AMENDMENT NO. 3 TO CREDIT AGREEMENT

EXHIBIT 10.1

AMENDMENT NO. 3 TO CREDIT AGREEMENT

AMENDMENT NO. 3 (this “Amendment”) dated as of October 19, 2006, to the $400,000,000 Amended and Restated Credit Agreement dated as of June 28, 2004 (as heretofore amended, the “Credit Agreement”) among KINDRED HEALTHCARE, INC. (the “Borrower”), the LENDERS party thereto, and JPMORGAN CHASE BANK, N.A. (formerly known as JPMorgan Chase Bank), as Administrative Agent and Collateral Agent.

W I T N E S S E T H:

WHEREAS, the parties hereto desire to amend certain provisions of the Credit Agreement as provided herein;

NOW, THEREFORE, the parties hereto agree as follows:

SECTION 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the Credit Agreement shall, after the amendments herein become effective, refer to the Credit Agreement as amended hereby.

SECTION 2. Defined Terms. The definition of “HCPI Transaction” in Section 1.01 of the Credit Agreement is amended and restated in its entirety to read as follows:

““HCPI Transaction” means (a) the transaction pursuant to which a Credit Party acquired the HCPI Property referred to as “MO# 860/861” in Part A of Schedule 1.01J from Health Care Property Investors, Inc. (together with its affiliates, “HCPI”) and, substantially simultaneously therewith and as sole consideration for which acquisition, entered into a Sale and Leaseback Transaction with respect to the HCPI Property referred to as “TN# 274” in Part A of Schedule 1.01J with HCPI and (b) the proposed transaction pursuant to which a Credit Party acquires the HCPI Properties referred to in Part B of Schedule 1.01J from HCPI and, substantially simultaneously therewith and as consideration for which acquisition, pays HCPI cash consideration of $23,000,000 and enters into a Sale and Leaseback Transaction with respect to the HCPI Properties referred to in Part C of Schedule 1.01J with HCPI, including $13,000,000 of supplemental rent.”

SECTION 3. Future Assets To Be Added To Collateral. Section 5.09(e) of the Credit Agreement is amended and restated in its entirety to read as follows:

“(e) If any Specified Property referred to in Part B of Schedule 1.01H with a fair market value exceeding $6,000,000 (in the case of a hospital) or $3,000,000 (in all other cases) has not been sold on or prior to the date that is nine months after the date on which the transaction referred to in clause (b) of the definition of “HCPI Transaction” is consummated (the date on which such transaction is consummated, the “HCPI Transaction Consummation Date”) (other than to the Borrower or any Subsidiary of

the Borrower), the Borrower shall promptly (and in any event by no later than the date that is ten months after the HCPI Transaction Consummation Date) cause such Specified Property to be added to the Collateral by delivering to the Agent a Mortgage with respect thereto. Prior to such time, the Borrower shall ensure that no Lien (other than Permitted Encumbrances) over any such Specified Property is granted to any Person.”

SECTION 4. Credit Agreement Schedules. (a) Schedule 1.01H to the Credit Agreement is replaced in its entirety with Schedule 1.01H attached hereto.

(b) Schedule 1.01J to the Credit Agreement is replaced in its entirety with Schedule 1.01J attached hereto.

SECTION 5. Representations Correct; No Default. The Borrower represents and warrants that (i) the representations and warranties contained in the Financing Documents are true as though made on and as of the date hereof and will be true on and as of the Amendment Effective Date (as defined below) as though made on and as of such date and (ii) no Default has occurred and is continuing on the date hereof and no Default will occur or be continuing on the Amendment Effective Date.

SECTION 6. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

SECTION 7. Effectiveness. (a) This Amendment shall become effective as of the date hereof on the date (the “Amendment Effective Date”) when the Administrative Agent shall have received duly executed counterparts hereof signed by the Borrower, the Subsidiary Guarantors and the Required Lenders (or, in the case of any Lender as to which an executed counterpart shall not have been received, the Administrative Agent shall have received facsimile or other written confirmation from such party of execution of a counterpart hereof by such Lender).

(b) Except as expressly set forth herein, the amendments contained herein shall not constitute a waiver or amendment of any term or condition of the Credit Agreement or any other Financing Document, and all such terms and conditions shall remain in full force and effect and are hereby ratified and confirmed in all respects.

SECTION 8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

2

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

KINDRED HEALTHCARE, INC., as     Borrower
By:		/s/ Xxxx X. Xxxxxxxx
Name:		Xxxx X. Xxxxxxxx
Title:		Assistant Treasurer

ADVANCED INFUSION SYSTEMS, INC. CARIBBEAN BEHAVIORAL HEALTH     SYSTEMS, INC. COURTLAND GARDENS HEALTH CENTER,     INC. HELIAN ASC OF NORTHRIDGE, INC. HELIAN HEALTH GROUP, INC. HELIAN RECOVERY CORPORATION HILLHAVEN – MSC PARTNERSHIP HOMESTEAD HEALTH CENTER, INC. X.X. XXXXXX HOSPITAL, INC. KINDRED ACUTE PULMONARY EAST, INC. KINDRED ACUTE PULMONARY WEST, INC. KINDRED HEALTHCARE, INC. KINDRED HEALTHCARE OPERATING, INC. KINDRED HEALTHCARE PHARMACY, LLC KINDRED HEALTHCARE SERVICES, INC. KINDRED HOLDINGS, L.L.C. KINDRED HOME CARE AND HOSPICE     INDIANA PARTNERSHIP KINDRED HOME CARE SERVICES, INC. KINDRED HOSPICE, INC. KINDRED HOSPITAL PHARMACY SERVICES,     INC. KINDRED HOSPITALS EAST, L.L.C. KINDRED HOSPITALS LIMITED     PARTNERSHIP KINDRED HOSPITALS WEST, L.L.C. KINDRED INSTITUTIONAL PHARMACY     SERVICES, INC. KINDRED INSURANCE HOLDINGS, INC. KINDRED NEVADA, L.L.C. KINDRED NURSING CENTERS CENTRAL     LIMITED PARTNERSHIP KINDRED NURSING CENTERS LIMITED     PARTNERSHIP KINDRED NURSING CENTERS EAST, L.L.C. KINDRED NURSING CENTERS NORTH, L.L.C. KINDRED NURSING CENTERS SOUTH, L.L.C. KINDRED NURSING CENTERS WEST, L.L.C. KINDRED PHARMACY SERVICES, INC.
By:		/s/ Xxxx X. Xxxxxxxx
Name:		Xxxx X. Xxxxxxxx
Title:		Assistant Treasurer

KINDRED REHAB SERVICES, INC. KINDRED SUPPORT SERVICES, LLC KINDRED SYSTEMS, INC. KPS ORLANDO, INC. KPS GREAT FALLS, INC. KPS PENNSYLVANIA, INC. KPS NASHVILLE, LLC KPS CHICAGO, INC. KPS-6, INC. KPS-7, INC. KPS-8, INC. KPS-9, INC. KPS-10, INC. KPS EAST, INC. KPS MIDWEST, INC. KPS MOUNTAIN, INC. KPS SEATTLE, INC. KPS WISCONSIN, INC. LAFAYETTE HEALTH CENTER, INC. MEDEQUITIES, INC. PERSONACARE OF BRADENTON, INC. PERSONACARE OF CLEARWATER, INC. PERSONACARE OF CONNECTICUT, INC. PERSONACARE OF GEORGIA, INC. PERSONACARE OF HUNTSVILLE, INC. PERSONACARE OF OHIO, INC. PERSONACARE OF OWENSBORO, INC. PERSONACARE OF PENNSYLVANIA, INC. PERSONACARE OF POMPANO EAST, INC. PERSONACARE OF POMPANO WEST, INC. PERSONACARE OF READING, INC. PERSONACARE OF SAN ANTONIO, INC. PERSONACARE OF SAN XXXXX, INC. PERSONACARE OF SHREVEPORT, INC. PERSONACARE OF ST. PETERSBURG, INC. PERSONACARE OF WARNER ROBINS, INC. PERSONACARE OF WISCONSIN, INC. PRODATA SYSTEMS, INC. RECOVERY INN OF MENLO PARK, L.P. RECOVERY INNS OF AMERICA, INC. RESPIRATORY CARE SERVICES, INC.
By:		/s/ Xxxx X. Xxxxxxxx
Name:		Xxxx X. Xxxxxxxx
Title:		Assistant Treasurer

SOUTHERN CALIFORNIA SPECIALTY CARE,     INC. SPECIALTY HEALTHCARE SERVICES, INC. SPECIALTY HOSPITAL OF CLEVELAND, INC. SPECIALTY HOSPITAL OF PHILADELPHIA,     INC. SPECIALTY HOSPITAL OF SOUTH CAROLINA,     INC.THC – CHICAGO, INC. THC – HOUSTON, INC. THC – MINNEAPOLIS, INC. THC – NORTH SHORE, INC. THC – ORANGE COUNTY, INC. THC – SEATTLE, INC. TRANSITIONAL HOSPITALS CORPORATION     OF INDIANA, INC. TRANSITIONAL HOSPITALS CORPORATION     OF LOUISIANA, INC. TRANSITIONAL HOSPITALS CORPORATION     OF NEVADA, INC. TRANSITIONAL HOSPITALS CORPORATION     OF NEW MEXICO, INC. TRANSITIONAL HOSPITALS CORPORATION     OF TAMPA, INC. TRANSITIONAL HOSPITALS CORPORATION     OF TEXAS, INC. TRANSITIONAL HOSPITALS CORPORATION     OF WISCONSIN, INC. XXXXXX NURSING CENTER, INC. KPS DENVER, L.L.C. KINDRED HOSPITAL-TOLEDO, L.L.C. KINDRED DEVELOPMENT 3, L.L.C. KINDRED DEVELOPMENT 4, L.L.C. KINDRED DEVELOPMENT 5, L.L.C. KINDRED DEVELOPMENT 6, L.L.C. KINDRED DEVELOPMENT 7, L.L.C. KINDRED DEVELOPMENT 8, L.L.C. KINDRED DEVELOPMENT 9, L.L.C. KINDRED DEVELOPMENT 10, L.L.C. KINDRED DEVELOPMENT 11, L.L.C. KINDRED DEVELOPMENT 12, L.L.C. KINDRED DEVELOPMENT 13, L.L.C. KINDRED DEVELOPMENT 14, L.L.C. KINDRED DEVELOPMENT 15, L.L.C.
By:		/s/ Xxxx X. Xxxxxxxx
Name:		Xxxx X. Xxxxxxxx
Title:		Assistant Treasurer

KINDRED DEVELOPMENT 12, L.L.C. KINDRED DEVELOPMENT 16, L.L.C. KINDRED DEVELOPMENT 17, L.L.C. KPS TENNESSEE, L.L.C. REHAB STAFFING LLC KINDRED DEVELOPMENT 20, L.L.C. KINDRED DEVELOPMENT 21, L.L.C. KINDRED DEVELOPMENT 22, L.L.C. KINDRED DEVELOPMENT 23, L.L.C. KINDRED DEVELOPMENT 24, L.L.C. KINDRED DEVELOPMENT 25, L.L.C. KINDRED DEVELOPMENT 26, L.L.C. KINDRED DEVELOPMENT 27, L.L.C. KINDRED DEVELOPMENT 28, L.L.C. KINDRED DEVELOPMENT 29, L.L.C. KINDRED HOSPITAL-SPRINGFIELD, L.L.C. FOOTHILL NURSING COMPANY PARTNERSHIP
By:		/s/ Xxxx X. Xxxxxxxx
Name:		Xxxx X. Xxxxxxxx
Title:		Assistant Treasurer

AVERY MANOR NURSING, L.L.C. BRAINTREE NURSING, L.L.C. COUNTRY ESTATES NURSING, L.L.C. FORESTVIEW NURSING, L.L.C. XXXXXXX NURSING, L.L.C. HARBORLIGHTS NURSING, L.L.C. HIGHGATE NURSING, L.L.C. HIGHLANDER NURSING, L.L.C. KINDRED BRAINTREE HOSPITAL, L.L.C. LAUREL LAKE HEALTH AND     REHABILITATION, L.L.C. MAIN ASSISTED LIVING, L.L.C. MASSACHUSETTS ASSISTED LIVING, L.L.C. XXXXXXX NURSING, L.L.C. SPRINGFIELD PARK VIEW HOSPITAL, L.L.C. TOWER HILL NURSING, L.L.C.
By:		/s/ Xxxx X. Xxxxxxxx
Name:		Xxxx X. Xxxxxxxx
Title:		Assistant Treasurer

JPMORGAN CHASE BANK, N.A., as     Administrative Agent, Collateral Agent     and Lender
By:		/s/ Xxxx Xxx Xxx
Name:		Xxxx Xxx Xxx
Title:		Vice President

ALLIED IRISH BANKS, P.L.C.
By:		/s/ Eanna P. Mulkere
Name:		Eanna P. Mulkere
Title:		Assistant Vice President

THE CIT GROUP/BUSINESS CREDIT, INC.
By:		/s/ Xxxxx Xxxxx
Name:		Xxxxx Xxxxx
Title:		Vice President

CITICORP NORTH AMERICA, INC.
By:		/s/ Xxxxxxx Xxxxxxxx
Name:		Xxxxxxx Xxxxxxxx
Title:		Director/Vice-President

CITICORP USA, INC.
By:		/s/ Xxxxxxx Xxxxxxxx
Name:		Xxxxxxx Xxxxxxxx
Title:		Director/Vice-President

FIFTH THIRD BANK, KENTUCKY, INC.
By:		/s/ Xxxxxxx X. Xxxxxxx
Name:		Xxxxxxx X. Xxxxxxx
Title:		Vice President

GENERAL ELECTRIC CAPITAL CORPORATION
By:		/s/ Xxxxxx X. Cloud
Name:		Xxxxxx X. Cloud
Title:		Duly Authorized Signatory

XXXXXXX XXXXX CAPITAL CORPORATION
By:		/s/ Xxxxx Xxxxx
Name:		Xxxxx Xxxxx
Title:		Vice President

NORTH FORK BUSINESS CAPITAL CORP.
By:		/s/ Xxxxxx X. Xxxxx
Name:		Xxxxxx X. Xxxxx
Title:		Vice President

PNC BANK, N.A.
By:		/s/ Xxxxxxxx X. Xxxxxxxxx
Name:		Xxxxxxxx X. Xxxxxxxxx
Title:		Senior Vice President

SIEMENS FINANCIAL SERVICES, INC.
By:		/s/ Xxxx Xxxxxxx
Name:		Xxxx Xxxxxxx
Title:		Vice President

U.S. BANK NATIONAL ASSOCIATION
By:		/s/ Xxxxx Xxxxxxxx
Name:		Xxxxx Xxxxxxxx
Title:		Senior Vice President

UBS AG, STAMFORD BRANCH
By:		/s/ Xxxxxxx X. Xxxxxx
Name:		Xxxxxxx X. Xxxxxx
Title:		Director Banking Product Services, US
By:		/s/ Xxxx X. Xxxx
Name:		Xxxx X. Xxxx
Title:		Associate Director Banking Product Services, US

XXXXX FARGO FOOTHILL INC.
By:		/s/ Xxxxxxx Xxxxxxxx
Name:		Xxxxxxx Xxxxxxxx
Title:		Senior Vice President

SCHEDULE 1.01H

SPECIFIED PROPERTIES

Part A

Capital Stock

All of the issued and outstanding capital stock of Transitional Hospitals Corporation of Michigan, Inc.

Facilities

State/ Facility #:		Facility Name:		County, City, State Location:		Facility Type:		Status:
CA#4693		Xxxxx Xxxx Xxxxxxxx Xxxxxxxx		Xxxxx Xxxx, XX		Hospital		Leased
CT#565		Xxxxxxxx Rehabilitation and Health Care Center		New London, Norwich, CT		Nursing center		Owned
XX#0000		Xxxxxxxxx Xxxxxx Xxxxxx		Xxxxxxxx, Xxxxxxxx, XX		Nursing center		Owned
IN#4620		LaGrange Community Hospital		LaGrange, IN		Hospital		Leased
XX#000		XX Xxxxxxx Xxxxxxxx		Xxxxxxxxx, Xxxxxxxxxx, XX		Storage facility		Owned
XX#000		Xxxxxxxxxx Xxxxxxx Health Care Center		XxXxxxxxx, Paducah, KY		Nursing center		Leased
MA#523		West Park Alzheimer and Nursing Center		Boston, West Roxbury, MA		Nursing center		Owned
MA#527		Briarwood Healthcare Nursing Center		Needham, Needham, MA		Nursing center		Owned
XX#000		Xxxxxxxxx Xxxxxxxxxx Xxxxxx		Xxxxxx, Xxxxxxxxxxx, XX		Nursing center		Owned
MA#540		Brook Farm Rehab and Nursing Center		West Roxbury, MA		Nursing center		Leased
MI#4-677		Kindred Hospital – Metro Detroit		Xxxxx, Detroit, MI		Hospital		Owned
MN#4-659		Valley Hospital at Hidden Lakes		Hennepin, Golden Valley, MN		Hospital		Owned
MO#860/861		The Greens at Creekside		Kansas City, MO		Nursing center and ALF		Leased
TN#274		Xxxxx County Health Care Center		Xxxxx, Carthage, TN		Nursing center		Owned

State/ Facility #:		Facility Name:		County, City, State Location:		Facility Type:		Status:
XX#0000		Xxxxxx Xxxxx		Xxxxxxxx Xxxx, XX		Vacant Land		Owned
WI#197		Oshkosh Medical & Rehab Center		Oshkosh, WI		Nursing center		Leased
WI#772		Family Heritage Medical and Rehabilitation Center		Wood, Wisconsin Rapids, WI		Nursing center		Owned

Part B

State/ Facility #:		Facility Name:		County, City, State Location:		Facility Type:		Status:
TN#174		Camden Healthcare and Rehabilitation Center		Benton, Camden, TN		Nursing center		Leased
TN#175		Jefferson City Health and Rehabilitation Center		Xxxxxxxxx, Xxxxxxxxx City, TN		Nursing center		Leased
TN#178		Spring Gate Rehabilitation and Healthcare Center		Shelby, Memphis, TN		Nursing center		Leased
TN#179		Huntingdon Health & Rehabilitation Center		Xxxxxxx, Huntingdon, TN		Nursing center		Leased
TN#183		Ripley Healthcare and Rehabilitation Center		Lauderdale, Ripley, TN		Nursing center		Leased
TN#184		Greystone Health Care Center		Xxxxxxxx, Blountville, TN		Nursing center		Leased
IN#287		Crestview		Xxxx, Vincennes, IN		Nursing center		Leased
XX#000		Xxxxxxxxxx Xxxxxxx Xxxxx		Xxxxx, Xxxxxxxxxx, XX		Nursing center		Leased
MA#531		Xxxxxxx House Nursing Home		Fairhaven, Fairhaven, MA		Nursing center		Leased
XX#000		Xxxxx Xxxx Xxxxxx		Xxxxxx, Xxxxxx, XX		Nursing center		Leased
TN#171		Pine Xxxxxxx Healthcare and Rehabilitation Center		Hardeman, Bolivar, TN		Nursing Center		Leased

SCHEDULE 1.01J

HCPI PROPERTIES

Part A

State/ Facility #:		Facility Name:		County, City, State Location:		Facility Type:		Status:
MA#540		Brook Farm Rehab and Nursing Center		West Roxbury, MA		Nursing center		Leased
MO#860/861		The Greens at Creekside		Kansas City, MO		Nursing center and ALF		Leased
TN#274		Xxxxx County Health Care Center		Xxxxx, Carthage, TN		Nursing center		Owned*
WI#197		Oshkosh Medical & Rehab Center		Oshkosh, WI		Nursing center		Leased

* This property was the subject of a Sale and Leaseback Transaction with HCPI.

Part B

State/ Facility #:		Facility Name:		County, City, State Location:		Facility Type:		Status:
TN#174		Camden Healthcare and Rehabilitation Center		Benton, Camden, TN		Nursing center		Leased
TN#175		Jefferson City Health and Rehabilitation Center		Xxxxxxxxx, Xxxxxxxxx City, TN		Nursing center		Leased
TN#178		Spring Gate Rehabilitation and Healthcare Center		Shelby, Memphis, TN		Nursing center		Leased
TN#179		Huntingdon Health & Rehabilitation Center		Xxxxxxx, Huntingdon, TN		Nursing center		Leased
TN#183		Ripley Healthcare and Rehabilitation Center		Lauderdale, Ripley, TN		Nursing center		Leased
TN#184		Greystone Health Care Center		Xxxxxxxx, Blountville, TN		Nursing center		Leased
IN#287		Crestview		Xxxx, Vincennes, IN		Nursing center		Leased
XX#000		Xxxxxxxxxx Xxxxxxx Xxxxx		Xxxxx, Xxxxxxxxxx, XX		Nursing center		Leased

Part B

State/ Facility #:		Facility Name:		County, City, State Location:		Facility Type:		Status:
MA#531		Xxxxxxx House Nursing Home		Fairhaven, Fairhaven, MA		Nursing center		Leased
XX#000		Xxxxx Xxxx Xxxxxx		Xxxxxx, Xxxxxx, XX		Nursing center		Leased
TN#171		Pine Xxxxxxx Healthcare and Rehabilitation Center		Hardeman, Bolivar, TN		Nursing center		Leased

Part C

State/ Facility #:		Facility Name:		County, City, State Location:		Facility Type:		Status:
TX#4610		Kindred Hospital – Dallas		Dallas, Dallas, TX		Hospital		Owned
GA#4670		Kindred Hospital – Atlanta		Xxxxxx, Atlanta, GA		Hospital		Owned
WI#4663		Kindred Hospital - Milwaukee		Milwaukee, Greenfield, WI		Hospital		Owned