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

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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

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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/ Teri A. Hartlage

Name:   Teri A. Hartlage Title:   Assistant Treasurer

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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.

J.B. THOMAS 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/ Teri A. Hartlage

Name:   Teri A. Hartlage Title:   Assistant Treasurer

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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 PEDRO, 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/ Teri A. Hartlage

Name:   Teri A. Hartlage Title:   Assistant Treasurer

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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.

TUCKER 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/ Teri A. Hartlage

Name:   Teri A. Hartlage Title:   Assistant Treasurer

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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/ Teri A. Hartlage

Name:   Teri A. Hartlage Title:   Assistant Treasurer

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AVERY MANOR NURSING, L.L.C.

BRAINTREE NURSING, L.L.C.

COUNTRY ESTATES NURSING, L.L.C. FORESTVIEW NURSING, L.L.C.

GODDARD 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.

MEADOWS NURSING, L.L.C.

SPRINGFIELD PARK VIEW HOSPITAL, L.L.C.

TOWER HILL NURSING, L.L.C.

By:  

/s/ Teri A. Hartlage

Name:   Teri A. Hartlage Title:   Assistant Treasurer

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JPMORGAN CHASE BANK, N.A., as

    Administrative Agent, Collateral Agent

    and Lender

By:  

/s/ Dawn Lee Lum

Name:   Dawn Lee Lum Title:   Vice President

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ALLIED IRISH BANKS, P.L.C. By:  

/s/ Eanna P. Mulkere

Name:   Eanna P. Mulkere Title:   Assistant Vice President

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THE CIT GROUP/BUSINESS CREDIT, INC. By:  

/s/ Craig Brown

Name:   Craig Brown Title:   Vice President

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CITICORP NORTH AMERICA, INC. By:  

/s/ William Washburn

Name:   William Washburn Title:   Director/Vice-President

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CITICORP USA, INC. By:  

/s/ William Washburn

Name:   William Washburn Title:   Director/Vice-President

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FIFTH THIRD BANK, KENTUCKY, INC. By:  

/s/ Richard G. Whipple

Name:   Richard G. Whipple Title:   Vice President

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GENERAL ELECTRIC CAPITAL CORPORATION By:  

/s/ Dennis W. Cloud

Name:   Dennis W. Cloud Title:   Duly Authorized Signatory

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MERRILL LYNCH CAPITAL CORPORATION By:  

/s/ Paula Berry

Name:   Paula Berry Title:   Vice President

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NORTH FORK BUSINESS CAPITAL CORP. By:  

/s/ Thomas F. Furst

Name:   Thomas F. Furst Title:   Vice President

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PNC BANK, N.A. By:  

/s/ Patricia S. Robertson

Name:   Patricia S. Robertson Title:   Senior Vice President

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SIEMENS FINANCIAL SERVICES, INC. By:  

/s/ Mark Picillo

Name:   Mark Picillo Title:   Vice President

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U.S. BANK NATIONAL ASSOCIATION By:  

/s/ David Wombwell

Name:   David Wombwell Title:   Senior Vice President

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UBS AG, STAMFORD BRANCH By:  

/s/ Richard L. Tavrow

Name:   Richard L. Tavrow Title:  

Director

Banking Product Services, US

By:  

/s/ Irja R. Otsa

Name:   Irja R. Otsa Title:  

Associate Director

Banking Product Services, US

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WELLS FARGO FOOTHILL INC. By:  

/s/ Richard Bohannon

Name:   Richard Bohannon Title:   Senior Vice President

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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    Menlo Park Surgical Hospital    Menlo Park, CA    Hospital    Leased
CT#565    Hamilton Rehabilitation and Health Care Center    New London, Norwich,
CT    Nursing center    Owned CT#1226    Homestead Health Center    Stamford,
Stamford, CT    Nursing center    Owned IN#4620    LaGrange Community Hospital
   LaGrange, IN    Hospital    Leased KY#699    OK Storage Building   
Jefferson, Louisville, KY    Storage facility    Owned KY#786    Riverfront
Terrace Health Care Center    McCracken, 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 MA#528    Westridge Healthcare
Center    Natick, Marlborough, MA    Nursing center    Owned MA#540    Brook
Farm Rehab and Nursing Center    West Roxbury, MA    Nursing center    Leased
MI#4-677    Kindred Hospital – Metro Detroit    Wayne, 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    Smith County Health Care Center   
Smith, Carthage, TN    Nursing center    Owned

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State/
Facility #:

  

Facility Name:

  

County, City, State Location:

  

Facility Type:

  

Status:

TX#4699    Colony Plaza    Missouri City, TX    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    Jefferson, Jefferson 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   
Carroll, Huntingdon, TN    Nursing center    Leased TN#183    Ripley Healthcare
and Rehabilitation Center    Lauderdale, Ripley, TN    Nursing center    Leased
TN#184    Greystone Health Care Center    Sullivan, Blountville, TN    Nursing
center    Leased IN#287    Crestview    Knox, Vincennes, IN    Nursing center   
Leased OH#295    Whitehouse Country Manor    Lucas, Whitehouse, OH    Nursing
center    Leased MA#531    Nichols House Nursing Home    Fairhaven, Fairhaven,
MA    Nursing center    Leased CO#849    Iliff Care Center    Denver, Denver, CO
   Nursing center    Leased TN#171    Pine Meadows Healthcare and Rehabilitation
Center    Hardeman, Bolivar, TN    Nursing Center    Leased

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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    Smith County Health Care Center   
Smith, Carthage, TN    Nursing center    Owned* WI#197    Oshkosh Medical &
Rehab Center    Oshkosh, WI    Nursing center    Leased

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* 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    Jefferson, Jefferson 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   
Carroll, Huntingdon, TN    Nursing center    Leased TN#183    Ripley Healthcare
and Rehabilitation Center    Lauderdale, Ripley, TN    Nursing center    Leased
TN#184    Greystone Health Care Center    Sullivan, Blountville, TN    Nursing
center    Leased IN#287    Crestview    Knox, Vincennes, IN    Nursing center   
Leased OH#295    Whitehouse Country Manor    Lucas, Whitehouse, OH    Nursing
center    Leased

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Part B

 

State/
Facility #:

  

Facility Name:

  

County, City, State Location:

  

Facility Type:

  

Status:

MA#531    Nichols House Nursing Home    Fairhaven, Fairhaven, MA    Nursing
center    Leased CO#849    Iliff Care Center    Denver, Denver, CO    Nursing
center    Leased TN#171    Pine Meadows 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    Fulton, Atlanta, GA    Hospital   
Owned WI#4663    Kindred Hospital - Milwaukee    Milwaukee, Greenfield, WI   
Hospital    Owned