurance Company By:______________________________ Name: Title: Address for notices: New York Life Insurance and Annuity Corporation c/o New York Life Insurance Company 51 Madison Avenue, Room 206 New York, NY 10010 Attention: Elise Chowdhry Telephone: (212) 576-7830 Facsimile: (212) 447-4122 -60- OAK HILL SECURITIES FUND, L.P. By: Oak Hill Securities GenPar, L.P., Its General Partner By: Oak Hill Securities MGP, Inc., Its General Partner By:______________________________ Name: Title: Address for notices: Oak Hill Securities Fund, L.P. c/o Oak Hill Partners, Inc. 65 East 55th Street - 32nd Floor New York, NY 10022 Attention: Scott Krase, Vice President Telephone: (212) 326-1551 Facsimile: (212) 593-3596 -61- OCTAGON CREDIT INVESTORS LOAN PORTFOLIO (A Unit of The Chase Manhattan Bank) By:__________________________________________ Name: Title: Address for notices: Octagon Credit Investors Loan Portfolio (A Unit of The Chase Manhattan Bank) c/o Octagon Credit Investors 380 Madison Avenue, 12th Floor New York, NY 10017 Attention: James P. Ferguson Managing Director Telephone: (212) 622-3070 Facsimile: (212) 622-3797 -62- PARIBAS CAPITAL FUNDING LLC By:______________________________ Name: Title: Address for notices: Paribas Capital Funding LLC 787 Seventh Avenue, 32nd Floor New York, NY 10019 Attention: Michael Weinberg Telephone: (212) 841-2544 Facsimile: (212) 841-2144 with a copy to: State Street Bank & Trust Co. Corporate Trust Dept. Attn: Richard Wagman Amy Molisse Phone: (617) 664-5410 Fax: (617) 664-5366(67)(68) -63- PILGRIM AMERICA PRIME RATE TRUST By:______________________________ Name: Title: Address for notices: Pilgrim America Prime Rate Trust c/o Pilgrim America Investments, Inc. Two Renaissance Square 40 North Central Avenue, Suite 1200 Phoenix, AZ 85004-3444 Attention: Michael Bacevich, Vice President Telephone: (602) 417-8258 Facsimile: (602) 417-8327 -64- ROYALTON COMPANY By: Pacific Investment Management Company, as its Investment Advisor By:______________________________ Name: Title: Address for notices: Royalton Company c/o Pacific Investment Management Co. 840 Newport Center Drive Newport Beach, CA 92658 Attention: Richard Weil/Raymond Kennedy Telephone: (714) 717-7213 (Richard) (714) 717-7363 (Raymond) Facsimile: (714) 717-7076 -65- NORTHERN LIFE INSURANCE COMPANY By:______________________________ Name: Title: Address for notices: Northern Life Insurance Company c/o Reliastar Investment Research, Inc. 100 Washington Avenue South, Suite 800 Minneapolis, MN 55401-2121 Attention: Tim Warrick, Vice President Telephone: (612) 372-5258 Facsimile: (612) 372-5368 -66- KZH - SOLEIL CORPORATION By:______________________________ Name: Title: Address for notices: KZH - Soleil Corporation c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 -67- KZH HOLDING CORPORATION III By:______________________________ Name: Title: Address for notices: KZH Holding Corporation III c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 -68- KZH-CRESCENT CORPORATION By:______________________________ Name: Title: Address for notices: KZH-Crescent Corporation c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 -69- VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST By:______________________________ Name: Title: VAN KAMPEN CLO I, LIMITED by: Van Kampen American Capital Management, Inc., as Collateral Manager, as Assignee By:______________________________ Name: Title: Address for notices: Van Kampen American Capital One Parkview Plaza Oakbrook Terrace, IL 60181 Attention: Jeffrey Maillet Telephone: (630) 684-6438 Facsimile: (630) 684-6740 or 6741 -70- CONTINENTAL ASSURANCE COMPANY Separate Account (E) By: TCW Asset Management Company as attorney-in-fact By:________________________________________________ Name: Title: Address for notices: By:________________________________________________ Name: Mark L. Gold Title: Managing Director Address for notices: Continental Assurance Company c/o TCW Asset Management Company 200 Park Avenue, Suite 2200 New York, NY 10166-0228 Attention: Mark L. Gold/Justin L. Driscoll Telephone: (212) 297-4137 Facsimile: (212) 297-4159 -71- CIBC INC. By:______________________________ Name: Title: Address for notices: CIBC Inc. c/o Canadian Imperial Bank of Commerce 425 Lexington Avenue, 7th Floor New York, NY 10025 Attention: William Swenson Telephone: (212) 856-3935 Facsimile: (212) 856-3799 -72- MORGAN STANLEY SENIOR FUNDING, INC. By:______________________________ Name: Title: Address for notices: MORGAN STANLEY SENIOR FUNDING, INC. 1585 Broadway, 10th Floor New York, New York 10036 Attention: James Morgan Telephone: (212) 761-4866 Facsimile: (212) 761-0592 -73- CRESCENT/MACH I PARTNERS, L.P. by: TCW Asset Management Company, its Investment Manager By:______________________________ Name: Title: Address for notices: Crescent/Mach I Partners L.P. c/o State Street Bank & Trust Co. Two International Place Boston, MA 02110 Attention: Jackie Kilroy Telephone: (617) 664-5477 Facsimile: (617) 664-5366 PLEASE COPY RATE SET NOTICE TO: ------------------------------- Mark L. Gold/Justin L. Driscoll Trust Company of the West 200 Park Avenue New York, NY 10166 Telephone: (212) 297-4137 Fax: (212) 297-4159 -74- PHADMIN:68311 NEW YORK LIFE INSURANCE COMPANY By:______________________________ Name: Title: Address for notices: New York Life Insurance and Annuity Corporation c/o New York Life Insurance Company 51 Madison Avenue Room 206 New York, New York 10010 Attention: Elise Chowdhry Telephone: (212) 576-7830 Facsimile: (212) 447-4122 -75- CITY NATIONAL BANK By:_______________________ Name: Title: Address for notices: -76- TORONTO-DOMINION BANK By:________________________ Address for notices: The Toronto-Dominion Bank 909 Fannin, Suite 1700 Houston, TX 77010 Attention: Sonja R. Jordan Telephone: 713/653-8244 Fax: 713/951-9921 -77- LEHMAN COMMERCIAL PAPER INC. By:_________________________ Address for notices: Lehman Commercial Paper Inc. 3 World Financial Center New York, NY 10285 Attention: Michele Swanson Telephone: 212/526-0330 Fax: 212/528-0819 -78- CAPTIVA II FINANCE LTD. By:__________________________________________ Address for notices: Captiva II Finance Ltd. c/o Deutsche Morgan Grenfell (Cayman) Limited P.O. Box 1984GT, Elizabethan Square Grand Cayman, Cayman Islands Attention: Director Telephone: (345) 949-8244 Facsimile: (345) 949-8178 with a copy to: Stanfield Capital Partners 175 Water Street New York, NY 10038 Attention: Christopher Jansen Telephone: (212) 602-3650 Facsimile: (212) 602-3670 -79- CERES FINANCE LTD. By:____________________________________________ Address for notices: Ceres Finance Ltd. c/o Deutsche Morgan Grenfell (Cayman) Limited P.O. Box 1984GT, Elizabethan Square Grand Cayman, Cayman Islands Attention: Director Telephone: (345) 949-8244 Facsimile: (345) 949-8178 with a copy to: Stanfield Capital Partners 175 Water Street New York, NY 10038 Attention: Christopher Jansen Telephone: (212) 602-3650 Facsimile: (212) 602-3670 -80- COOPERATIEVE CENTRALE RAIFFEIFEN- BEORENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH By:______________________________ Name: Title: -81- AMARA-2 FINANCE LTD. By:__________________________________ Name: Title: Address for notices: Amara-2 Finance Ltd. c/o Stanfield Capital Partners LLC 175 Water Street New York, NY 10038 Attention: Christopher E. Janson Telephone: (212) 602-3650 Facsimile: (212) 602-3670 -82- MLCBO IV (CAYMAN) LTD. BY: PROTECTIVE ASSET MANAGEMENT COMPANY, as Collateral Manager By:_______________________________________ Name: Title: Address for notices: MLCBO IV (CAYMAN) LTD. c/o Protective Asset Management Company, as Collateral Manager 13455 Noel Road Dallas, TX 75240 Attention: Cathy Ragsdale Telephone: (972) 233-4300 Facsimile: (972) 233-4343 -83- PAMCO CAYMAN LTD. BY: PROTECTIVE ASSET MANAGEMENT COMPANY, as Collateral Manager By:________________________________________ Name: Title: Address for notices: PAMCO CAYMAN LTD. c/o Protective Asset Management Company, as Collateral Manager 13455 Noel Road Dallas, TX 75240 Attention: Cathy Ragsdale Telephone: (972) 233-4300 Facsimile: (972) 233-4343 -84- JACKSON NATIONAL LIFE INSURANCE COMPANY By: PPM America, Inc., as attorney- in-fact, on behalf of Jackson National Life Insurance Company By:___________________________________ Name: Michael DiRe Title: Managing Director Address for notices: PPM America, Inc. c/o Michael King 225 W. Wacker, Suite 1200 Chicago, IL 60606 Attention: Michael DiRe Telephone: (312) 634-1206 Facsimile: (312) 634-0054 -85- CYPRESSTREE INVESTMENT PARTNERS I., Ltd. By: CypressTree Investment Management Company, Inc., as Portfolio Manager By:___________________________________ Name: Philip C. Robbins Title: Vice President Address for notices: -86- INDOSUEZ CAPITAL FUNDING III, LIMITED By: Indosuez Capital, as Portfolio Advisor By:________________________________________ Name: Title: Address for notices: Indosuez Capital Funding III, Limited c/o Texas Commerce Bank N.A. A/C 17499 600 Travis Street, 8th Floor Houston, TX 77002-8039 Attention: Joe Elston, Asset Backed Group Telephone: (713) 216-2704 Facsimile: (713) 216-2101 -87- THE ROYAL BANK OF SCOTLAND plc By:___________________________ Name: David Dougan Title: Vice President Address for notices: The Royal Bank of Scotland plc Wall Street Plaza 88 Pine Street, 26th Floor New York, NY 10005 Attention: David Dougan Telephone: (212) 269-0938 Facsimile: (212) 480-0791 -88- The foregoing Amendment No. 1 is acknowledged and agreed to by the undersigned Surety (whether in its capacity as Surety, pledgor under the Pledge Agreement or otherwise) as of the date first above written. GENESIS ELDERCARE CORP. By:_________________ Name: Title: EX-10 3 EXHIBIT 10.2 Execution Copy AMENDMENT NO. 2 AND WAIVER TO CREDIT AGREEMENT (Multicare) AMENDMENT NO. 2 AND WAIVER TO CREDIT AGREEMENT, dated as of August 28, 1998, (this "Amendment No. 2") by and among: The Multicare Companies, Inc. and certain Subsidiaries identified on the signature pages hereto as "Borrowers"; the institutions identified on the signature pages hereto as "Lenders"; Mellon Bank, N.A. as Issuer of Letters of Credit and as Administrative Agent; Citicorp USA, Inc. as Syndication Agent; First Union National Bank as Documentation Agent; and NationsBank, N.A. as Syndication Agent. Background A Credit Agreement, dated as of October 9, 1997, was entered into by and among The Multicare Companies, Inc. and certain of its Subsidiaries as Borrowers, Mellon Bank, N.A. as Issuer of Letters of Credit and Administrative Agent, Citicorp USA, Inc. as Syndication Agent, First Union National Bank as Documentation Agent, NationsBank, N.A. as Syndication Agent, and the Lenders and other Agents identified therein and was amended pursuant to that certain Amendment No. 1 thereto, dated as of March 5, 1998. The Credit Agreement, as so amended, is referred to herein as the "Current Credit Agreement". The Current Credit Agreement, as the same may be amended, modified, restated or supplemented from time to time is herein referred to as the "Credit Agreement" or the "Agreement". Terms are used in this Amendment No. 2 as defined in the Current Credit Agreement unless otherwise specified. Concurrent with the execution of the original Credit Agreement referred to above, an Affiliate of the Borrowers, Genesis Health Ventures, Inc., and certain of its Subsidiaries entered into a certain Third Amended and Restated Credit Agreement, dated as of October 9, 1997, with Mellon Bank, N.A. as Issuer of Letters of Credit and Administrative Agent, Citicorp USA, Inc. as Syndication Agent, First Union National Bank as Documentation Agent, NationsBank, N.A. as Syndication Agent and the Lenders identified therein, which Agreement was amended as of March 5, 1998. (Such Third Amended and Restated Credit Agreement, as so amended, and as the same may be further amended, restated, modified or supplemented from time to time, is herein referred to as the "Genesis Credit Agreement"). The Lenders parties to the Current Credit Agreement are the same as the Lenders party to the Genesis Credit Agreement. Pursuant to the terms of the Current Credit Agreement and the terms of the Genesis Credit Agreement, each assignment by a Lender of its rights and obligations with respect to any tranche of the Current Credit Agreement must be made concurrent with an assignment by such Lender of a similar percentage of its rights and obligations under the same tranche of the Genesis Credit Agreement. 1 The Genesis Credit Agreement is being amended as of the date hereof to provide for, among other things, an increase in the amount of the revolving credit commitment thereunder, subject to certain conditions precedent. The parties thereto and the parties hereto have decided that, at the time that those conditions are satisfied and the amount of the revolving credit commitment under the Genesis Credit Agreement is increased (as defined below, the "Revolver Increase Effective Date"), the requirement for the concurrent assignment provisions respecting the revolving credit commitments and revolving credit loans under the two agreements should be eliminated. (No change is desired with respect to assignments of rights and obligations relative to the term loans.) In addition, the parties to the Current Credit Agreement wish to amend the terms thereof respecting Qualifying Interest Rate Hedging Agreements to provide that Affiliates of Lenders (and not just Lenders) may be parties to Qualifying Interest Rate Hedging Agreements and thereby become entitled to security under the Pledge Agreement. Accordingly, the parties to the Current Credit Agreement wish to amend the terms of the Current Credit Agreement (a) to eliminate the concurrent assignment requirements with respect to the revolving credit loans and revolving credit commitments under the Genesis Credit Agreement as of the date that the amount of the Genesis revolving credit commitment is increased, (b) to provide that Affiliates of Lenders may share in the pledged collateral with respect to obligations under certain Interest Rate Hedging Agreements, (c) to make certain other changes to conform certain provisions in the Credit Agreement to those in the Genesis Credit Agreement and (d) to modify certain other provisions of the Current Credit Agreement as more fully set forth below. NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows. Agreement 1. Amendments to Current Credit Agreement on Amendment No. 2 Effective Date. The Current Credit Agreement is amended in each of the following respects, as of the Amendment No. 2 Effective Date (as defined in Section 4 below). 1.1 New Definitions. Each of the following new definitions shall be added to Section 11.1 of the Current Credit Agreement (Certain Definitions) in its correct alphabetical location and shall also apply in construing this Amendment No. 2: "Mandatorily Redeemable Stock" means all stock that is (i) redeemable, payable or required to be purchased or otherwise retired or extinguished (other than stock which is redeemable, payable or required to be purchased under all circumstances for consideration consisting solely of common stock of Multicare), or convertible into any Indebtedness of the issuer, (A) at a fixed or determinable date, whether by operation of a sinking fund or 2 otherwise, (B) at the option of any Person other than the issuer whether or not conditioned upon the occurrence of a circumstance or event, such as a change in control of the issuer) or (C) upon the occurrence of a condition not solely within the control of the issuer, such as a redemption required to be made out of future earnings or (ii) convertible into Mandatorily Redeemable Stock. "Revolver Increase Effective Date" has the meaning ascribed to that term in the Genesis Credit Agreement. 1.2 Amendment to Certain Definitions. Each of the following definitions set forth in Section 11.1 of the Current Credit Agreement shall be amended in the manner specified below. 1.2.1 Applicable Margin Definition. The next-to-last sentence of the definition of "Applicable Margin" shall be amended in its entirety to read as follows: The Applicable Margin shall be adjusted five Business Days after receipt of the annual or quarterly Officer's Compliance Certificate delivered pursuant to Section 6.1 and shall be based on the Adjusted Total Debt to Cash Flow Ratio set forth therein. 1.2.2 Indebtedness Definition. Clause (b) of the definition of "Indebtedness" shall be amended in its entirety to read as follows: all (i) obligations of such Person evidenced by bonds, debentures, notes or similar instruments and (ii) Mandatorily Redeemable Stock; 1.2.3 Qualifying Interest Rate Hedging Agreements Definition. The definition of "Qualifying Interest Rate Hedging Agreements" shall be amended in its entirety to read as follows: "Qualifying Interest Rate Hedging Agreements" means such Interest Rate Hedging Agreements as may be entered into from time to time pursuant to Section 6.12 above between any or all of the Borrowers, on the one hand, and any Lender Party or any Affiliate of a Lender Party that satisfies the conditions set forth in Section 10.14 above, on the other hand. 1.3 Change in Notice Requirements Respecting Prepayment of Revolving Credit Loans. In order to provide for a shorter notice period for the prepayment of certain RC Loans, the first sentence of Section 1.5(c)(i) of the Current Credit Agreement (Application and Timing of Prepayments/Notice) shall be amended by adding the following proviso thereto immediately preceding the period: provided, however, that for any prepayment of RC Loans (which is not part of a concurrent prepayment of Term Loans), the Borrowers shall 3 give the Administrative Agent notice, in the case of a prepayment of Prime Rate Loans, no later than 11:00 A.M. (Philadelphia time) one (1) Business Day before the date of such prepayment and, in the case of a prepayment of LIBO Rate Loans, no later than 11:00 A.M. (Philadelphia time) three (3) Business Days before the date of such prepayment. 1.4 Year 2000 Representation. A new paragraph (z) shall be added immediately following paragraph (y) of Section 5.1 of the Current Credit Agreement, which new paragraph shall read as follows: (z) Year 2000 Compliance. Each of the Borrowers has reviewed the areas within its business and operations which could be adversely affected by a computer failure to recognize and perform properly date sensitive functions involving certain dates prior to, on or after January 1, 2000 ("Year 2000 Problem") and, if there are any such areas, the Borrowers have developed and implemented plans to avoid any Material Adverse Effect as a consequence of a Year 2000 Problem. The Borrowers reasonably believe that all internal computer operations that are material to their respective business operations will be able to perform properly date sensitive functions for all dates before, on and after January 1, 2000 except to the extent that a failure to do so could not reasonably be expected to have a Material Adverse Effect. 1.5 Waiver and Amendment of Financial Reporting Requirements for Excluded Subsidiaries. The phrase "[i]f at any time that the Cash Flow of the Excluded Subsidiaries in the aggregate exceeds 3% of the Cash Flow of Multicare and its consolidated Subsidiaries," which appears in subparagraphs (a)(i) and (b)(i) of Section 6.1 is hereby amended by replacing "3%" with "5.0%." This amendment shall be retroactively effective as of the Closing Date and any failure to comply with the provisions as written in the Current Credit Agreement (i.e., with the "3%" reference) prior to the Amendment No. 2 Effective Date is hereby waived so long as the Borrowers shall have been in compliance with the terms thereof as amended hereby (i.e., the "5.0%" reference). 1.6 Amendment of Indebtedness Covenant. In order to allow for some amortization of Indebtedness incurred under paragraph (e) of Section 8.1 of the Current Credit Agreement prior to the Maturity Date, said paragraph (e) of Section 8.1 shall be amended in its entirety to read as follows: (e) with respect to the Borrowers (but not the Surety) other Indebtedness incurred from time to time, in an aggregate outstanding principal amount not to exceed Fifteen Million Dollars ($15,000,000.00) at any time so long as such Indebtedness is incurred pursuant to agreements or instruments (i) which do not cause a Default or Event of Default hereunder, (ii) which contain terms and conditions no more onerous than the terms and conditions hereof and (iii) pursuant to which no more than five percent (5%) of the original principal amount of such Indebtedness shall amortize (or be subject to required prepayment) in any year; 4 1.7 Amendment of Lien Covenant. Paragraph (d) of Section 8.2 of the Current Credit Agreement shall be amended by adding the words "and the related Licenses" after the words "real estate and equipment" in the first line thereof. 1.8 Joinder of Certain Affiliates as Parties to Qualifying Interest Rate Hedging Agreements. Article 10 of the Current Credit Agreement is amended by adding a new Section 10.14 at the end thereof which shall read as follows: 10.14 JOINDER OF AFFILIATES AS PARTIES TO QUALIFYING INTEREST RATE HEDGING AGREEMENTS; APPOINTMENT OF AGENT. Any Affiliate of a Lender Party that now or hereafter is a party to an Interest Rate Hedging Agreement entered into with any Borrower or Borrowers pursuant to the terms of this Agreement may become a secured party under the Pledge Agreement (and the Interest Rate Hedging Agreement shall thereby become a Qualifying Interest Rate Hedging Agreement secured by the Collateral under the Pledge Agreement) if (i) the Administrative Agent consents in writing to such Person becoming a secured party (such consent not to be unreasonably withheld) and (ii) such Affiliate signs a Joinder to this Agreement agreeing to the terms hereof. By signing a Joinder to this Agreement in form and substance satisfactory to the Administrative Agent, each such Affiliate shall be deemed to be a "Lender" and a "Lender Party" for purposes of this Article 10 (but shall not be included as a Requisite Lender for voting or other purposes) and shall be deemed to have appointed the Administrative Agent as its agent for the purposes set forth in the Loan Documents and to have agreed to the exculpation and indemnification provisions set forth in such Loan Documents relative to such agent. Without limiting the generality of the foregoing, (a) the Administrative Agent is authorized and directed to accept any and all payments under the Loan Documents (including, without limitation, the Pledge Agreement) on behalf of, among others, such Affiliate and to make payments to, among others, such Affiliate in accordance with the provisions of the Loan Documents and (b) such Affiliate understands that any Qualifying Interest Rate Hedging Agreement shall be secured pari passu with the Loans and other Obligations for so long as the Obligations under the Credit Agreement remain outstanding and so secured, but that such Affiliate is not entitled to voting or other rights under this Agreement and the other Loan Documents. 2. Amendments to the Current Credit Agreement on the Revolver Increase Effective Date. Each of the following amendments to the Current Credit Agreement shall be effective as of the Revolver Increase Effective Date. 5 2.1 Amendment of Special Intercreditor Provisions in Connection with Severence of RC Commitments under Genesis Credit Agreement from RC Commitments under Multicare Credit Agreement. Section 10 A.1 of the Current Credit Agreement is amended by adding the following sentence at the end thereof: Notwithstanding the foregoing, from and after the Revolver Increase Effective Date, certain "RC Lenders" as defined in the Genesis Credit Agreement may not be Lenders hereunder and certain RC Lenders hereunder may not be "Lenders" as defined in the Genesis Credit Agreement. Accordingly, all RC Lenders hereunder that are not Lenders under the Genesis Credit Agreement agree to abide by the special intercreditor provisions set forth in this Article 10A (or any successor provisions) and the special intercreditor provisions set forth in Article 10A of the Genesis Credit Agreement (or any successor provisions) as if a party thereto. Without limiting the generality of the foregoing, without the written consent of the necessary Lenders under the Genesis Credit Agreement, the parties hereto will not amend, modify, supplement or restate the provisions of this Agreement (currently set forth in 8.16 above) which sets forth tests respecting when management fees under the Multicare Management Agreement may be paid in cash, which provisions are incorporated by reference into the Multicare Management Agreement. The Lenders party to the Genesis Credit Agreement are intended third party beneficiaries of this provision. 2.2 Assignments and Participations of RC Loans and RC Commitments to be Independent of Genesis RC Loans and Genesis RC Commitments. Clause (v) of paragraph (b) of Section 12.9 of the Current Credit Agreement (Participations) shall be amended by adding the words "except with respect to any interest in RC Loans and RC Commitments" immediately following the words "with respect to any sale of a participation in any Tranche hereunder". Clause (v) of paragraph (c) of Section 12.9 (Assignments) shall be amended by adding the words "except with respect to any interest in RC Loans and RC Commitments" immediately following the words "with respect to any assignment of an interest in any Tranche hereunder". 2.3 Amendment to Form of Assignment and Acceptance Agreement (Exhibit H) Relative to Requirement that Assignment of RC Loans and RC Commitments be made Contemporaneously with Genesis RC Loans and RC Commitments. Exhibit H to the Credit Agreement (Form of Assignment and Acceptance Agreement) shall be amended (a) by replacing the words "as required by Section 12.9(c) of the Credit Agreement" in paragraph E of the Recitals with the words "to the extent required by Section 12.9(c) of the Credit Agreement" and (b) by adding the words "As Applicable" after the phrase "To Be Delivered With Multicare Assignment and Acceptance Agreement" in the box at the beginning of the document. 3. Representations and Warranties. In order to induce the Lenders, the Issuer and the Agents to agree to amend the Current Credit Agreement, each of the Borrowers, jointly and severally, makes the following representations and warranties, which shall survive the execution and delivery of this Amendment No. 2. 6 (a) The execution, delivery and performance of this Amendment No. 2 does not require any consent of, notice to, or filing with any governmental entity or any other third party, does not violate the terms of any agreement or instrument binding on any Borrower (including, without limitation, the constituent documents of such Borrower) or violate any Law applicable to such Borrower. On and after the Amendment No. 2 Effective Date, the Current Credit Agreement as amended by the amendments hereunder to be effective on the Amendment No. 2 Effective Date, shall be the legal, valid and binding obligation of each Borrower enforceable against such Borrower in accordance with its terms and, after the Revolver Increase Effective Date, the Current Credit Agreement as so amended and as further amended by the amendments hereunder to be effective on the Revolver Increase Effective Date, shall be the legal, valid and binding obligation enforceable against such Borrower in accordance with its terms. (b) No Default or Event of Default has occurred and is continuing or would exist immediately after giving effect to the amendments contained herein. (c) Each of the representations and warranties set forth in the Credit Agreement is true and correct in all material respects both before and after giving effect to the amendments and transactions contemplated hereby as though each such representation and warranty were made at and as of the date hereof and as of the Amendment No. 2 Effective Date and as of the Revolver Increase Effective Date. 4. Amendment No. 2 Effective Date. The amendments set forth in Section 1 (Amendments to Current Credit Agreement on Amendment No. 2 Effective Date) above shall be effective on the date (the "Amendment No. 2 Effective Date") that each of the following conditions is satisfied: 4.1 Execution of Amendment. Each of the Borrowers and the Required Lenders shall have executed this Amendment No. 2 and the Surety shall have executed the acknowledgement set forth below. 4.2 Execution of Amendment No. 2 to Genesis Credit Agreement. Amendment No. 2 to the Genesis Credit Agreement shall have been executed by the requisite parties. 4.3 Execution of Pledge Agreement Amendment. An Amendment No. 1 to Pledge Agreement, in substantially the form attached hereto as Exhibit A, shall have been executed by the Pledgors and Pledgee. 4.4 Other Documents and Information. The Administrative Agent shall have received such other documents and information as it shall reasonably request. 7 5. Revolver Increase Effective Date. The amendments set forth in Section 2 (Amendments to Current Credit Agreement on Revolver Increase Effective Date) above shall be effective on the Revolver Increase Effective Date provided that such date is on or after the Amendment No. 2 Effective Date. 6. Counterparts. This Amendment No. 2 may be executed in counterparts and by different parties hereto in separate counterparts, each of which, when executed and delivered, shall be deemed to be an original and all of which, when taken together, shall constitute one and the same instrument. A photocopied or facsimile signature shall be deemed to be the functional equivalent of a manually executed original for all purposes. 7. Ratification. The Current Credit Agreement, as amended by this Amendment No. 2, and the other Loan Documents, as amended in accordance with the provisions hereof, are, and shall continue to be, in full force and effect and are hereby in all respects confirmed, approved and ratified. 8. Payment of Expenses. Without limiting other payment obligations of the Borrowers set forth in the Loan Documents, the Borrowers hereby, jointly and severally, agree to pay all costs and expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment No. 2 and any other documents or instruments which may be delivered in connection herewith, including, without limitation, the reasonable fees and expenses of its counsel, Drinker Biddle & Reath LLP. 9. Authorization to Agent. The Lenders hereby authorize the Administrative Agent to take such action (including, without limitation, signing amendments to Loan Documents) as shall be consistent with the purposes hereof and as it shall deem necessary or appropriate to carry out the purposes of this Amendment No. 2. Without limiting the generality of the foregoing, the Lenders hereby authorize and direct the Administrative Agent to sign (on their behalf) an Amendment No. 1 to the Pledge Agreement in substantially the form attached hereto as Exhibit A. 10. Governing Law. This Amendment No. 2 shall be construed in accordance with, and governed by, the laws of the Commonwealth of Pennsylvania, without regard to choice of law principles. 11. References. From and after the Amendment No. 2 Effective Date, or Revolver Increase Effective Date, as applicable, each reference in the Credit Agreement to "this Agreement", "hereof", "hereunder" or words of like import, and all references to the Credit Agreement in any and all Loan Documents, other agreements, instruments, documents, certificates and writings of every kind and nature, shall be deemed to mean the Current Credit Agreement as modified and amended by this Amendment No. 2 and as the same may be further amended, modified or supplemented in accordance with the terms thereof. 8 IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to be duly executed as of the date first above written. BORROWERS: THE MULTICARE COMPANIES, INC., a Delaware corporation By_______________________________ Name: Barbara J. Hauswald Title: Treasurer Address for notices: 101 East State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Esq. Telephone: (610) 444-6350 Facsimile: (610) 444-3365 9 ADS APPLE VALLEY LIMITED PARTNERSHIP, a Massachusetts limited partnership, by: ADS Apple Valley, Inc. its General Partner ADS DARTMOUTH GENERAL PARTNERSHIP, a Massachusetts general partnership, by ADS Dartmouth ALF, Inc. and ADS Senior Housing, Inc., its General Partners ADS HINGHAM LIMITED PARTNERSHIP, a Massachusetts limited partnership, by ADS Hingham Nursing Facility, Inc., its General Partner ADS RECUPERATIVE CENTER LIMITED PARTNERSHIP, a Massachusetts limited partnership, by ADS Recuperative Center, Inc., its General Partner CARE HAVEN ASSOCIATES LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its General Partners CUMBERLAND ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Cumberland, Inc., its General Partner GLENMARK PROPERTIES I, LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its General Partners GROTON ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by Health Resources of Groton, Inc., its General Partner MIDDLETOWN (RI) ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Middletown (R.I.), Inc., its General Partner POINT PLEASANT HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner RALEIGH MANOR LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner ROMNEY HEALTH CARE CENTER LTD., LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner SISTERVILLE HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner TEAYS VALLEY HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner THE STRAUS GROUP - HOPKINS HOUSE, L.P., a New Jersey limited partnership, by Encare of Wyncote, Inc., its General Partner THE STRAUS GROUP - QUAKERTOWN MANOR, L.P., a New Jersey limited partnership, by Encare of Quakertown, Inc., its General Partner WALLINGFORD ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by Health Resources of Wallingford, Inc., its General Partner 10 WARWICK ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Warwick, Inc., its General Partner By: ______________________________ On behalf of each of the foregoing General Partners by Barbara J. Hauswald, Treasurer HOLLY MANOR ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by Encare of Mendham, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager MERCERVILLE ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by Breyut Convalescent Center, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager POMPTON ASSOCIATES, L.P., a New Jersey limited partnership, by Pompton Corp., L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager THE STRAUS GROUP - OLD BRIDGE, L.P., a New Jersey limited partnership, by Health Resources of Emery, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager THE STRAUS GROUP - RIDGEWOOD, L.P., a New Jersey limited partnership, by Health Resources of Ridgewood, L.L.C., its General Partner, by Century Care Management, sInc., its authorized manager By:__________________________ On behalf of each of the foregoing General Partners by Barbara J. Hauswald as Treasurer of the Authorized Manager Address for notices: 101 East State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Esq. Telephone: (610) 444-6350 Facsimile: (610) 444-3365 11 ACADEMY NURSING HOME, INC., a Massachusetts corporation ADS APPLE VALLEY, INC., a Massachusetts corporation ADS CONSULTING, INC., a Massachusetts corporation ADS DANVERS ALF, INC., a Delaware corporation ADS DARTMOUTH ALF, INC., a Delaware corporation ADS HINGHAM ALF, INC., a Delaware Corporation ADS HINGHAM NURSING FACILITY, INC., a Massachusetts corporation ADS HOME HEALTH, INC., a Delaware corporation ADS MANAGEMENT, INC., a Massachusetts corporation ADS/MULTICARE, INC., a Delaware corporation ADS RECUPERATIVE CENTER, INC., a Massachusetts corporation ADS SENIOR HOUSING, INC., a Massachusetts corporation ADS VILLAGE MANOR, INC., a Massachusetts corporation ANR, INC., a Delaware corporation APPLEWOOD HEALTH RESOURCES, INC., a Delaware corporation AUTOMATED PROFESSIONAL ACCOUNTS, INC., a West Virginia corporation BERKS NURSING HOMES, INC., a Pennsylvania corporation BETHEL HEALTH RESOURCES, INC., a Delaware corporation BRIGHTWOOD PROPERTY, INC., a West Virginia corporation CENTURY CARE CONSTRUCTION, INC., a New Jersey corporation CENTURY CARE MANAGEMENT, INC., a Delaware corporation CHATEAU VILLAGE HEALTH RESOURCES, INC., a Delaware corporation CHG INVESTMENT CORP., INC., a Delaware corporation CHNR-I, INC., a Delaware corporation COLONIAL HALL HEALTH RESOURCES, INC., a Delaware corporation COLONIAL HOUSE HEALTH RESOURCES, INC., a Delaware corporation CONCORD HEALTH GROUP, INC., a Delaware corporation CONCORD HOME HEALTH, INC., a Pennsylvania corporation CONCORD REHAB, INC., a Pennsylvania corporation CONCORD SERVICE CORPORATION, a Pennsylvania corporation 12 CVNR, INC., a Delaware corporation DELM NURSING, INC., a Pennsylvania corporation ELMWOOD HEALTH RESOURCES, INC., a Delaware corporation ENCARE OF PENNYPACK, INC., a Pennsylvania corporation ENCARE OF QUAKERTOWN, INC., a Pennsylvania corporation ENCARE OF WYNCOTE, INC., a Pennsylvania corporation ENR, INC., a Delaware corporation GLENMARK ASSOCIATES, INC., a West Virginia corporation GMA - BRIGHTWOOD, INC., a West Virginia corporation GMA CONSTRUCTION, INC., a West Virginia corporation GMA - MADISON, INC., a West Virginia corporation GMA PARTNERSHIP HOLDING COMPANY, INC., a West Virginia corporation GMA - UNIONTOWN, INC., a Pennsylvania corporation HEALTH RESOURCES OF BOARDMAN, INC., a Delaware corporation HEALTH RESOURCES OF CEDAR GROVE, INC., a New Jersey corporation HEALTH RESOURCES OF COLCHESTER, INC., a Connecticut corporation HEALTH RESOURCES OF COLUMBUS, INC., a Delaware corporation HEALTH RESOURCES OF CUMBERLAND, INC., a Delaware corporation HEALTH RESOURCES OF EATONTOWN, INC., a New Jersey corporation HEALTH RESOURCES OF FARMINGTON, INC., a Delaware corporation HEALTH RESOURCES OF GARDNER, INC., a Delaware corporation HEALTH RESOURCES OF GLASTONBURY, INC., a Connecticut corporation HEALTH RESOURCES OF GROTON, INC., a Delaware corporation HEALTH RESOURCES OF LAKEVIEW, INC., a New Jersey corporation HEALTH RESOURCES OF LEMONT, INC., a Delaware corporation HEALTH RESOURCES OF LYNN, INC., a New Jersey corporation HEALTH RESOURCES OF KARMENTA AND MADISON, INC., a Delaware corporation HEALTH RESOURCES OF MARCELLA, INC., a Delaware corporation HEALTH RESOURCES OF MIDDLETOWN (R.I.), INC., a Delaware corporation 13 HEALTH RESOURCES OF MORRISTOWN, INC., a New Jersey corporation HEALTH RESOURCES OF NORFOLK, INC., a Delaware corporation HEALTH RESOURCES OF NORWALK, INC., a Connecticut corporation HEALTH RESOURCES OF PENNINGTON, INC., a New Jersey corporation HEALTH RESOURCES OF ROCKVILLE, INC., a Delaware corporation HEALTH RESOURCES OF SOUTH BRUNSWICK, INC., a New Jersey corporation HEALTH RESOURCES OF TROY HILLS, INC., a New Jersey corporation HEALTH RESOURCES OF WALLINGFORD, INC., a Delaware corporation HEALTH RESOURCES OF WARWICK, INC., a Delaware corporation HEALTHCARE REHAB SYSTEMS, INC., a Pennsylvania corporation HORIZON ASSOCIATES, INC., a West Virginia corporation HORIZON MOBILE, INC., a West Virginia corporation HORIZON REHABILITATION, INC., a West Virginia corporation HR OF CHARLESTON, INC., a West Virginia corporation HRWV Huntington, Inc., a West Virginia corporation LAKEWOOD HEALTH RESOURCES, INC., a Delaware corporation LAUREL HEALTH RESOURCES, INC., a Delaware corporation LEHIGH NURSING HOMES, INC., a Pennsylvania corporation LWNR, INC., a Delaware corporation MABRI CONVALESCENT CENTER, INC., a Connecticut corporation MARKGLEN, INC., a West Virginia corporation MARSHFIELD HEALTH RESOURCES, INC., a Delaware corporation MONTGOMERY NURSING HOMES, INC., a Pennsylvania corporation MULTICARE AMC, INC., a Delaware Corporation MULTICARE HOME HEALTH OF ILLINOIS, INC., a Delaware corporation NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC., a Massachusetts corporation PHC OPERATING CORP., a Delaware corporation POCAHONTAS CONTINUOUS CARE CENTER, INC., a West Virginia corporation PRESCOTT NURSING HOME, INC., a Massachusetts corporation 14 PROGRESSIVE REHABILITATION CENTERS, INC., a Delaware corporation PROVIDENCE HEALTH CARE, INC., a Delaware corporation REST HAVEN NURSING HOME, INC, a West Virginia corporation RIDGELAND HEALTH RESOURCES, INC., a Delaware corporation RIVER PINES HEALTH RESOURCES, INC., a Delaware corporation RIVERSHORES HEALTH RESOURCES, INC., a Delaware corporation RLNR, INC., a Delaware corporation ROSE HEALTHCARE, INC., a New Jersey corporation ROSE VIEW MANOR, INC., a Pennsylvania corporation RSNR, INC., a Delaware corporation RVNR, INC., a Delaware corporation SENIOR LIVING VENTURES, INC., a Pennsylvania corporation SCHUYLKILL NURSING HOMES, INC., a Pennsylvania corporation SCHUYLKILL PARTNERSHIP ACQUISITION CORP., a Pennsylvania corporation SENIOR SOURCE, INC., a Massachusetts corporation SNOW VALLEY HEALTH RESOURCES, INC., a Delaware corporation SOLOMONT FAMILY FALL RIVER VENTURE, INC., a Massachusetts corporation SOLOMONT FAMILY MEDFORD VENTURE, INC., a Massachusetts corporation STAFFORD CONVALESCENT CENTER, INC., a Delaware corporation S.T.B. INVESTORS, LTD., a New York corporation SVNR, INC., a Delaware corporation THE ADS GROUP, INC., a Massachusetts corporation TRI-STATE MOBILE MEDICAL SERVICES, INC., a West Virginia corporation WESTFORD NURSING AND RETIREMENT CENTER, INC., a Massachusetts corporation 15 WILLOW MANOR NURSING HOME, INC., a Massachusetts corporation By:___________________________________ Barbara J. Hauswald as Treasurer on behalf of each of the foregoing Address for notices: 101 East State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Esq. Telephone: (610) 444-6350 Facsimile: (610) 444-3365 16 BREYUT CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager ENCARE OF MENDHAM, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF BRIDGETON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF CINNAMINSON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF CRANBURY, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF EMERY, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF ENGLEWOOD, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF EWING, L.L.C., a New Jersey limited liability company. by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF FAIR LAWN, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF JACKSON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF RIDGEWOOD, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF WEST ORANGE, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager POMPTON CARE, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager ROEPHEL CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager By:______________________________ On behalf of each of the foregoing Authorized Managers by its Treasurer 17 The foregoing Amendment No. 2 is acknowledged and agreed to by the undersigned Surety (whether in its capacity as Surety, pledgor under the Pledge Agreement or otherwise) as of the date first above written. GENESIS ELDERCARE CORP. By:______________________ Name: Barbara J. Hauswald Title: Treasurer 18 AGENTS, ISSUER AND LENDERS: MELLON BANK, N.A., as a Lender, as Issuer and as Administrative Agent By______________________________________ Name: Michael J. Fox Title: Vice President Address for notices: street address: AIM 199-5220 Mellon Independence Center 701 Market Street Philadelphia, Pennsylvania 19106 mailing address: AIM 199-5220 P.O. Box 7899 Philadelphia, Pennsylvania 19101-7899 Attention: Linda Sigler, Loan Administration Telephone: 215-553-4583 Facsimile: 215-553-4789 19 With a copy to Plymouth Meeting Executive Campus 610 W. Germantown Pike, Suite 200 Plymouth Meeting, Pennsylvania 19462 Attention: Michael Fox Vice President Telephone: 610-941-8426 Facsimile: 610-941-4136 With a copy for notices respecting assignments to: MELLON BANK, N.A. One Mellon Bank Center 45th Floor Pittsburgh, PA 15258-0001 Attention: Dean Hazelton Telephone: 412-236-0316 Facsimile: 412-234-4612 20 CITICORP USA, INC., as a Lender and as Syndication Agent By__________________________________________________ Name: Title: Address for notices: 399 Park Avenue 8th Floor, Zone 6 New York, NY 10043 Attention: Margaret A. Brown Telephone: 212-559-0501 Facsimile: 212-793-0289 21 FIRST UNION NATIONAL BANK, as a Lender and as Documentation Agent By___________________________________________ Name: Title: FIRST UNION NATIONAL BANK (as successor to CORESTATES BANK, N.A.) By___________________________________________ Name: Title: Address for notices: One First Union Center TW-5 Charlotte, NC 28288-0735 Attention: Matt MacIver Telephone: 704-374-4187 Facsimile: 704-383-9144 22 NATIONSBANK, N.A., as a Lender and as a Syndication Agent By_______________________________ Name: Title: Address for notices: 101 North Tryon Street 15th Floor Charlotte, NC 28255 NC1-001-15-11 Attention: Jacquetta Banks Telephone: 704-388-1111 Facsimile: 704-386-8694 With a copy to 100 North Tryon Street 8th Floor Charlotte, NC 28255 NC1-007-0813 Attention: Scott Ward Telephone: 704-388-7839 Facsimile: 704-388-6002 23 CREDIT LYONNAIS NEW YORK BRANCH By:_______________________________________ Name: Title: Address for notices: Credit Lyonnais New York Branch 1301 Avenue of the Americas New York, NY 10019 Attention: John C. Oberle Telephone: (212) 261-7344 Facsimile: (212) 261-3440 24 FLEET NATIONAL BANK By:_____________________________________ Name: Title: Address for notices: Fleet National Bank One Federal Street MA OF D07B Boston, MA 02110 Attention: Carol Paige Telephone: (617) 346-4619 Facsimile: (617) 346-4699 25 THE INDUSTRIAL BANK OF JAPAN, LIMITED By:_____________________________________________ Name: Title: Address for notices: The Industrial Bank of Japan, Limited 1251 Avenue of the Americas New York, NY 10020 Attention: Randall Wernes Telephone: (212) 282-3461 Facsimile: (212) 282-4488 26 NATIONAL WESTMINSTER BANK Plc By:____________________________________ Name: Title: Address for notices: National Westminster Bank Plc 175 Water Street, 26th Floor New York, NY 10038 Attention: Andrew Weinberg Phone: (212) 418-4567 Facsimile: (212) 418-4594 with a copy to: Gleacher NatWest Inc. 660 Madison Avenue, 17th Floor New York, NY 10021 Attention: Field Smith Telephone: (212) 418-4525 Facsimile: (212) 418-4598 27 THE SAKURA BANK, LIMITED By:_______________________________________ Name: Title: Address for notices: The Sakura Bank, Limited 277 Park Avenue, 45th Floor New York, NY 10172 Attention: Philip Schubert Telephone: (212) 756-6945 Facsimile: (212) 888-7651 28 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_____________________________________ Name: Title: Address for notices: Bank of America National Trust & Savings Associations 555 S. Flower Street, 11th Floor Los Angeles, CA 90071 Attention: Anthony Trunzo Telephone: (213) 228-9718 Facsimile: (213) 228-2756 29 PARIBAS By:________________________________________ Name: Title: By:________________________________________ Name: Title: Address for notices: Paribas 787 Seventh Avenue New York, NY 10019 Attention: David R. Laffey Telephone: (212) 841-2116 Facsimile: (212) 841-2292 30 BANKBOSTON, N.A. By:____________________________________ Name: Title: Address for notices: BankBoston, N.A. 100 Federal Street, 01-08-06 Boston, MA 02110 Attention: William R. Rogers Telephone: (617) 434-6247 Facsimile: (617) 434-0819 31 THE BANK OF NEW YORK By:_____________________________________ Name: Title: Address for notices: The Bank of New York One Wall Street, 21st Floor New York, NY 10286 Attention: Walter C. Parelli Telephone: (212) 635-6820 Facsimile: (212) 635-7970 32 BANK OF TOKYO-MITSUBISHI TRUST COMPANY By:___________________________________________ Name: Title: Address for notices: Bank of Tokyo-Mitsubishi Trust Company 1251 Avenue of the Americas, 12th Floor New York, NY 10020-1104 Attention: Douglas Weir Telephone: (212) 782-4503 Facsimile: (212) 782-4979 33 CRESTAR BANK By:______________________________________ Name: Title: Address for Notices: Crestar Bank 120 E. Baltimore Street, 25th Floor Baltimore, MD 21202 Attention: Andrea Robinson Telephone: (410) 986-1686 Facsimile: (410) 986-1012 34 DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN BRANCH By:__________________________________ Name: Title: By:__________________________________ Name: Title: Address for notices: Dresdner Bank AG, New York 75 Wall Street, 25th Floor New York, NY 10005-2889 Attention: Felix K. Camacho Telephone: (212) 429-3007 Facsimile: (212) 429-2129 35 FINOVA CAPITAL CORPORATION By:____________________________________ Name: Title: Address for notices: Finova Capital Corporation 311 S. Wacker, Suite 4400 Chicago, IL 60606 Attention: Brian Williamson Telephone: (312) 294-4175 Facsimile: (312) 322-3553 36 KEY CORPORATE CAPITAL INC. By:_________________________________ Name: Title: Address for notices: Key Corporate Capital Inc. c/o Key Bank, N.A. 127 Public Square Cleveland, OH 44114 Attention: Angela Mago OH-01-27-0605 Telephone: (216) 689-3247 Facsimile: (216) 689-5970 37 FIRST NATIONAL BANK OF MARYLAND By:_________________________________ Name: Title: Address for notices: First National Bank of Maryland 25 S. Charles Street, 18th Floor Baltimore, MD 21201 Attention: Robert H. Hauver Telephone: (410) 244-4246 Facsimile: (410) 244-4388 38 NATEXIS BANQUE BFCE By:________________________________ Name: Title: By:________________________________ Name: Title: Address for notices: Natexis Banque BFCE 645 Fifth Avenue, 20th Floor New York, NY 10022 Attention: Frank Madden Telephone: (212) 872-5180 Facsimile: (212) 872-5045 39 NATIONAL CITY BANK OF PENNSYLVANIA By:_____________________________________ Name: Title: Address for notices: National City Bank of Pennsylvania 20 Stanwix Street, 46-25-191 Pittsburgh, PA 15222 Loc. 46-25-191 Attention: Debra W. Riefner Telephone: (412) 644-8880 Facsimile: (412) 471-4883 40 THE SANWA BANK, LIMITED By:___________________________________ Name: Title: Address for notices: The Sanwa Bank, Limited 55 E. 52nd Street New York, NY 10055 Attention: Jean-Michel Fatovic Telephone: (212) 339-6397 Facsimile: (212) 754-1304 41 THE SUMITOMO BANK, LIMITED By:___________________________________ Name: Title: By:___________________________________ Name: Title: Address for notices: The Sumitomo Bank, Limited 450 Lexington Avenue, Suite 1700 New York, NY 10017 Attention: Brian Smith Telephone: (212) 808-2325 Facsimile: (212) 818-0867 42 SUMMIT BANK By:_______________________________________________ Name: James P. Andersen Title: Vice President and Regional Manager Address for notices: Summit Bank 250 Moore Street, 2nd Floor Hackensack, NJ 07601 Attention: Christine Clausen Telephone: (201) 646-5080 Facsimile: (201) 646-9497 43 THE DAI-ICHI KANGYO BANK, LTD. By:_______________________________________ Name: Title: Address for notices: The Dai-Ichi Kangyo Bank, Ltd. One World Trade Center, 48th Floor New York, NY 10048 Attention: Takayuki Kumagai Telephone: (212) 432-6651 Facsimile: (212) 488-8955 44 CREDITANSTALT CORPORATE FINANCE, INC. By:__________________________________________ Name: Title: By:__________________________________________ Name: Title: Address for notices: Creditanstalt Corporate Finance, Inc. Two Greenwich Plaza Greenwich, CT 06830 Attention: Bill Magee Telephone: (203) 861-6587 Facsimile: (203) 861-0297 45 CREDIT SUISSE FIRST BOSTON By:________________________________ Name: Title: By:________________________________ Name: Title: Address for notices: Credit Suisse First Boston 11 Madison Avenue New York, NY 10010 Attention: Robert B. Potter Telephone: (212) 325-9154 Facsimile: (212) 325-8319 46 FIRST NATIONAL BANK OF CHICAGO By:_______________________________ Name: Title: Address for notices: First National Bank of Chicago 1 First National Plaza Chicago, IL 60670 Attention: Tom Harkless Telephone: (312) 732-2478 Facsimile: (312) 732-2016 47 SCOTIABANC, INC. By:______________________________ Name: Title: Address for notices: ScotiaBanc, Inc. 600 Peachtree Street NE Suite 2700 Atlanta, GA 30308 Attention: Dana Maloney Telephone: (404) 877-1524 Facsimile: (404) 888-8998 48 CIBC INC. By:_________________________________ Name: Title: Address for notices: CIBC Inc. 425 Lexington Avenue, 8th Floor New York, NY 10025 Attention: Judith Kirshner Telephone: (212) 856-3547 Facsimile: (212) 856-2991 49 AMSOUTH BANK By:_______________________________ Name: Title: Address for notices: AmSouth Bank 1900 5th Ave. N. AST7FL Birmingham, AL 35203 Attention: Ken DiFatta Telephone: (205) 801-0358 Facsimile: (205) 326-4790 50 PFL LIFE INSURANCE COMPANY By:____________________________________________ Name: Title: Address for notices: PFL Life Insurance Company c/o Aegon USA Investment Management, Inc. 4333 Edgewood Road, NE Cedar Rapids, IA 52499 Attention: John Bailey, Securities Analyst Telephone: (319) 369-2811 Facsimile: (319) 369-2666 51 PEOPLES LIFE INSURANCE COMPANY By:___________________________________________ Name: Title: Address for notices: Peoples Life Insurance Company c/o Aegon USA Investment Management, Inc. 4333 Edgewood Road, NE Cedar Rapids, IA 52499 Attention: John Bailey, Securities Analyst Telephone: (319) 369-2811 Facsimile: (319) 369-2666 Payment Advice Attention: Marla Johnson Peoples Security Life Insurance Company c/o AEGON USA Investment Management, Inc. 4333 Edgewood Road N.E. Cedar Rapids, IA 52499-5112 Fax Number: (319) 398-8695 52 FLOATING RATE PORTFOLIO By: INVESCO Senior Secured Management, Inc., as attorney in fact By:_______________________________ Address for notices: Floating Rate Portfolio c/o INVESCO Senior Secured Management, Inc. 1166 Avenue of the Americas, 27th Floor New York, NY 10036 Attention: Kathleen Lenarcic Telephone: (212) 278-9794 Facsimile: (212) 278-9619 53 MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST By:_______________________________ Name: Title: Address for notices: Morgan Stanley Dean Witter Prime Income Trust c/o Morgan Stanley Dean Witter Advisors 72nd Floor Two World Trade Center New York, NY 10048 Attention: Kevin Egan Telephone: (212) 392-5845 Facsimile: (212) 392-5345 54 DEEPROCK & COMPANY By: Eaton Vance Management as Investment Advisor By:______________________________ Name: Title: Address for notices: State Street Bank & Trust Company Corporate Trust Division One Enterprise Drive North Quincy, MA 02171 Attention: Patrick McEnroe Telephone: (617) 664-5367 Facsimile: (617) 664-5366 Eaton Vance Management Attention: Prime Rate Reserves 24 Federal Street, 6th Floor Boston, MA 02110 Attention: Payson Swaffield Telephone: (617) 654-8486 Telecopier: (617) 695-9594 Reference: 55 ING HIGH INCOME PRINCIPAL PRESERVATION FUND HOLDINGS, LDC By: ING Capital Advisors, Inc., As Investment Advisor By:_______________________________ Name: Title: Address for notices: ING High Income Principal Preservation Fund Holdings, LDC c/o ING Capital Advisors, Inc. 233 S. Wacker Drive # 5200 Chicago, IL 60606 Attention: Jane Musser Nelson Telephone: (312) 496-7606 Facsimile: (312) 496-7611 56 SENIOR DEBT PORTFOLIO BY: Boston Management and Research as Investment Advisor By:____________________________ Name: Title: Address for notices: Eaton Vance Management Attention: Prime Rate Services 24 Federal Street, 6th Floor Boston, MA 02110 Attention: Payson Swaffield Telephone: (617) 654-8486 Facsimile: (617) 695-9594 57 MASSACHUSETTS MUTUAL LIFE INSURANCE CO. By:____________________________ Name: Title: Address for notices: Massachusetts Mutual Life Insurance Co. 1295 State Street Springfield, MA 01111 Attention: John Wheeler, Managing Director Telephone: (413) 744-6228 Facsimile: (413) 744-6127 58 MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By:____________________________ Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO By: Merrill Lynch Asset Management, L.P., as Investment Advisor By:____________________________ Name: Title: Address for notices: Merrill Lynch Senior Floating Rate Fund, Inc. c/o Merrill Lynch Asset Management 800 Scudders Mill Road - Area 1B Plainsboro, NJ 08536 Attention: Colleen Cunniffe Telephone: (609) 282-2093 Facsimile: (609) 282-2756 59 MERRILL LYNCH GLOBAL INVESTMENT SERIES Income Strategies Portfolio By: Merrill Lynch Asset Management, L.P., as Investment Advisor As assignee By:____________________________ Name: Title: Address for notices: Merrill Lynch Global Investment Series c/o Merrill Lynch Asset Management, L.P. 800 Scudders Mill Road - Area 1B Plainsboro, NJ 08536 Attention: Colleen Cunniffe Telephone: (609) 282-2093 Facsimile: (609) 282-2756 60 METROPOLITAN LIFE INSURANCE COMPANY By:____________________________ Name: Title: Address for notices: Metropolitan Life Insurance Company 334 Madison Avenue Convent Station, NJ 07961-0633 Attention: James Dingler Asst. Vice President Telephone: (201) 254-3206 Facsimile: (201) 254-3050 61 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By:____________________________ Name: Title: Its Authorized Representative Address for notices: The Northwestern Mutual Life Insurance Company 720 E. Wisconsin Avenue Milwaukee, WI 53202 Attention: David A. Barras Director-Investments Northwestern Investment Management Company Telephone: (414) 299-1618 Facsimile: (414) 299-7124 62 NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION By: New York Life Insurance Company By:____________________________ Name: Title: Address for notices: New York Life Insurance and Annuity Corporation c/o New York Life Insurance Company 51 Madison Avenue, Room 206 New York, NY 10010 Attention: Charles Riceman Telephone: (212) 576-4260 Facsimile: (212) 447-4122 63 OAK HILL SECURITIES FUND, L.P. By: Oak Hill Securities GenPar, L.P., Its General Partner By: Oak Hill Securities MGP, Inc., Its General Partner By:____________________________ Name: Title: Address for notices: Oak Hill Securities Fund, L.P. c/o O'Sullivan Graev & Karabell, LLP 30 Rockefeller Plaza New York, NY 10112 Attention: John Ashmead, Esq. Telephone: (212) 408-2494 Facsimile: (212) 728-5950 64 OCTAGON LOAN TRUST By:____________________________ Name: Title: Address for notices: Octagon Loan Trust 380 Madison Avenue, 12th Floor New York, NY 10017 Attention: James P. Ferguson Managing Director Telephone: (212) 622-3070 Facsimile: (212) 622-3797 65 PARIBAS CAPITAL FUNDING LLC By:____________________________ Name: Title: Address for notices: Paribas Capital Funding LLC 787 Seventh Avenue, 32nd Floor New York, NY 10019 Attention: Michael Weinberg Telephone: (212) 841-2544 Facsimile: (212) 841-2144 with a copy to: State Street Bank & Trust Co. Corporate Trust Dept. Attn: Bill Connolly Phone: (617) 664-5410 Fax: (617) 664-5366(67)(68) 66 ROYALTON COMPANY By: Pacific Investment Management Company, as its Investment Advisor By:____________________________ Name: Title: Address for notices: Royalton Company c/o Pacific Investment Management Co. 840 Newport Center Drive Newport Beach, CA 92658 Attention: Richard Weil/Raymond Kennedy Telephone: (714) 717-7213 (Richard) (714) 717-7363 (Raymond) Facsimile: (714) 717-7076 67 NORTHERN LIFE INSURANCE COMPANY By:____________________________ Name: Title: Address for notices: Northern Life Insurance Company c/o Reliastar Investment Research, Inc. 100 Washington Avenue South, Suite 800 Minneapolis, MN 55401-2121 Attention: Tim Warrick, Vice President Telephone: (612) 372-5258 Facsimile: (612) 372-5368 68 KZH SOLEIL LLC By:____________________________ Name: Title: Address for notices: KZH Soleil LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 69 KZH III LLC By:____________________________ Name: Title: Address for notices: KZH III LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 70 KZH CRESCENT LLC By:____________________________ Name: Title: Address for notices: KZH Crescent LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 71 VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, as assignee By:____________________________ Name: Title: VAN KAMPEN CLO I, LIMITED by: Van Kampen American Capital Management, Inc., as Collateral Manager, as Assignee By:____________________________ Name: Title: VAN KAMPEN AMERICAN CAPITAL SENIOR INCOME TRUST By:____________________________ Name: Title: Address for notices: In care of: Van Kampen American Capital One Parkview Plaza Oakbrook Terrace, IL 60181 Attention: Jeffrey Maillet Telephone: (630) 684-6438 Facsimile: (630) 684-6384 or 6385 72 CONTINENTAL ASSURANCE COMPANY Separate Account (E) By: TCW Asset Management Company as attorney-in-fact By:____________________________ Name: Mark L. Gold Title: Managing Director By:____________________________ Name: Justin L. Driscoll Title: Senior Vice President Address for notices: Continental Assurance Company c/o TCW Asset Management Company 200 Park Avenue, Suite 2200 New York, NY 10166-0228 Attention: Mark L. Gold/Justin L. Driscoll Telephone: (212) 297-4137 Facsimile: (212) 297-4159 73 CANADIAN IMPERIAL BANK OF COMMERCE By:_____________________________ Name: Title: Address for notices: Canadian Imperial Bank of Commerce 425 Lexington Avenue, 7th Floor New York, NY 10025 Attention: William Swenson Telephone: (212) 856-3935 Facsimile: (212) 856-3799 74 MORGAN STANLEY SENIOR FUNDING, INC. By:___________________________ Name: Title: Address for notices: MORGAN STANLEY SENIOR FUNDING, INC. 1585 Broadway, 10th Floor New York, New York 10036 Attention: James Morgan Telephone: (212) 761-4866 Facsimile: (212) 761-0592 75 CRESCENT/MACH I PARTNERS, L.P. by: TCW Asset Management Company, its Investment Manager By:______________________________ Name: Title: Address for notices: Crescent/Mach I Partners L.P. c/o State Street Bank & Trust Co. Two International Place Boston, MA 02110 Attention: Jackie Kilroy Telephone: (617) 664-5477 Facsimile: (617) 664-5366 PLEASE COPY RATE SET NOTICE TO: Mark L. Gold/Justin L. Driscoll Trust Company of the West 200 Park Avenue New York, NY 10166 Telephone: (212) 297-4137 Fax: (212) 297-4159 76 NEW YORK LIFE INSURANCE COMPANY By:____________________________ Name: Title: Address for notices: New York Life Insurance and Annuity Corporation c/o New York Life Insurance Company 51 Madison Avenue Room 206 New York, New York 10010 Attention: Charles Riceman Telephone: (212) 576-4260 Facsimile: (212) 447-4122 77 CITY NATIONAL BANK By:___________________________ Name: Title: Address for notices: City National Bank 400 N. Roxbury Drive, 3rd Floor Beverly Hills, CA 90210 Attention: Randall Watsek Telephone: 310/888-6114 Fax: 310/888-6152 78 TORONTO-DOMINION BANK By:_____________________ Address for notices: The Toronto-Dominion Bank 31 West 52nd Street New York, NY 10019 Attention: Jim McCarthy Telephone: 212/468-6752 Fax: 212/974-0396 79 LEHMAN COMMERCIAL PAPER INC. By:__________________________ Address for notices: Lehman Commercial Paper Inc. 3 World Financial Center New York, NY 10285 Attention: Michele Swanson Telephone: 212/526-0330 Fax: 212/528-0819 80 CAPTIVA II FINANCE LTD. By:________________________________ Address for notices: Captiva II Finance Ltd. c/o Deutsche Morgan Grenfell (Cayman) Limited P.O. Box 1984GT, Elizabethan Square Grand Cayman, Cayman Islands Attention: Director Telephone: (345) 949-8244 Facsimile: (345) 949-8178 with a copy to: Stanfield Capital Partners 175 Water Street New York, NY 10038 Attention: Christopher Jansen Telephone: (212) 602-3650 Facsimile: (212) 602-3670 81 CERES FINANCE LTD. By:______________________________ Address for notices: Ceres Finance Ltd. c/o Deutsche Morgan Grenfell (Cayman) Limited P.O. Box 1984GT, Elizabethan Square Grand Cayman, Cayman Islands Attention: Director Telephone: (345) 949-8244 Facsimile: (345) 949-8178 with a copy to: Stanfield Capital Partners 175 Water Street New York, NY 10038 Attention: Christopher Jansen Telephone: (212) 602-3650 Facsimile: (212) 602-3670 82 COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH By:______________________________ Name: Title: By:______________________________ Name: Title: Address for notices: Rabobank Nederland 245 Park Avenue New York, NY 10167 Attention: M. Christina Debler Telephone: (212) 916-7967 Facsimile: (212) 916-7837 83 AMARA-2 FINANCE LTD. By:______________________________ Name: Title: Address for notices: Amara-2 Finance Ltd. c/o Stanfield Capital Partners LLC 175 Water Street New York, NY 10038 Attention: Christopher E. Janson Telephone: (212) 602-3650 Facsimile: (212) 602-3670 84 MLCBO IV (CAYMAN) LTD. BY: HIGHLAND CAPITAL MANAGEMENT L.P., as Collateral Manager By:___________________________ Name: Title: Address for notices: MLCBO IV (CAYMAN) LTD. c/o Highland Capital Management L.P., as Collateral Manager 1150 Two Galleria Tower 13455 Noel Road, LB#45 Dallas, TX 75240 Attention: Mark Okada Telephone: (972) 233-4300 Facsimile: (972) 233-4343 85 PAMCO CAYMAN LTD. BY: HIGHLAND CAPITAL MANAGEMENT L.P., as Collateral Manager By:____________________________ Name: Title: Address for notices: PAMCO CAYMAN LTD. c/o Highland Capital Management L.P., as Collateral Manager 1150 Two Galleria Tower 13455 Noel Road, LB#45 Dallas, TX 75240 Attention: Mark Okada Telephone: (972) 233-4300 Facsimile: (972) 233-4343 86 JACKSON NATIONAL LIFE INSURANCE COMPANY By: PPM America, Inc., as attorney- in-fact, on behalf of Jackson National Life Insurance Company By:_______________________________ Name: Title: Address for notices: PPM America, Inc. 225 W. Wacker, Suite 1200 Chicago, IL 60606 Attention: Michael DiRe Telephone: (312) 634-2509 Facsimile: (312) 634-0054 87 CYPRESSTREE INVESTMENT PARTNERS I., Ltd. By: CypressTree Investment Management Company, Inc., as Portfolio Manager By:________________________________ Name: Title: Address for notices: CypressTree Investment Partners I, Ltd. 125 High Street Boston, MA 02110 Attention: John Fraser Telephone: (617) 946-0600 Facsimile: (617) 946-5681 88 INDOSUEZ CAPITAL FUNDING III, LIMITED By: Indosuez Capital, as Portfolio Advisor By:________________________________ Name: Title: Address for notices: Indosuez Capital Funding III, Limited 1211 Avenue of the Americas, 7th Floor New York, NY 10036-8701 Attention: Francoise Berthelot Telephone: (212) 278-2213 Facsimile: (212) 278-2254 89 THE ROYAL BANK OF SCOTLAND plc By:__________________________ Name: Title: Address for notices: The Royal Bank of Scotland plc Wall Street Plaza 88 Pine Street, 26th Floor New York, NY 10005 Attention: David Dougan Telephone: (212) 269-0938 Facsimile: (212) 480-0791 90 MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By:_____________________________ Name: Title: Address for notices: Merrill Lynch, Pierce, Fenner & Smith Incorporated 250 Vesey Street North Tower - 23rd Floor New York, NY 10281-1316 Attention: Arlena Filipowicz Telephone: (212) 449-8902 Facsimile: (212) 449-0188 91 PAM CAPITAL FUNDING LP BY: HIGHLAND CAPITAL MANAGEMENT L.P., as Collateral Manager By:_______________________________ Name: Title: Address for notices: PAM Capital Funding LP c/o Highland Capital Management L.P. 1150 Two Galleria Tower 13455 Noel Road, LB #45 Dallas, TX 75240 Attention: Mark Okada Telephone: (972) 233-4300 Facsimile: (972) 233-4343 92 STEIN ROE & FARNHAM INCORPORATED As Agent For KEYPORT LIFE INSURANCE COMPANY By:__________________________________ Name: Title: Address for notices: Keyport Life Insurance Company c/o Stein Roe & Farnham One South Wacker Drive, 33rd Floor Chicago, IL 60606 Attention: Brian W. Good Telephone: (312) 368-7644 Facsimile: (312) 368-7857 93 CHASE SECURITIES INC., as Agent For The Chase Manhattan Bank, as Assignee By:__________________________________ Name: Title: Address for notices: Chase Securities, Inc. 270 Park Avenue, 4th Floor New York, NY 10017 Attention: William Bokos Telephone: (212) 270-5458 Facsimile: (212) 270-7968 94 ALLIANCE CAPITAL MANAGEMENT L.P., As Manager on behalf of ALLIANCE CAPITAL FUNDING, L.L.C. By: ALLIANCE CAPITAL MANAGEMENT CORPORATION, General Partner of Alliance Capital Management L.P. By:__________________________________ Name: Title: Address for notices: Alliance Capital Funding, L.L.C. Alliance Capital Management L.P. 1345 Avenue of the Americas, 38th Floor New York, NY 10105 Attention: James Kennedy Telephone: (212) 969-2497 Facsimile: (212) 969-2285 95 ALLIANCE INVESTMENTS, LIMITED, As Assignee By:__________________________________ Name: Title: Address for notices: Alliance Capital Management L.P. 1345 Avenue of the Americas New York, NY 10105 Attention: Sheryl Rothman, Alliance Investments, Ltd. Telephone: (212) 969-2265 Facsimile: (212) 969-1554 96 ML CLO XII PILGRIM AMERICA (CAYMAN) LTD. By: Pilgrim America Investments, Inc. As its Investment Manager By:__________________________________ Name: Title: Address for notices: ML CLO XII PILGRIM AMERICA (CAYMAN) LTD. c/o Pilgrim America Investments, Inc. Two Renaissance Square, Suite 1200 40 North Central Avenue Phoenix, AZ 85004-3444 Attention: Melina Dempsey Telephone: (602) 417-8268 Facsimile: (602) 417-8327 97 ARM FINANCIAL GROUP, INC. By:__________________________________ Name: Title: Address for notices: ARM Financial Group, Inc. 515 W. Market Street Louisville, KY 40202-3319 Attention: Trisha Pearl Telephone: (502) 540-2855 Facsimile: (502) 582-7977 98 LTCB TRUST COMPANY By:__________________________________ Name: Title: Address for notices: LTCB Trust Company 165 Broadway, 49th Floor New York, NY 10006 Attention: Junichi Ebihara Telephone: (212) 335-4477 Facsimile: (212) 608-2371 99 KZH CRESCENT-2 LLC By:____________________________ Name: Title: Address for notices: KZH Crescent-2 LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 100 PROVIDENT BANK OF MARYLAND By:__________________________________ Name: Title: Address for notices: Provident Bank of Maryland 114 E. Lexington Street Baltimore, MD 21202 Attention: Frieda McWilliams Telephone: (410) 277-2086 Facsimile: (410) 277-2793 101 GENERAL ELECTRIC CAPITAL CORPORATION By:__________________________________ Name: Title: Address for notices: General Electric Capital Corporation Commercial Finance 3379 Peachtree Road, N.E, Suite 560 Atlanta, GA 30326 Attention: Holly Kaczmarczyk Telephone: (404) 814-2604 Facsimile: (404) 266-3538 102 ABN AMRO BANK N.V. By:__________________________________ Name: Title: Address for notices: ABN AMRO BANK N.V. 135 South LaSalle Street, Suite 2805 Chicago, IL 60603 Attention: Credit Administration Telephone: (312) 904-8835 Facsimile: (312) 904-8840 103 DEUTSCHE BANK AG NEW YORK BRANCH a/o CAYMAN ISLANDS BRANCH By:__________________________________ Name: Title: By:__________________________________ Name: Title: Address for notices: Deutsche Bank AG New York Branch a/o Cayman Islands Branch 31 W. 52nd Street New York, NY 10019 Attention: Sue Pearson Telephone: (212) 469-7140 Facsimile: (212) 469-8701 104 EX-10 4 EXHIBIT 10.3 AMENDMENT NO. 3 AND WAIVER TO CREDIT AGREEMENT (Multicare) AMENDMENT NO. 3 AND WAIVER TO CREDIT AGREEMENT, dated as of February 11, 1999, (this "Amendment No. 3") by and among: The Multicare Companies, Inc. and certain Subsidiaries identified on the signature pages hereto as "Borrowers"; the institutions identified on the signature pages hereto as "Lenders"; Mellon Bank, N.A. as Issuer of Letters of Credit and as Administrative Agent; Citicorp USA, Inc. as Syndication Agent; First Union National Bank as Documentation Agent; and Bank of America (as successor by merger to NationsBank, N.A.) as Syndication Agent. Background A Credit Agreement, dated as of October 9, 1997, was entered into by and among The Multicare Companies, Inc. and certain of its Subsidiaries as Borrowers, Mellon Bank, N.A. as Issuer of Letters of Credit and Administrative Agent, Citicorp USA, Inc. as Syndication Agent, First Union National Bank as Documentation Agent, NationsBank, N.A. as Syndication Agent, and the Lenders and other Agents identified therein and was amended pursuant to that certain Amendment No. 1 thereto, dated as of March 5, 1998 and was further amended pursuant to that certain Amendment No. 2 thereto, dated as of August 28, 1998. The Credit Agreement, as so amended, is referred to herein as the "Current Credit Agreement". The Current Credit Agreement, as the same may be amended, modified, restated or supplemented from time to time is herein referred to as the "Credit Agreement" or the "Agreement". Terms are used in this Amendment No. 3 as defined in the Current Credit Agreement unless otherwise specified. The Borrowers have requested that the Adjusted Total Debt/Cash Flow Ratio, the Adjusted Senior Debt/Cash Flow Ratio and the Fixed Charge Coverage Ratio set forth in the Current Credit Agreement be modified for a limited period and that the maximum amount of permitted rental payments in the Current Credit Agreement be increased. The Lenders are willing to make such changes to the Current Credit Agreement subject to the condition that the Applicable Margin on LIBO Rate Loans be increased and subject to such other terms and conditions as are more fully set forth below. NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows. Agreement 1 1. Amendments to Current Credit Agreement on Amendment No. 3 Effective Date. The Current Credit Agreement is amended in each of the following respects, as of the Amendment No. 3 Effective Date (as defined in Section 3 below). 1.1 Timing of Prepayments in Connection with Net Proceeds of Dispositions. In order to provide for the prepayment of Loans with asset sale proceeds promptly after the asset sale (rather than 364 days thereafter) and eliminate the existing right to use proceeds of a disposition to effect an acquisition, the first four sentences of paragraph (ii) of Section 1.5(b) are deleted in their entirety and replaced with the following: Promptly (but in no event more than ten Business Days) after the date of any sale, assignment, transfer or other disposition by any Borrower of any assets (other than pursuant to paragraphs (a), (b), (c) or (e) of Section 8.5 below) whether now owned or hereafter acquired (including a disposition of equity, collectively, a "disposition"), Multicare, on behalf of the Borrowers, shall prepay the Loans by an amount equal to the amount of the Net Cash Proceeds of such disposition. No more than five (5) Business Days before any proposed disposition, Multicare, on behalf of the applicable Borrower, shall notify the Administrative Agent in writing (1) that such disposition is anticipated, (2) the anticipated date of such disposition, (3) the anticipated date of prepayment of the Loans pursuant to this paragraph (ii) and (4) the amount of Net Cash Proceeds anticipated in connection therewith. At least five (5) Business Days before the actual prepayment, Multicare, on behalf of the Borrowers, shall either confirm or correct the information provided in such notice. Such confirmation or correction shall be deemed to be an irrevocable notice of prepayment. 1.2 Adjusted Total Debt/Cash Flow Ratio. The covenant set forth in Section 7.1(c) of the Current Credit Agreement is amended to provide that, for the period commencing 10/1/98 and ending on 12/30/99, the Adjusted Total Debt/Cash Flow Ratio shall be no greater than 7.25 to 1. At all other times, the maximum permitted Adjusted Total Debt/Cash Flow Ratio shall be as set forth in the Current Credit Agreement. 1.3 Adjusted Senior Debt/Cash Flow Ratio. The covenant set forth in Section 7.1(d) of the Current Credit Agreement is amended to provide that, for the period commencing 10/1/98 and ending on 12/30/99, the Adjusted Senior Debt/Cash Flow Ratio shall be no greater than 5.25 to 1. At all other times, the maximum permitted Adjusted Senior Debt/Cash Flow Ratio shall be as set forth in the Current Credit Agreement. 1.4 Delivery of Status Letters. A new paragraph (l) shall be added to Section 6.1 of the Current Credit Agreement immediately following paragraph (k) thereof as follows: On each of June 30, 1999 and September 30, 1999, Multicare, on behalf of the Borrowers, shall deliver to the Administrative Agent and each Lender a letter advising them of its plans and the status of the implementation of those plans to cause an event to occur or condition to exist which would result in compliance with the required December 31, 1999 Adjusted Total Debt/Cash Flow Ratio and required December 31, 1999 Adjusted Senior Debt/Cash Flow Ratio. 2 1.5 Adjustment to Permitted Rental Expense. In order to allow the Borrowers to incur additional rental expense, clause (c) of Section 8.7 of the Current Credit Agreement (Leases) is amended in its entirety to read as follows: (c) Other leases which are not Capitalized Leased or Synthetic Leases but only to the extent that the aggregate Rental Expense of the Surety and the Borrowers with respect to all such other leases does not exceed (i) during the fiscal year ending September 30, 1999, $25,000,000.00 and (ii) during each fiscal year thereafter, an amount equal to the amount permitted in the preceding year plus an additional $2,000,000.00 (e.g., $27,000,000.00 in the fiscal year ending September 30, 2000). 1.6 Applicable Margin Definition. In order to increase the Applicable Margin on LIBO Rate Loans and add two additional pricing tiers, the definition of Applicable Margin is amended in its entirety to read as follows: "Applicable Margin" means a marginal rate of interest which is added to the LIBO Rate or Prime Rate, as the case may be, to determine the effective rate of interest on Loans and other payments as specified in the Loan Documents. Until the Officer's Compliance Certificate for the fiscal quarter ending March 31, 1999 is delivered to the Administrative Agent and Lenders pursuant to Section 6.1 above, the Applicable Margin (a) for LIBO Rate Loans shall be the following: 3.0% for RC Loans or Tranche A Term Loans; 3.25% for Tranche B Term Loans; and 3.5% for Tranche C Term Loans, and (b) for Prime Rate Loans shall be the following: .75% for RC Loans and Tranche A Term Loans; 1.0% for Tranche B Term Loans; and 1.25% for Tranche C Term Loans. Thereafter, the Applicable Margin shall be determined in the following manner: (a) For any RC Loans or Tranche A Term Loans, the Applicable Margin shall be the percentage amount set forth below under the caption "Applicable Margin for RC Loans and Tranche A Term Loans" opposite the relevant Adjusted Total Debt/Cash Flow Ratio: Adjusted Total Applicable Margin for RC Loans Debt/Cash Flow Ratio and Tranche A Term Loans -------------------- --------------------------------- Prime Rate Loans LIBO Rate Loans ---------------- --------------- below 3.0 0 1.00% > 3.0 < 3.5 0 1.25% - > 3.5 < 4.0 0 1.50% - > 4.0 < 4.5 0 1.75% - > 4.5 < 5.0 0 2.00% - > 5.0 < 5.5 .25% 2.25% - > 5.5 < 6.0 .50% 2.50% - > 6.0 < 6.5 .75% 2.75% - >6.5 < 7.00 .75% 3.00% - >7.00 .75% 3.25% - 3 (b) For any Tranche B Term Loan, the Applicable Margin at all times after the Amendment No. 3 Effective Date shall be 1.0% for Prime Rate Loans and 3.25% for LIBO Rate Loans. (c) For any Tranche C Term Loan, the Applicable Margin at all times after the Amendment No. 3 Effective Date shall be 1.25% for Prime Rate Loans and 3.5% for LIBO Rate Loans. (d) The Applicable Margin for Swing Loans at all times shall be zero. The Applicable Margin shall be adjusted five Business Days after receipt of the annual or quarterly Officer's Compliance Certificate delivered pursuant to Section 6.1 and shall be based on the Adjusted Total Debt/Cash Flow Ratio set forth therein. At any time that such annual or quarterly Officer's Compliance Certificate is required to be delivered pursuant to said Section 6.1 and is not so delivered, then the Applicable Margin shall be the highest rate specified for the subject Loan until the Officer's Compliance Certificate is so delivered. 1.7 Fixed Charge Coverage Ratio Definition. In order to provide greater flexibility to the Borrowers for the period commencing on October 1, 1998 and ending December 30, 1999, the definition of "Fixed Charge Coverage Ratio" in Section 11.1 of the Existing Credit Agreement is amended by adding the following two sentences at the end thereof: Notwithstanding the foregoing, for calculations of the Fixed Charge Coverage Ratio with respect to the period commencing October 1, 1998 and ending December 30, 1999, there shall not be added to the denominator "principal payments scheduled or required to be made on Total Funded Indebtedness for the four fiscal quarters ending on, or most recently prior to, such date of determination". For calculations made with respect to any period ending after December 30, 1999, the calculation shall be made without regard to the adjustment set forth in the preceding sentence. 4 1.8 New Definition of Amendment No. 3 Effective Date. Section 11.1 of the Current Credit Agreement is amended by adding the following new definition in its correct alphabetical location: "Amendment No. 3 Effective Date" means the date that Amendment No. 3 to this Agreement becomes effective as more particularly set forth in said Amendment No. 3 hereto. 1.9 Amendment to Assignment Provisions. In order to allow assignments by Lenders of smaller amounts, Section 12.9(c) of the Current Credit Agreement is amended by replacing the phrase "Ten Million Dollars ($10,000,000.00)" in each of clauses (iii) and (iv) thereof with the phrase "Five Million Dollars ($5,000,000.00)". 2. Representations and Warranties. In order to induce the Lenders, the Issuer and the Agents to agree to amend the Current Credit Agreement, each of the Borrowers, jointly and severally, makes the following representations and warranties, which shall survive the execution and delivery of this Amendment No. 3. (a) The execution, delivery and performance of this Amendment No. 3 does not require any consent of, notice to, or filing with any governmental entity or any other third party, does not violate the terms of any agreement or instrument binding on any Borrower (including, without limitation, the constituent documents of such Borrower) or violate any Law applicable to such Borrower. On and after the Amendment No. 3 Effective Date, the Current Credit Agreement as amended by the amendments hereunder to be effective on the Amendment No. 3 Effective Date, shall be the legal, valid and binding obligation of each Borrower enforceable against such Borrower in accordance with its terms. (b) No Default or Event of Default has occurred and is continuing, after giving effect to the amendments contained herein. (c) Each of the representations and warranties set forth in the Credit Agreement is true and correct in all material respects both before and after giving effect to the amendments and transactions contemplated hereby as though each such representation and warranty were made at and as of the date hereof and as of the Amendment No. 3 Effective Date. 3. Amendment No. 3 Effective Date; Waiver. The amendments set forth in Section 1 (Amendments to Current Credit Agreement on Amendment No. 3 Effective Date) above shall be effective on the date (the "Amendment No. 3 Effective Date") that each of the following conditions is satisfied: 3.1 Execution of Amendment. Each of the Borrowers and the Required Lenders shall have executed this Amendment No. 3 and the Surety shall have executed the acknowledgement set forth below. 5 3.2 Other Documents and Information. The Administrative Agent shall have received such other documents and information as it shall reasonably request. Also effective on the Amendment No. 3 Effective Date, each Default or Event of Default that would have existed had this Amendment No. 3 not become effective is hereby waived to the extent and only to the extent that it does not exist or would not exist after giving effect to this Amendment No. 3. This waiver is limited in scope to its precise terms and does not imply any other or future waivers. 4. Counterparts. This Amendment No. 3 may be executed in counterparts and by different parties hereto in separate counterparts, each of which, when executed and delivered, shall be deemed to be an original and all of which, when taken together, shall constitute one and the same instrument. A photocopied or facsimile signature shall be deemed to be the functional equivalent of a manually executed original for all purposes. 5. Ratification. The Current Credit Agreement, as amended by this Amendment No. 3, and the other Loan Documents, are, and shall continue to be, in full force and effect and are hereby in all respects confirmed, approved and ratified. 6. Payment of Fees and Expenses. Without limiting other payment obligations of the Borrowers set forth in the Loan Documents, the Borrowers hereby, jointly and severally, agree to pay (a) all costs and expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment No. 3 and any other documents or instruments which may be delivered in connection herewith, including, without limitation, the reasonable fees and expenses of its counsel, Drinker Biddle & Reath LLP, (b) a fee to each Lender who signs and returns a signature page hereto no later than 5:00 p.m. on February 11, 1999 in an amount equal to .2% of such Lender's total Commitment under the Agreement and (c) such other fees as Multicare has agreed to pay in connection herewith. 7. Authorization to Agent. The Lenders hereby authorize the Administrative Agent to take such action (including, without limitation, signing amendments to Loan Documents) as shall be consistent with the purposes hereof and as it shall deem necessary or appropriate to carry out the purposes of this Amendment No. 3. 8. Governing Law. This Amendment No. 3 shall be construed in accordance with, and governed by, the laws of the Commonwealth of Pennsylvania, without regard to choice of law principles. 9. References. From and after the Amendment No. 3 Effective Date, each reference in the Credit Agreement to "this Agreement", "hereof", "hereunder" or words of like import, and all references to the Credit Agreement in any and all Loan Documents, other agreements, instruments, documents, certificates and writings of every kind and nature, shall be deemed to mean the Current Credit Agreement as modified and amended by this Amendment No. 3 and as the same may be further amended, modified or supplemented in accordance with the terms thereof. 6 IN WITNESS WHEREOF, the parties have caused this Amendment No. 3 to be duly executed as of the date first above written. BORROWERS: THE MULTICARE COMPANIES, INC., a Delaware corporation By____________________________ Name: Barbara J. Hauswald Title: Treasurer Address for notices: 101 East State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Vice President Chairman's Office & Corporate Secretary Telephone: (610) 444-6350 Facsimile: (610) 444-3365 7 ADS APPLE VALLEY LIMITED PARTNERSHIP, a Massachusetts limited partnership, by: ADS Apple Valley, Inc. its General Partner ADS DARTMOUTH GENERAL PARTNERSHIP, a Massachusetts general partnership, by ADS Dartmouth ALF, Inc. and ADS Senior Housing, Inc., its General Partners ADS HINGHAM LIMITED PARTNERSHIP, a Massachusetts limited partnership, by ADS Hingham Nursing Facility, Inc., its General Partner ADS RECUPERATIVE CENTER LIMITED PARTNERSHIP, a Massachusetts limited partnership, by ADS Recuperative Center, Inc., its General Partner CARE HAVEN ASSOCIATES LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its General Partners CUMBERLAND ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Cumberland, Inc., its General Partner GLENMARK PROPERTIES I, LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc. and GMA Partnership Holding Company, Inc., its General Partners GROTON ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by Health Resources of Groton, Inc., its General Partner MIDDLETOWN (RI) ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Middletown (R.I.), Inc., its General Partner POINT PLEASANT HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner RALEIGH MANOR LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner ROMNEY HEALTH CARE CENTER LTD., LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner SISTERVILLE HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner TEAYS VALLEY HAVEN LIMITED PARTNERSHIP, a West Virginia limited partnership, by Glenmark Associates, Inc., its General Partner THE STRAUS GROUP - HOPKINS HOUSE, L.P., a New Jersey limited partnership, by Encare of Wyncote, Inc., its General Partner THE STRAUS GROUP - QUAKERTOWN MANOR, L.P., a New Jersey limited partnership, by Encare of Quakertown, Inc., its General Partner WALLINGFORD ASSOCIATES OF CONNECTICUT, L.P., a Delaware limited partnership, by Health Resources of Wallingford, Inc., its General Partner 8 WARWICK ASSOCIATES OF RHODE ISLAND, L.P., a Delaware limited partnership, by Health Resources of Warwick, Inc., its General Partner By: ___________________________________ On behalf of each of the foregoing General Partners by Barbara J. Hauswald, Treasurer HOLLY MANOR ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by Encare of Mendham, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager MERCERVILLE ASSOCIATES OF NEW JERSEY, L.P., a Delaware limited partnership, by Breyut Convalescent Center, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager POMPTON ASSOCIATES, L.P., a New Jersey limited partnership, by Pompton Corp., L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager THE STRAUS GROUP - OLD BRIDGE, L.P., a New Jersey limited partnership, by Health Resources of Emery, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager THE STRAUS GROUP - RIDGEWOOD, L.P., a New Jersey limited partnership, by Health Resources of Ridgewood, L.L.C., its General Partner, by Century Care Management, Inc., its authorized manager By:__________________________ On behalf of each of the foregoing General Partners by Barbara J. Hauswald as Treasurer of the Authorized Manager Address for notices: 101 East State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Vice President Chairman's Office & Corporate Secretary Telephone: (610) 444-6350 Facsimile: (610) 444-3365 9 ACADEMY NURSING HOME, INC., a Massachusetts corporation ADS APPLE VALLEY, INC., a Massachusetts corporation ADS CONSULTING, INC., a Massachusetts corporation ADS DANVERS ALF, INC., a Delaware corporation ADS DARTMOUTH ALF, INC., a Delaware corporation ADS HINGHAM ALF, INC., a Delaware Corporation ADS HINGHAM NURSING FACILITY, INC., a Massachusetts corporation ADS HOME HEALTH, INC., a Delaware corporation ADS MANAGEMENT, INC., a Massachusetts corporation ADS/MULTICARE, INC., a Delaware corporation ADS RECUPERATIVE CENTER, INC., a Massachusetts corporation ADS SENIOR HOUSING, INC., a Massachusetts corporation ADS VILLAGE MANOR, INC., a Massachusetts corporation ANR, INC., a Delaware corporation APPLEWOOD HEALTH RESOURCES, INC., a Delaware corporation AUTOMATED PROFESSIONAL ACCOUNTS, INC., a West Virginia corporation BERKS NURSING HOMES, INC., a Pennsylvania corporation BETHEL HEALTH RESOURCES, INC., a Delaware corporation BRIGHTWOOD PROPERTY, INC., a West Virginia corporation CENTURY CARE CONSTRUCTION, INC., a New Jersey corporation CENTURY CARE MANAGEMENT, INC., a Delaware corporation CHATEAU VILLAGE HEALTH RESOURCES, INC., a Delaware corporation CHG INVESTMENT CORP., INC., a Delaware corporation CHNR-I, INC., a Delaware corporation COLONIAL HALL HEALTH RESOURCES, INC., a Delaware corporation COLONIAL HOUSE HEALTH RESOURCES, INC., a Delaware corporation CONCORD HEALTH GROUP, INC., a Delaware corporation CONCORD HOME HEALTH, INC., a Pennsylvania corporation CONCORD REHAB, INC., a Pennsylvania corporation CONCORD SERVICE CORPORATION, a Pennsylvania corporation 10 CVNR, INC., a Delaware corporation DELM NURSING, INC., a Pennsylvania corporation ELMWOOD HEALTH RESOURCES, INC., a Delaware corporation ENCARE OF PENNYPACK, INC., a Pennsylvania corporation ENCARE OF QUAKERTOWN, INC., a Pennsylvania corporation ENCARE OF WYNCOTE, INC., a Pennsylvania corporation ENR, INC., a Delaware corporation GLENMARK ASSOCIATES, INC., a West Virginia corporation GMA - BRIGHTWOOD, INC., a West Virginia corporation GMA CONSTRUCTION, INC., a West Virginia corporation GMA - MADISON, INC., a West Virginia corporation GMA PARTNERSHIP HOLDING COMPANY, INC., a West Virginia corporation GMA - UNIONTOWN, INC., a Pennsylvania corporation HEALTH RESOURCES OF BOARDMAN, INC., a Delaware corporation HEALTH RESOURCES OF CEDAR GROVE, INC., a New Jersey corporation HEALTH RESOURCES OF COLCHESTER, INC., a Connecticut corporation HEALTH RESOURCES OF COLUMBUS, INC., a Delaware corporation HEALTH RESOURCES OF CUMBERLAND, INC., a Delaware corporation HEALTH RESOURCES OF EATONTOWN, INC., a New Jersey corporation HEALTH RESOURCES OF FARMINGTON, INC., a Delaware corporation HEALTH RESOURCES OF GARDNER, INC., a Delaware corporation HEALTH RESOURCES OF GLASTONBURY, INC., a Connecticut corporation HEALTH RESOURCES OF GROTON, INC., a Delaware corporation HEALTH RESOURCES OF LAKEVIEW, INC., a New Jersey corporation HEALTH RESOURCES OF LEMONT, INC., a Delaware corporation HEALTH RESOURCES OF LYNN, INC., a New Jersey corporation HEALTH RESOURCES OF KARMENTA AND MADISON, INC., a Delaware corporation HEALTH RESOURCES OF MARCELLA, INC., a Delaware corporation HEALTH RESOURCES OF MIDDLETOWN (R.I.), INC., a Delaware corporation 11 HEALTH RESOURCES OF MORRISTOWN, INC., a New Jersey corporation HEALTH RESOURCES OF NORFOLK, INC., a Delaware corporation HEALTH RESOURCES OF NORWALK, INC., a Connecticut corporation HEALTH RESOURCES OF PENNINGTON, INC., a New Jersey corporation HEALTH RESOURCES OF ROCKVILLE, INC., a Delaware corporation HEALTH RESOURCES OF SOUTH BRUNSWICK, INC., a New Jersey corporation HEALTH RESOURCES OF TROY HILLS, INC., a New Jersey corporation HEALTH RESOURCES OF WALLINGFORD, INC., a Delaware corporation HEALTH RESOURCES OF WARWICK, INC., a Delaware corporation HEALTHCARE REHAB SYSTEMS, INC., a Pennsylvania corporation HORIZON ASSOCIATES, INC., a West Virginia corporation HORIZON MOBILE, INC., a West Virginia corporation HORIZON REHABILITATION, INC., a West Virginia corporation HR OF CHARLESTON, INC., a West Virginia corporation HRWV Huntington, Inc., a West Virginia corporation LAKEWOOD HEALTH RESOURCES, INC., a Delaware corporation LAUREL HEALTH RESOURCES, INC., a Delaware corporation LEHIGH NURSING HOMES, INC., a Pennsylvania corporation LWNR, INC., a Delaware corporation MABRI CONVALESCENT CENTER, INC., a Connecticut corporation MARKGLEN, INC., a West Virginia corporation MARSHFIELD HEALTH RESOURCES, INC., a Delaware corporation MONTGOMERY NURSING HOMES, INC., a Pennsylvania corporation MULTICARE AMC, INC., a Delaware Corporation MULTICARE HOME HEALTH OF ILLINOIS, INC., a Delaware corporation NURSING AND RETIREMENT CENTER OF THE ANDOVERS, INC., a Massachusetts corporation PHC OPERATING CORP., a Delaware corporation POCAHONTAS CONTINUOUS CARE CENTER, INC., a West Virginia corporation PRESCOTT NURSING HOME, INC., a Massachusetts corporation 12 PROGRESSIVE REHABILITATION CENTERS, INC., a Delaware corporation PROVIDENCE HEALTH CARE, INC., a Delaware corporation REST HAVEN NURSING HOME, INC, a West Virginia corporation RIDGELAND HEALTH RESOURCES, INC., a Delaware corporation RIVER PINES HEALTH RESOURCES, INC., a Delaware corporation RIVERSHORES HEALTH RESOURCES, INC., a Delaware corporation RLNR, INC., a Delaware corporation ROSE HEALTHCARE, INC., a New Jersey corporation ROSE VIEW MANOR, INC., a Pennsylvania corporation RSNR, INC., a Delaware corporation RVNR, INC., a Delaware corporation SENIOR LIVING VENTURES, INC., a Pennsylvania corporation SCHUYLKILL NURSING HOMES, INC., a Pennsylvania corporation SCHUYLKILL PARTNERSHIP ACQUISITION CORP., a Pennsylvania corporation SENIOR SOURCE, INC., a Massachusetts corporation SNOW VALLEY HEALTH RESOURCES, INC., a Delaware corporation SOLOMONT FAMILY FALL RIVER VENTURE, INC., a Massachusetts corporation SOLOMONT FAMILY MEDFORD VENTURE, INC., a Massachusetts corporation STAFFORD CONVALESCENT CENTER, INC., a Delaware corporation S.T.B. INVESTORS, LTD., a New York corporation SVNR, INC., a Delaware corporation THE ADS GROUP, INC., a Massachusetts corporation TRI-STATE MOBILE MEDICAL SERVICES, INC., a West Virginia corporation WESTFORD NURSING AND RETIREMENT CENTER, INC., a Massachusetts corporation 13 WILLOW MANOR NURSING HOME, INC., a Massachusetts corporation By:______________________________ Barbara J. Hauswald as Treasurer on behalf of each of the foregoing Address for notices: 101 East State Street Kennett Square, PA 19348 Attention: Ira C. Gubernick, Vice President Chairman's Office & Corporate Secretary Telephone: (610) 444-6350 Facsimile: (610) 444-3365 14 BREYUT CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager ENCARE OF MENDHAM, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF BRIDGETON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF CINNAMINSON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF CRANBURY, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF EMERY, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF ENGLEWOOD, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF EWING, L.L.C., a New Jersey limited liability company. by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF FAIR LAWN, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF JACKSON, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF RIDGEWOOD, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager HEALTH RESOURCES OF WEST ORANGE, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager POMPTON CARE, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager ROEPHEL CONVALESCENT CENTER, L.L.C., a New Jersey limited liability company, by Century Care Management, Inc., its authorized manager By:______________________________ On behalf of each of the foregoing Authorized Managers by its Treasurer 15 The foregoing Amendment No. 3 is acknowledged and agreed to by the undersigned Surety (whether in its capacity as Surety, pledgor under the Pledge Agreement or otherwise) as of the date first above written. GENESIS ELDERCARE CORP. By:______________________ Name: Barbara J. Hauswald Title: Treasurer 16 AGENTS, ISSUER AND LENDERS: MELLON BANK, N.A., as a Lender, as Issuer and as Administrative Agent By________________________________ Name: Michael J. Fox Title: Vice President Address for notices: street address: AIM 199-5220 Mellon Independence Center 701 Market Street Philadelphia, Pennsylvania 19106 mailing address: AIM 199-5220 P.O. Box 7899 Philadelphia, Pennsylvania 19101-7899 Attention: Linda Sigler, Loan Administration Telephone: 215-553-4583 Facsimile: 215-553-4789 17 With a copy to Plymouth Meeting Executive Campus 610 W. Germantown Pike, Suite 200 Plymouth Meeting, Pennsylvania 19462 Attention: Michael Fox Vice President Telephone: 610-941-8426 Facsimile: 610-941-4136 With a copy for notices respecting assignments to: MELLON BANK, N.A. One Mellon Bank Center 45th Floor Pittsburgh, PA 15258-0001 Attention: Dean Hazelton Telephone: 412-236-0316 Facsimile: 412-236-9176 18 CITICORP USA, INC., as a Lender and as Syndication Agent By________________________________ Name: Title: Address for notices: 399 Park Avenue 8th Floor, Zone 6 New York, NY 10043 Attention: Margaret A. Brown Telephone: 212-559-0501 Facsimile: 212-793-0289 19 FIRST UNION NATIONAL BANK, as a Lender and as Documentation Agent By________________________________ Name: Title: FIRST UNION NATIONAL BANK (as successor to CORESTATES BANK, N.A.) By________________________________ Name: Title: Address for notices: One First Union Center TW-5 Charlotte, NC 28288-0735 Attention: Marijane Boyle Telephone: 704-383-0624 Facsimile: 704-383-9144 20 NATIONSBANK, N.A., as a Lender and as a Syndication Agent By_______________________________ Name: Title: Address for notices: 101 North Tryon Street 15th Floor Charlotte, NC 28255 NC1-001-15-11 Attention: Matthew Menz Telephone: 704-388-1111 Facsimile: 704-409-0083 With a copy to 100 North Tryon Street 17th Floor Charlotte, NC 28255 NC1-007-1711 Attention: Ms. Marty Mitchell Telephone: 704-388-1115 Facsimile: 704-386-1270 e-mail: marty.mitchell@nationsbank.com 21 CREDIT LYONNAIS NEW YORK BRANCH By:_______________________________ Name: Title: Address for notices: Credit Lyonnaise New York Branch 1301 Avenue of the Americas New York, NY 10019 Attention: John C. Oberle Telephone: (212) 261-7344 Facsimile: (212) 261-3440 22 FLEET NATIONAL BANK By:_________________________ Name: Title: Address for notices: Fleet National Bank One Federal Street MA OF D07B Boston, MA 02110 Attention: Carol Paige Telephone: (617) 346-4619 Facsimile: (617) 346-4699 23 THE INDUSTRIAL BANK OF JAPAN, LIMITED By:__________________________________ Name: Title: Address for notices: The Industrial Bank of Japan, Limited 1251 Avenue of the Americas New York, NY 10020 Attention: Randall Wernes Telephone: (212) 282-3461 Facsimile: (212) 282-4488 24 NATIONAL WESTMINSTER BANK Plc By:____________________________ Name: Title: Address for notices: National Westminster Bank Plc 65 East 55th Street, 21st Floor New York, NY 10022 Attention: Andrew Weinberg Phone: (212) 418-4567 Facsimile: (212) 418-4594 with a copy to: Gleacher NatWest Inc. 660 Madison Avenue, 14th Floor New York, NY 10021 Attention: Andrew Weinberg Telephone: (212) 418-4567 Facsimile: (212) 418-4594 25 THE SAKURA BANK, LIMITED By:_____________________________ Name: Title: Address for notices: The Sakura Bank, Limited 277 Park Avenue, 45th Floor New York, NY 10172 Attention: Yoshikazu Nagura Telephone: (212) 909-4549 Facsimile: (212) 909-4599 26 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By:_______________________________ Name: Title: Address for notices: Bank of America National Trust & Savings Associations 100 North Tryon Street, 17th Floor Charlotte, NC 28255 Attention: Michael Andry Telephone: (704) 388-8878 Facsimile: (704) 386-3893 With copies to NationsBank, N.A. 101 North Tryon Street, 15th Floor Charlotte, NC 28255 NC1-001-15-11 Attention: Matthew Menz Telephone: 704-388-1111 Facsimile: 704-409-0083 and NationsBank, N.A. 100 North Tryon Street, 17th Floor Charlotte, NC 28255 NC1-007-1711 Attention: Ms. Marty Mitchell Telephone: 704-388-1115 Facsimile: 704-388-6002 e-mail: marty.mitchell@nationsbank.com 27 PARIBAS By:__________________________ Name: Title: By:__________________________ Name: Title: Address for notices: Paribas 787 Seventh Avenue New York, NY 10019 Attention: Tod Majidzadeh Telephone: (212) 841-2931 Facsimile: (212) 841-2292 28 BANKBOSTON, N.A. By:___________________________ Name: Title: Address for notices: BankBoston, N.A. 100 Federal Street, 01-08-06 Boston, MA 02110 Attention: William R. Rogers Telephone: (617) 434-6247 Facsimile: (617) 434-0819 29 THE BANK OF NEW YORK By:___________________________ Name: Title: Address for notices: The Bank of New York One Wall Street, 21st Floor New York, NY 10286 Attention: Peter Abdill Telephone: (212) 635-8020 Facsimile: (212) 635-8092 30 BANK OF TOKYO-MITSUBISHI TRUST COMPANY By:___________________________ Name: Title: Address for notices: Bank of Tokyo-Mitsubishi Trust Company 1251 Avenue of the Americas, 12th Floor New York, NY 10020-1104 Attention: Douglas Weir Telephone: (212) 782-4503 Facsimile: (212) 782-4935 31 CRESTAR BANK By:___________________________________ Name: Title: Address for Notices: Crestar Bank 120 E. Baltimore Street, 25th Floor Baltimore, MD 21202 Attention: Andrea Robinson Telephone: (410) 986-1686 Facsimile: (410) 986-1012 32 DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN BRANCH By:__________________________ Name: Title: By:__________________________ Name: Title: Address for notices: Dresdner Bank AG, New York 75 Wall Street, 25th Floor New York, NY 10005-2889 Attention: Felix K. Camacho Telephone: (212) 429-3007 Facsimile: (212) 429-2129 33 FINOVA CAPITAL CORPORATION By:_________________________ Name: Title: Address for notices: Finova Capital Corporation 311 S. Wacker, Suite 4400 Chicago, IL 60606 Attention: Brian Williamson Telephone: (312) 294-4175 Facsimile: (312) 322-3553 34 KEY CORPORATE CAPITAL INC. By:__________________________ Name: Title: Address for notices: Key Corporate Capital Inc. c/o Key Bank, N.A. 127 Public Square Cleveland, OH 44114 Attention: Angela Mago OH-01-27-0605 Telephone: (216) 689-3247 Facsimile: (216) 689-5970 35 FIRST NATIONAL BANK OF MARYLAND By:____________________________ Name: Title: Address for notices: First National Bank of Maryland 25 S. Charles Street, 18th Floor Baltimore, MD 21201 Attention: Robert H. Hauver Telephone: (410) 244-4246 Facsimile: (410) 244-4388 36 NATEXIS BANQUE BFCE By:__________________________ Name: Title: By:__________________________ Name: Title: Address for notices: Natexis Banque BFCE 645 Fifth Avenue, 20th Floor New York, NY 10022 Attention: Frank Madden Telephone: (212) 872-5180 Facsimile: (212) 872-5045 37 NATIONAL CITY BANK OF PENNSYLVANIA By:_______________________________ Name: Title: Address for notices: National City Bank of Pennsylvania 20 Stanwix Street, 46-25-191 Pittsburgh, PA 15222 Loc. 46-25-191 Attention: Debra W. Riefner Telephone: (412) 644-8880 Facsimile: (412) 471-4883 38 THE SANWA BANK, LIMITED By:___________________________ Name: Title: Address for notices: The Sanwa Bank, Limited 55 E. 52nd Street New York, NY 10055 Attention: Jean-Michel Fatovic Telephone: (212) 339-6397 Facsimile: (212) 754-1304 39 SUMMIT BANK By:____________________________________ Name: James P. Andersen Title: Vice President and Regional Manager Address for notices: Summit Bank 250 Moore Street, 2nd Floor Hackensack, NJ 07601 Attention: Tom Hanrahan Telephone: (201) 646-5859 Facsimile: (201) 646-9497 40 THE DAI-ICHI KANGYO BANK, LTD. By:________________________________ Name: Title: Address for notices: The Dai-Ichi Kangyo Bank, Ltd. One World Trade Center, 48th Floor New York, NY 10048 Attention: Takayuki Kumagai Telephone: (212) 432-6651 Facsimile: (212) 488-8955 41 BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC. By:________________________________ Name: Title: By:________________________________ Name: Title: Address for notices: Bank Austria Creditanstalt Corporate Finance, Inc. Two Greenwich Plaza Greenwich, CT 06830 Attention: Cliff Wells Telephone: (203) 861-6417 Facsimile: (203) 861-0297 42 CREDIT SUISSE FIRST BOSTON By:_____________________________ Name: Title: By:_____________________________ Name: Title: Address for notices: Credit Suisse First Boston 11 Madison Avenue New York, NY 10010 Attention: William S. Lutkins Telephone: (212) 325-9705 Facsimile: (212) 325-8319 43 FIRST NATIONAL BANK OF CHICAGO By:_____________________________ Name: Title: Address for notices: First National Bank of Chicago 1 First National Plaza Chicago, IL 60670 Attention: Patricia Carpen Telephone: (312) 732-1418 Facsimile: (312) 732-2016 44 SCOTIABANC, INC. By:____________________________ Name: Title: Address for notices: ScotiaBanc, Inc. 600 Peachtree Street NE Suite 2700 Atlanta, GA 30308 Attention: Dana Maloney Telephone: (404) 877-1524 Facsimile: (404) 888-8998 45 CIBC INC. By:_______________________________ Name: Title: Address for notices: CIBC Inc. 425 Lexington Avenue, 8th Floor New York, NY 10025 Attention: Judith Kirshner Telephone: (212) 856-3547 Facsimile: (212) 856-3991 46 AMSOUTH BANK By:__________________________ Name: Title: Address for notices: AmSouth Bank 1900 5th Ave. N. AST7FL Birmingham, AL 35203 Attention: Ken DiFatta Telephone: (205) 801-0358 Facsimile: (205) 326-4790 47 PFL LIFE INSURANCE COMPANY By:_______________________________ Name: Title: Address for notices: PFL Life Insurance Company c/o Aegon USA Investment Management, Inc. 4333 Edgewood Road, NE Cedar Rapids, IA 52499 Attention: John Bailey, Securities Analyst Telephone: (319) 369-2811 Facsimile: (319) 369-2666 48 MONUMENTAL LIFE INSURANCE COMPANY (successor by merger to PEOPLES SECURITY LIFE INSURANCE COMPANY) By:___________________________ Name: Title: Address for notices: Monumental Life Insurance Company c/o Aegon USA Investment Management, Inc. 4333 Edgewood Road, NE Cedar Rapids, IA 52499 Attention: John Bailey, Securities Analyst Telephone: (319) 369-2811 Facsimile: (319) 369-2666 Payment Advice Attention: Marla Johnson Monumental Life Insurance Company c/o AEGON USA Investment Management, Inc. 4333 Edgewood Road, NE Cedar Rapids, IA 52499 Fax Number: (319) 398-8695 49 FLOATING RATE PORTFOLIO By: INVESCO Senior Secured Management, Inc., as attorney in fact By:________________________________ Address for notices: Floating Rate Portfolio c/o INVESCO Senior Secured Management, Inc. 1166 Avenue of the Americas, 27th Floor New York, NY 10036 Attention: Kathleen Lenarcic Telephone: (212) 278-9794 Facsimile: (212) 278-9619 50 MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST By:________________________________ Name: Title: Address for notices: Morgan Stanley Dean Witter Prime Income Trust c/o Morgan Stanley Dean Witter Advisors 72nd Floor Two World Trade Center New York, NY 10048 Attention: Kevin Egan Telephone: (212) 392-5845 Facsimile: (212) 392-5345 51 DEEPROCK & COMPANY By: Eaton Vance Management as Investment Advisor By:______________________________ Name: Title: Address for notices: State Street Bank & Trust Company Corporate Trust Division One Enterprise Drive North Quincy, MA 02171 Attention: Patrick McEnroe Telephone: (617) 664-5367 Facsimile: (617) 664-5366 Eaton Vance Management Attention: Prime Rate Reserves 24 Federal Street, 6th Floor Boston, MA 02110 Attention: Payson Swaffield Telephone: (617) 654-8484 Telecopier: (617) 695-9594 Reference: 52 ING HIGH INCOME PRINCIPAL PRESERVATION FUND HOLDINGS, LDC By: ING Capital Advisors, Inc., As Investment Advisor By:_________________________________ Name: Title: Address for notices: ING High Income Principal Preservation Fund Holdings, LDC c/o ING Capital Advisors, Inc. 233 S. Wacker Drive #5200 Chicago, IL 60606 Attention: Jane Musser Nelson Telephone: (312) 496-7606 Facsimile: (312) 496-7611 53 SENIOR DEBT PORTFOLIO BY: Boston Management and Research as Investment Advisor By:______________________________ Name: Title: Address for notices: Eaton Vance Management Attention: Prime Rate Services 24 Federal Street, 6th Floor Boston, MA 02110 Attention: Payson Swaffield Telephone: (617) 654-8484 Facsimile: (617) 695-9594 54 MASSACHUSETTS MUTUAL LIFE INSURANCE CO. By:______________________________ Name: Title: Address for notices: Massachusetts Mutual Life Insurance Co. 1295 State Street Springfield, MA 01111 Attention: John Wheeler, Managing Director Telephone: (413) 744-6228 Facsimile: (413) 744-2022 55 MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By:_______________________________ Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO By: Merrill Lynch Asset Management, L.P., as Investment Advisor By:_______________________________ Name: Title: Address for notices: Merrill Lynch Senior Floating Rate Fund, Inc. c/o Merrill Lynch Asset Management 800 Scudders Mill Road - Area 1B Plainsboro, NJ 08536 Attention: Colleen Cunniffe Telephone: (609) 282-2093 Facsimile: (609) 282-2756 56 MERRILL LYNCH GLOBAL INVESTMENT SERIES Income Strategies Portfolio By: Merrill Lynch Asset Management, L.P., as Investment Advisor As assignee By:_______________________________ Name: Title: Address for notices: Merrill Lynch Global Investment Series c/o Merrill Lynch Asset Management, L.P. 800 Scudders Mill Road - Area 1B Plainsboro, NJ 08536 Attention: Colleen Cunniffe Telephone: (609) 282-2093 Facsimile: (609) 282-2756 57 METROPOLITAN LIFE INSURANCE COMPANY By:_____________________________ Name: Title: Address for notices: Metropolitan Life Insurance Company 334 Madison Avenue Convent Station, NJ 07961-0633 Attention: James Dingler Asst. Vice President Telephone: (973) 254-3206 Facsimile: (973) 254-3050 58 THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By:________________________________ Name: Title: Its Authorized Representative Address for notices: The Northwestern Mutual Life Insurance Company 720 E. Wisconsin Avenue Milwaukee, WI 53202 Attention: David A. Barras Director-Investments Northwestern Investment Management Company Telephone: (414) 299-1618 Facsimile: (414) 299-7124 59 NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION By: New York Life Insurance Company By:______________________________ Name: Title: Address for notices: New York Life Insurance and Annuity Corporation c/o New York Life Insurance Company 51 Madison Avenue, Room 206 New York, NY 10010 Attention: Adam Clemens Telephone: (212) 576-7238 Facsimile: (212) 447-4122 60 OAK HILL SECURITIES FUND, L.P. By: Oak Hill Securities GenPar, L.P., Its General Partner By: Oak Hill Securities MGP, Inc., Its General Partner By:_______________________________ Name: Title: Address for notices: Oak Hill Securities Fund, L.P. c/o O'Sullivan Graev & Karabell, LLP 30 Rockefeller Plaza New York, NY 10112 Attention: John Ashmead, Esq. Telephone: (212) 408-2494 Facsimile: (212) 728-5950 61 OCTAGON LOAN TRUST By:____________________________ Name: Title: Address for notices: Octagon Loan Trust 380 Madison Avenue, 12th Floor New York, NY 10017 Attention: James P. Ferguson Managing Director Telephone: (212) 622-3070 Facsimile: (212) 622-3797 62 PARIBAS CAPITAL FUNDING LLC By:____________________________ Name: Title: Address for notices: Paribas Capital Funding LLC 787 Seventh Avenue, 32nd Floor New York, NY 10019 Attention: Michael Weinberg Telephone: (212) 841-2544 Facsimile: (212) 841-2144 with a copy to: State Street Bank & Trust Co. Corporate Trust Dept. Attn: Bill Connolly Phone: (617) 664-5410 Fax: (617) 664-5366(67)(68) 63 ROYALTON COMPANY By: Pacific Investment Management Company, as its Investment Advisor By:_____________________________ Name: Title: Address for notices: Royalton Company c/o Pacific Investment Management Co. 840 Newport Center Drive Newport Beach, CA 92658 Attention: Melissa Fejdasz Telephone: (949) 721-5169 Facsimile: (949) 718-2623 64 NORTHERN LIFE INSURANCE COMPANY By: ____________________________ Name: Title: Address for notices: Northern Life Insurance Company c/o Reliastar Investment Research, Inc. 100 Washington Avenue South, Suite 800 Minneapolis, MN 55401-2121 Attention: James V. Wittich Telephone: (612) 372-3553 Facsimile: (612) 372-5368 65 KZH SOLEIL LLC By:________________________________ Name: Title: Address for notices: KZH Soleil LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 66 KZH III LLC By:_____________________________ Name: Title: Address for notices: KZH III LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 67 KZH CRESCENT LLC By:_____________________________ Name: Title: Address for notices: KZH Crescent LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 68 VAN KAMPEN PRIME RATE INCOME TRUST By:__________________________ Name: Title: VAN KAMPEN CLO I, LIMITED by: Van Kampen Management, Inc., as Collateral Manager By:__________________________ Name: Title: VAN KAMPEN SENIOR INCOME TRUST By:__________________________ Name: Title: Address for notices: In care of: Van Kampen One Parkview Plaza Oakbrook Terrace, IL 60181 Attention: Jeffrey Maillet Telephone: (630) 684-6438 Facsimile: (630) 684-6740 69 CONTINENTAL ASSURANCE COMPANY Separate Account (E) By: TCW Asset Management Company as attorney-in-fact By:_______________________________ Name: Mark L. Gold Title: Managing Director By:_______________________________ Name: Justin L. Driscoll Title: Senior Vice President Address for notices: Continental Assurance Company c/o TCW Asset Management Company 200 Park Avenue, Suite 2200 New York, NY 10166-0228 Attention: Mark L. Gold/Justin L. Driscoll Telephone: (212) 771-4137 Facsimile: (212) 771-4159 70 CANADIAN IMPERIAL BANK OF COMMERCE By:______________________________ Name: Title: Address for notices: Canadian Imperial Bank of Commerce 425 Lexington Avenue, 7th Floor New York, NY 10025 Attention: William Swenson Telephone: (212) 856-3935 Facsimile: (212) 856-3799 71 MORGAN STANLEY SENIOR FUNDING, INC. By:_____________________________ Name: Title: Address for notices: MORGAN STANLEY SENIOR FUNDING, INC. 1585 Broadway, 10th Floor New York, New York 10036 Attention: James Morgan Telephone: (212) 761-4866 Facsimile: (212) 761-0592 72 CRESCENT/MACH I PARTNERS, L.P. by: TCW Asset Management Company, its Investment Manager By:_____________________________ Name: Title: Address for notices: Crescent/Mach I Partners L.P. c/o State Street Bank & Trust Co. Two International Place Boston, MA 02110 Attention: Elizabeth Kennedy Telephone: (617) 664-5015 Facsimile: (617) 664-5291 PLEASE COPY RATE SET NOTICE TO: Mark L. Gold/Justin L. Driscoll Trust Company of the West 200 Park Avenue New York, NY 10166 Telephone: (212) 771-4137 Fax: (212) 771-4159 73 NEW YORK LIFE INSURANCE COMPANY By:______________________________ Name: Title: Address for notices: New York Life Insurance and Annuity Corporation c/o New York Life Insurance Company 51 Madison Avenue Room 206 New York, New York 10010 Attention: Adam Clemens Telephone: (212) 576-7238 Facsimile: (212) 447-4122 74 CITY NATIONAL BANK By:______________________________ Name: Title: Address for notices: City National Bank 400 N. Roxbury Drive, 3rd Floor Beverly Hills, CA 90210 Attention: Randall Watsek Telephone: 310/888-6131 Fax: 310/888-6564 75 TORONTO-DOMINION (NEW YORK), INC. By:_____________________________ Address for notices: The Toronto-Dominion (New York), Inc. 909 Fannin, Suite 1700 Houston, TX 77010 Attention: Sonja Jordan Telephone: 713/653-8244 Fax: 713/951-9921 76 LEHMAN COMMERCIAL PAPER INC. By:________________________ Address for notices: Lehman Commercial Paper Inc. 3 World Financial Center New York, NY 10285 Attention: Michele Swanson Telephone: 212/526-0330 Fax: 212/526-0242 77 CAPTIVA II FINANCE LTD. By:___________________________ Address for notices: Captiva II Finance Ltd. c/o Deutsche Morgan Grenfell (Cayman) Limited P.O. Box 1984GT, Elizabethan Square Grand Cayman, Cayman Islands Attention: Director Telephone: (345) 949-8244 Facsimile: (345) 949-8178 with a copy to: Stanfield Capital Partners 330 Madison Avenue, 27th Flr. New York, NY 10017 Attention: Christopher Bondy Telephone: (212) 284-4304 Facsimile: (212) 284-4320 78 CERES FINANCE LTD. By:____________________________ Address for notices: Ceres Finance Ltd. c/o Deutsche Morgan Grenfell (Cayman) Limited P.O. Box 1984GT, Elizabethan Square Grand Cayman, Cayman Islands Attention: Director Telephone: (345) 949-8244 Facsimile: (345) 949-8178 with a copy to: Stanfield Capital Partners 330 Madison Avenue, 27th Flr. New York, NY 10017 Attention: Christopher Bondy Telephone: (212) 284-4304 Facsimile: (212) 284-4320 79 COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH By:___________________________ Name: Title: By:___________________________ Name: Title: Address for notices: Rabobank Nederland 245 Park Avenue New York, NY 10167 Attention: M. Christina Debler Telephone: (212) 916-7967 Facsimile: (212) 916-7837 80 AMARA-2 FINANCE LTD. By:_____________________________ Name: Title: Address for notices: Amara-2 Finance Ltd. c/o Stanfield Capital Partners LLC 330 Madison Avenue, 27th Flr. New York, NY 10017 Attention: Christopher Bondy Telephone: (212) 284-4304 Facsimile: (212) 284-4320 81 MLCBO IV (CAYMAN) LTD. BY: HIGHLAND CAPITAL MANAGEMENT L.P., as Collateral Manager By:______________________________ Name: Title: Address for notices: MLCBO IV (CAYMAN) LTD. c/o Highland Capital Management L.P. as Collateral Manager 1150 Two Galleria Tower 13455 Noel Road, LB #45 Dallas, TX 75240 Attention: Mark Okada Telephone: (972) 233-4300 Facsimile: (972) 233-4343 82 JACKSON NATIONAL LIFE INSURANCE COMPANY By: PPM America, Inc., as attorney- in-fact, on behalf of Jackson National Life Insurance Company By:______________________________ Name: Title: Address for notices: PPM America, Inc. 225 W. Wacker, Suite 1200 Chicago, IL 60606 Attention: Michael DiRe Telephone: (312) 634-2509 Facsimile: (312) 634-0054 83 CYPRESSTREE INVESTMENT PARTNERS I., Ltd. By: CypressTree Investment Management Company, Inc., as Portfolio Manager By:____________________________ Name: Title: Address for notices: CypressTree Investment Partners I, Ltd. 125 High Street Boston, MA 02110 Attention: John Fraser Telephone: (617) 946-0600 Facsimile: (617) 946-5681 84 INDOSUEZ CAPITAL FUNDING III, LIMITED By: Indosuez Capital, as Portfolio Advisor By:______________________________ Name: Title: Address for notices: Indosuez Capital Funding III, Limited 1211 Avenue of the Americas, 8th Floor New York, NY 10036-8701 Attention: Melissa Marano Telephone: (212) 278-2231 Facsimile: (212) 278-2250 85 THE ROYAL BANK OF SCOTLAND plc By:___________________________ Name: Title: Address for notices: The Royal Bank of Scotland plc Wall Street Plaza 88 Pine Street, 26th Floor New York, NY 10005 Attention: Derek Bonner Telephone: (212) 269-0938 Facsimile: (212) 269-8929 86 ML CLO XX PILGRIM AMERICA (CAYMAN) LTD. By: Pilgrim Investments, Inc. As its Investment Manager By:_____________________________ Name: Title: Address for notices: ML CLO XX Pilgrim America (Cayman) Ltd. c/o Pilgrim Investments, Inc. Two Renaissance Square 40 North Central Avenue, Suite 1200 Phoenix, AZ 85004-4424 Attention: Tom Burgess Telephone: (602) 417-8248 Facsimile: (602) 417-8327 87 PAM CAPITAL FUNDING LP BY: HIGHLAND CAPITAL MANAGEMENT L.P., as Collateral Manager By:_______________________________ Name: Title: Address for notices: PAM Capital Funding LP c/o Highland Capital Management L.P. 1150 Two Galleria Tower 13455 Noel Road, LB #45 Dallas, TX 75240 Attention: Mark Okada Telephone: (972) 233-4300 Facsimile: (972) 233-4343 88 STEIN ROE & FARNHAM INCORPORATED As Agent For KEYPORT LIFE INSURANCE COMPANY By:__________________________________ Name: Title: Address for notices: Keyport Life Insurance Company c/o Stein Roe & Farnham One South Wacker Drive, 33rd Floor Chicago, IL 60606 Attention: Brian W. Good Telephone: (312) 368-7644 Facsimile: (312) 368-7857 89 CHASE SECURITIES INC., as Agent For The Chase Manhattan Bank, as Assignee By:__________________________________ Name: Title: Address for notices: Chase Securities, Inc. 270 Park Avenue, 4th Floor New York, NY 10017 Attention: William Bokos Telephone: (212) 270-3142 Facsimile: (212) 270-7968 90 ALLIANCE CAPITAL MANAGEMENT L.P., As Manager on behalf of ALLIANCE CAPITAL FUNDING, L.L.C. By: ALLIANCE CAPITAL MANAGEMENT CORPORATION, General Partner of Alliance Capital Management L.P. By:__________________________________ Name: Title: Address for notices: Alliance Capital Funding, L.L.C. Alliance Capital Management L.P. 1345 Avenue of the Americas, 38th Floor New York, NY 10105 Attention: Savitri Alex Telephone: (212) 969-1350 Facsimile: (212) 969-1466 91 ALLIANCE INVESTMENTS, LIMITED, As Assignee By: Alliance Capital Management Corp. By:__________________________________ Name: Title: Address for notices: Alliance Capital Management L.P. 1345 Avenue of the Americas New York, NY 10105 Attention: Savitri Alex Alliance Investments, Ltd. Telephone: (212) 969-1350 Facsimile: (212) 969-1466 92 ML CLO XII PILGRIM AMERICA (CAYMAN) LTD. By: Pilgrim Investments, Inc. As its Investment Manager By:__________________________________ Name: Title: Address for notices: ML CLO XII PILGRIM AMERICA (CAYMAN) LTD. c/o Pilgrim Investments, Inc. Two Renaissance Square, Suite 1200 40 North Central Avenue Phoenix, AZ 85004-4424 Attention: Tom Burgess Telephone: (602) 417-8248 Facsimile: (602) 417-8327 93 INTEGRITY LIFE INSURANCE COMPANY By:__________________________________ Name: Title: Address for notices: Integrity Life Insurance Company 515 W. Market Street Louisville, KY 40202-3319 Attention: James Myjak Telephone: (502) 582-7921 Facsimile: (502) 582-7903 94 LTCB TRUST COMPANY By:__________________________________ Name: Title: Address for notices: LTCB Trust Company 165 Broadway, 49th Floor New York, NY 10006 Attention: Junichi Ebihara Telephone: (212) 335-4477 Facsimile: (212) 608-2371 95 KZH CRESCENT-3 LLC By:__________________________ Name: Title: Address for notices: KZH Crescent-3 LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 96 CAPTIVA III FINANCE, LTD., as advised by Pacific Investment Management Company By:___________________________ Address for notices: Captiva III Finance, Ltd. c/o Pacific Investment Management Co. 840 Newport Center Drive Newport Beach, CA 92660 Attention: Melissa Fejdasz Telephone: (949) 721-5169 Facsimile: (949) 718-2623 97 KZH APPALOOSA LLC By:___________________________ Name: Title: Address for notices: KZH Appaloosa LLC c/o The Chase Manhattan Bank 450 West 33rd Street - 15th Floor New York, NY 10001 Attention: Virginia Conway Telephone: (212) 946-7575 Facsimile: (212) 946-7776 98 EX-27 5 FINANCIAL DATA SCHEDULE
5 1 U.S. Dollars 3-MOS SEP-30-1999 OCT-01-1998 DEC-31-1998 1 10,384 0 123,388 0 0 154,622 718,920 0 1,711,274 122,592 735,522 0 0 0 730,660 1,711,274 168,484 168,484 129,812 129,812 24,456 0 16,185 (1,969) 609 (2,578) 0 0 0 (2,578) 0 0
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