<PAGE>

                                AMENDMENT NO. 3


      THIS AMENDMENT NO. 3 (this "Amendment") dated as of May 28, 1999, to that
Third Amended and Restated Credit Agreement referenced below, is by and among
CENTENNIAL HEALTHCARE CORPORATION, a Georgia corporation (the "Company"), the
subsidiaries of the Company that are borrowers under the Credit Agreement, the
Lenders identified herein, FIRST UNION NATIONAL BANK, as administrative agent
(the "Agent"), and NATIONSBANK, N.A., as Syndication Agent. Terms used but not
otherwise defined shall have the meanings provided in the Credit Agreement.

                              W I T N E S S E T H

      WHEREAS, a revolving credit facility has been established in favor of the
Company and the other Borrowers identified therein pursuant to the terms of that
Third Amended and Restated Credit Agreement dated as of July 31, 1998 (as
amended and modified, the "Credit Agreement") among the Borrowers, the lenders
identified therein, First Union National Bank, as administrative agent, and
NationsBank, N.A., as syndication agent;

      WHEREAS, the Company has requested certain modifications to the Credit
Agreement;

      WHEREAS, the Lenders have agreed to make the requested modifications on
the terms and conditions set forth herein;

      NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

      1.1 The following definitions in Section 1.1 of the Credit Agreement are
amended and modified, or added, to read as follows:

           "Adjusted Fixed Charges" shall mean the sum of (i) interest expense,
      operating lease expense and taxes for the Company and its Consolidated
      Subsidiaries for the most-recently ended Rolling Period, plus (ii) current
      maturities of Funded Debt for the Company and its Consolidated
      Subsidiaries as of the last day of such period; provided, that (A) in the
      event that any Permitted Acquisition has been consummated during such
      Rolling Period and the pro forma results of the business so acquired are
      included in the calculation of Adjusted EBITDAR, the Adjusted Fixed
      Charges for such Rolling Period shall be calculated for the Company and
      its Consolidated Subsidiaries including such Permitted Acquisition based
      on such pro forma combined historical financial statements and (B)
      "Adjusted Fixed Charges" shall not include (i) scheduled commitment
      reductions occurring hereunder within one year of the date of
      determination or (ii) scheduled commitment reductions and/or sinking fund
      payments, or the like, under the Lease Financing Facility occurring within
      one year of the date of determination.

           "Business Day" shall mean any day not a Saturday, Sunday or other day
      on which commercial banks in Charlotte, North Carolina, New York, New York
<PAGE>

      or [______], Pennsylvania are authorized or required by law to close.

           "Capital Expenditures" shall mean expenditures for any fixed assets
      or improvements, replacements, substitutions or additions thereto, which
      have a useful life of more than one (1) year, including direct or indirect
      acquisition of such assets; provided that as used herein "Capital
      Expenditures" shall not include (i) Permitted Acquisitions or (ii)
      expenditures of proceeds of insurance settlements, condemnation awards and
      other settlements in respect of lost, destroyed, damaged or condemned
      assets, equipment or other property.

           "Collateral Security Documents" shall mean collectively, this
      Agreement, the Pledge Agreements, the Security Agreement, the Mortgages,
      and related stock certificates and stock powers and financing statements,
      the Intercreditor Agreement, if any, and any additional documents granting
      security to Agent for the ratable benefit of the Secured Parties.

           "Commitment" shall mean the maximum aggregate principal amount up to
      which the Lenders, on a several basis, have agreed to make Advances under
      Section 2 hereof and/or participate in the issuance of Letters of Credit
      under Section 2A hereof, being NINETY MILLION DOLLARS ($90,000,000) on the
      date hereof, as such maximum aggregate principal amount may be decreased
      from time to time pursuant to Paragraph 2.8 hereof, but shall not include
      the Tranche B Commitment under Section 2.1A hereof.

           "Consolidated Proforma Fixed Charge Coverage Ratio" shall mean, as of
      any date of determination, the ratio of Adjusted EBITDAR to Proforma
      Adjusted Fixed Charges.

           "Eligible Assignee" means (i) a lender hereunder; (ii) an Affiliate
      of a lender hereunder or any fund that invests in bank loans and is
      managed by an investment advisor to a Lender; and (iii) any other Person
      (other than a Person in a Permitted Line of Business) approved by the
      Administrative Agent and, unless an Event of Default has occurred and is
      continuing at the time any assignment is effected in accordance with
      Section 10.2, the Borrowers (such approval by the Administrative Agent or
      the Borrowers not to be unreasonably withheld or delayed and such approval
      to be deemed given by the Borrowers if no objection is received by the
      assigning lender and the Administrative Agent from the Borrowers within
      two Business Days after notice of such proposed assignment has been
      provided by the assigning lender to the Borrower); provided, however, that
      neither the Borrowers nor an Affiliate of any Borrower shall qualify as an
      Eligible Assignee.

           "Intercreditor Agreement" means any Intercreditor Agreement entered
      into by the Secured Parties relating to the Collateral Security Documents.

           "Maximum Tranche B Principal Amount" shall mean the maximum principal
      amount of the Tranche B Commitment up to which the applicable Tranche B
      Lender has agreed to lend funds, as set forth in Schedule 2 attached
      hereto.

           "Mortgages" means those mortgages, deeds of trust, security deeds or
      like instruments given by the Borrowers to secure the Secured Obligations
      referenced therein, as amended and modified.

           "Proforma Adjusted Fixed Charges" shall mean the sum of (i) Adjusted
<PAGE>

      Fixed Charges, plus (ii) scheduled commitment reductions hereunder
      occurring within one year of the date of determination, plus (iii)
      scheduled commitment reductions and/or sinking fund payments, or the like,
      under the Lease Financing Facility occurring within one year of the date
      of determination.

           "Secured Parties" shall mean, individually and collectively, Agent,
      the Lenders, the Tranche B Lenders, the Lease Financing Lenders, and, as
      defined in the Lease Financing Rules of Usage and Definitions, the
      Holders, the Lessor, the Owner Trustee, in its capacity as trustee,
      NationsBank, N.A., as holder of that $5 million promissory note dated as
      of May 28, 1999, as amended and modified, the Agent and the Syndication
      Agent.

           "Security Agreement" means the security agreement dated as of May 28,
      1999 given by the Borrowers to secure the Secured Obligations referenced
      therein, as amended and modified.

           "Tranche B Advance" shall mean an advance of funds by the Tranche B
      Lenders under the Tranche B Commitment.

           "Tranche B Advance Request Form" shall mean a certificate in
      substantially the same form as the Advance Request Form with appropriate
      modifications to reference Tranche B Advances.

           "Tranche B Commitment" shall mean the maximum aggregate principal
      amount up to which the Tranche B Lenders, on a several basis, have agreed
      to make Tranche B Advances under Section 2.1A hereof, being FIVE MILLION
      EIGHT HUNDRED SIXTY-NINE THOUSAND FIVE HUNDRED AND NO/100 DOLLARS
      ($5,869,500) on May 28, 1999 (being the date of Amendment No. 3), as such
      maximum aggregate principal amount may be decreased from time to time
      hereunder.

           "Tranche B Lenders" shall mean individually and "Tranche B Lenders"
      shall mean individually and collectively, the institutions identified on
      Schedule 2 attached hereto and their respective successors and assigns in
      accordance with Paragraph 10.2 hereof (which as provided therein, requires
      the prior written consent of the Borrowers under certain circumstances),
      so long as such institution retains any portion of the Tranche B
      Commitment or Tranche B Loan hereunder.

           "Tranche B Loan" shall mean the outstanding principal balance of
      indebtedness advanced under the Tranche B Commitment, together with
      interest accrued on and fees and expenses incurred in connection with any
      of the foregoing.

           "Tranche B Note" shall mean individually, and "Tranche B Notes" shall
      mean individually and collectively the Tranche B Notes in substantially
      the form of the Notes shown in Exhibit C attached hereto, to be delivered
      by the Borrowers to the Tranche B Lenders pursuant to Section 2.1A(b)
      hereof, as the same may be amended, modified, extended, consolidated or
      restated from time to time.

           "Tranche B Pro Rata Share" shall mean, as to a Tranche B Lender at
      any time, the ratio which the outstanding principal balance of its portion
      of the Tranche B Loan outstanding at such time hereunder bears to the
      aggregate outstanding principal balance of the Tranche B Loan at such
<PAGE>

      time.

           "Tranche B Required Lenders" shall mean those Tranche B Lenders
      (which may include the Agent in its capacity as a Lender) holding Tranche
      B Pro Rata Shares of the Tranche B Loan in excess of fifty percent (50%).

           "Tranche B Termination Date" shall mean the earlier of (i) December
      31, 1999 or (ii) the date on which the Tranche B Commitment may have been
      terminated hereunder.

      1.2 A new Section 2.1A is inserted immediately following Section 2.1 to
      read as follows:

           2.1A Tranche B Commitment.

                (a) Tranche B Commitment. From time to time prior to the Tranche
      B Termination Date, subject to the provisions below, each Tranche B Lender
      severally agrees to make Tranche B Advances to Borrowers up to such
      Tranche B Lender's Maximum Tranche B Principal Amount as set forth on
      Schedule 2 attached hereto, and borrowers may repay at the offices of
      Agent and reborrow under the Tranche B Commitment, up to an aggregate
      principal amount not to exceed at any time outstanding the amount of the
      Tranche B Commitment as from time to time in effect. The obligations of
      the Borrowers hereunder are and shall be joint and several. Each of the
      Borrowers hereby irrevocably authorizes and requests that the Company
      execute all Tranche B Advance Request Forms, make all elections as to
      interest rates and take any other actions required or permitted of
      Borrowers hereunder, on its respective behalf, in each case with the same
      force and effect as if such Borrower had executed such Tranche B Advance
      Request form, made such election or taken such other action itself.

                (b) Tranche B Promissory Notes. The indebtedness of the
      Borrowers to each Tranche B Lender under the Tranche B Loans will be
      evidenced by a Tranche B Note executed by the Borrowers, jointly and
      severally, in favor of such Lender. The original principal amount of each
      Tranche B Lender's Tranche B Note will be the amount identified in
      Schedule 2 attached hereto as its Maximum Tranche B Principal Amount;
      provided, however, that notwithstanding the face amount of each such Note,
      the Borrowers' liability under each of such Note shall be limited at all
      times to the actual indebtedness, principal, interest, fees and expenses,
      then outstanding to such Tranche B Lender under the Tranche B Loan.

                (c) Tranche B Lenders' Participation. The Tranche B Lenders
      shall participate in the Tranche B Loan in the Maximum Tranche B Principal
      Amounts and Tranche B Pro Rata Shares set forth in Schedule 2 attached
      hereto.

                (d) Use of Proceeds. Tranche B Advances under the Tranche B
      Commitment may be used for the same purposes provided in Section 2.4 for
      Advances.

                (e) Repayment. The aggregate outstanding principal balance of
      the Tranche B Loan shall be due and payable in full on the Tranche B
      Termination Date; provided, however, that notwithstanding the foregoing,
      the entire outstanding balance of the Tranche B Loan shall be payable in
      full on the date of acceleration of the Tranche B Loan as provided herein.
<PAGE>

                (f) Interest. The Tranche B Loan shall bear interest at the same
      rates and as provided in Section 2.8 for Advances.

                (g) Tranche B Advances. Tranche B Advances shall be made as
      provided in Section 2.9 for Advances (with appropriate modifications to
      refer to the Tranche B Advances).

                (h) Adjustments to Tranche B Commitment.

                     (i) Optional Reduction by Borrowers. Borrowers shall have
      the right at any time and from time to time, upon three (3) Business Days'
      prior written notice to Agent, to reduce the Tranche B Commitment in whole
      or in part pro rata among the Tranche B Lenders in increments of
      $1,000,000, without penalty or premium, provided that on the effective
      date of such reduction Borrowers shall make a payment to the Agent for the
      account of the Tranche B Lenders in an amount, if any, by which the
      aggregate outstanding principal balance of the Tranche B Loan exceeds the
      amount of the Tranche B Commitment, as then so reduced, together with
      accrued interest on the amount so prepaid, and, if a portion is paid prior
      to the last day of an Interest Period, any amounts which may be due
      pursuant to Paragraph 2.10 hereof.

                     (ii) Termination by Lenders. Pursuant to Paragraph 8.2
      hereof, Tranche B Required Lenders shall have the right to terminate the
      Tranche B Commitment at any time, in their sole discretion and upon notice
      to Borrowers, upon the occurrence of any Event of Default hereunder. Any
      payment following the occurrence of any Event of Default, acceleration and
      demand for payment shall include the payment of any amounts due pursuant
      to Paragraph 2.10 hereof.

                     (iii) Pro Rata Reductions in Maximum Tranche B Principal
      Amounts; Restoration Only with Consent. Any termination or reduction of
      the Tranche B Commitment shall result in pro rata reduction in each
      Tranche B Lender's Maximum Tranche B Principal Amount, and shall be
      permanent; and the commitment and respective Maximum Principal Amounts
      cannot thereafter be restored or increased without the written consent of
      all Tranche B Lenders.

                (i) Voluntary Prepayments. Voluntary prepayments may be made on
      the Tranche B Loan as provided in Section 2.9(a) for Advances.

                (j) Funding Costs and Loss of Earnings. The provisions of
      Section 2.10 shall apply with equal effect to the Tranche B Loan.

                (k) Payments. The provisions of Section 2.11 shall apply with
      equal effect to the Tranche B Loan.

                (l) Tranche B Commitment Fee. Borrowers shall pay to the Agent,
      for the benefit of the Tranche B Lenders, a non-refundable commitment fee
      on the average unused portion of each Tranche B Lender's Maximum Tranche B
      Principal Amount as from time to time in effect from the date hereof
      through the Tranche B Termination Date at the applicable rate, and payable
      as, provided in Section 2.12 for the Commitment based on the ratio of
      Adjusted Total Debt to Adjusted EBITDAR for the Company and its
      Consolidated Subsidiaries.
<PAGE>

                (m) Regulatory Changes in Capital Requirements. The provisions
      of Section 2.16 shall apply with equal effect to the Tranche B Loan.

                (n) Taxes. The provisions of Section 2.17 shall apply with equal
      effect to the Tranche B Loan.

                (o) Representations and Warranties. The representations and
      warranties in Section 3 shall be extended also to the Tranche B Lenders
      and apply with equal effect to the Tranche B Loan.

                (p) Conditions to Tranche B Advances. The provisions of Sections
      4.2 and 4.3 shall apply with equal effect to the Tranche B Advances.

                (q) Covenants. The affirmative covenants of Section 5 and the
      negative covenants of Section 6 shall be extended also to the Tranche B
      Lenders and shall remain in effect until the Tranche B Loan is paid in
      full and the Tranche B Commitment has been terminated.

                (r) Collateral and Rights of Set-Off. The provisions of Section
      7 shall be extended also to the Tranche B Lenders and apply with equal
      effect to the Tranche B Loan.

      1.3 In Section 2.8 of the Credit Agreement, subsection (b) is amended in
      its entirety to read as follows:

                (b) Scheduled Permanent Reductions in Commitments. The
      Commitments hereunder shall be permanently reduced on the dates and in the
      amounts shown below:

                Date of Reduction            Scheduled Commitment
                                               Reduction Amount

                December 31, 2000                   $ 6,000,000
                December 31, 2001                   $12,500,000
                December 31, 2002                   $12,500,000

      1.4A Section 2.9(b)(i) is hereby amended and restated to read as follows:

                (i) Asset Dispositions. Prior to January 1, 2000 in connection
      with each Sale of Material Assets approved by Lenders pursuant to
      Paragraph 6.7 hereof and on and after January 1, 2000 in connection with
      any sale of assets (whether or not a Sale of Material Assets subject to
      approval pursuant to Section 6.7 hereof), the Net Cash Proceeds to the
      seller of such transaction shall be paid directly to Agent for the account
      of Lenders and applied to the Loan as set forth in subparagraph (iv)
      below.

      1.4 The last sentence of subclause (iv) of clause (b) of Section 2.9 is
amended in its entirety to read as follows:

           Prepayments made under clauses (ii) in respect of the incurrence of
      additional Indebtedness or (iii) in respect of equity issuances above
      prior to the Termination Date shall not reduce the Commitment and may be
      reborrowed in accordance with this Agreement. Prepayments made under
      clause (i) shall serve to reduce the Commitment hereunder on a dollar-for-
      dollar basis by the amount of prepayment required thereunder.
<PAGE>

      1.5 The following sentence is added to the end of Section 4.3 of the
      Credit Agreement:

           Each request for an Advance (including extensions and conversions of
      an Advance) or a Letter of Credit and each acceptance by the Borrower of
      an Advance (including extensions and conversions of an Advance) or a
      Letter of Credit shall be deemed to constitute a representation and
      warranty by the Borrower as of the date of such request or acceptance of
      an Advance or Letter of Credit that the applicable conditions set forth in
      the foregoing sentence have been satisfied.

      1.6 Section 5.2 is amended to read as follows:

                (a) Quarterly Financial Statements. Furnish Lenders within
      forty-five (45) days of the end of each of the first three fiscal quarters
      of each fiscal year with unaudited quarterly consolidated and
      consolidating financial statements of the Company and its Consolidated
      Subsidiaries, in form and substance as reasonably required by Lenders,
      including a balance sheet, a consolidated statement of income and a
      statement of cash flows, and a certificate signed by the chief financial
      or chief executive officer of Borrowers stating that the financial
      statements fairly present the financial condition of the Company and its
      Consolidated Subsidiaries as of the date and for the periods covered and
      were prepared in accordance with GAAP consistently applied, subject to
      normal year-end audit adjustments.

                (b) Monthly Financial Statements. Furnish Lenders within thirty
      (30) days of the end of each fiscal month with unaudited company-prepared
      consolidated and consolidating financial statements of the Company and its
      Consolidated Subsidiaries, in form and substance as reasonably required by
      Lenders, including a balance sheet, a consolidated statement of income and
      a statement of cash flows, and a certificate signed by the chief financial
      or chief executive officer of Borrowers stating that the financial
      statements fairly present the financial condition of the Company and its
      Consolidated Subsidiaries as of the date and for the periods covered in
      accordance with GAAP consistently applied excluding footnotes and
      narrative disclosures and subject to normal quarterly and year-end audit
      adjustments and accruals.

      1.7 Section 5.12 of the Credit Agreement is amended to read as follows:

           5.12 Additional Collateral Documentation, Etc.

           (a) The Borrowers shall, within 45 days from the date of Amendment
      No. 3, in the case of unencumbered properties, and within 90 days from the
      date of Amendment No. 3, in the case of encumbered properties, deliver to
      the Agent, with respect to all real property owned by the Borrowers,
      Mortgages and such other documents, instruments and other items of the
      types required by the Agent, including, but not limited to, appropriate
      UCC-1 financing statements, real estate title insurance policies,
      environmental reports, landlord's waivers and favorable opinions of
      counsel, all in form, content and scope reasonably satisfactory to the
      Agent.

           (b) As soon as practicable and in any event within 30 days after any
      Person becomes a direct or indirect Subsidiary of any Borrower, the
      Borrowers shall provide the Agent with written notice thereof setting
<PAGE>

      forth information in reasonable detail describing all of the assets of
      such Person and shall (i) if such Person is a Domestic Subsidiary, cause
      such Person to execute a joinder agreement, in form and substance
      satisfactory to the Agent, relating to this Credit Agreement, the Notes,
      the Security Agreement and the Pledge Agreement, (ii) if such Person is a
      Domestic Subsidiary, cause 100% of the issued and outstanding capital
      stock (or other ownership interest) of such Person to be delivered to the
      Agent (together with undated stock powers signed in blank) and pledged to
      the Agent pursuant to an appropriate pledge agreement(s) in substantially
      the form of the Pledge Agreement and otherwise in form acceptable to the
      Agent, (iii) if such Person is a direct Foreign Subsidiary of any
      Borrower, cause 65% (or such greater percentage which would not result in
      material adverse tax consequences) of the issued and outstanding capital
      stock (or other ownership interest) entitled to vote (within the meaning
      of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and
      outstanding capital stock (or other ownership interest) not entitled to
      vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) of such
      Person to be delivered to the Agent (together with undated stock powers
      signed in blank (unless, with respect to a Foreign Subsidiary, such stock
      powers are deemed unnecessary by the Agent in its reasonable discretion
      under the law of the jurisdiction of incorporation of such Person)) and
      pledged to the Agent pursuant to an appropriate pledge agreement(s) in
      substantially the form of the Pledge Agreement and otherwise in form
      acceptable to the Agent and (iv) cause such Person to (A) if such Person
      is a Domestic Subsidiary which has any real property, deliver to the
      Agent, with respect to such real property, Mortgages and such other
      documents, instruments and other items of the types required by the Agent
      all in form, content and scope reasonably satisfactory to the Agent and
      (B) deliver such other documentation as the Agent may reasonably request
      in connection with the foregoing, including, without limitation,
      appropriate UCC-1 financing statements, real estate title insurance
      policies, environmental reports, landlord's waivers, certified resolutions
      and other organizational and authorizing documents of such Person,
      favorable opinions of counsel to such Person (which shall cover, among
      other things, the legality, validity, binding effect and enforceability of
      the documentation referred to above and the perfection of the Agent's
      liens thereunder), all in form, content and scope reasonably satisfactory
      to the Agent.

           (c) If a Borrower shall (a) acquire any intellectual property,
      securities, instruments, chattel paper or other personal property required
      to be pledged to the Agent hereunder or under any of the Collateral
      Security Documents or (b) acquire or lease any real property, the
      Borrowers shall promptly notify the Agent of same. Each Borrower shall
      take such action at its own expense as requested by the Agent to ensure
      that the Agent has a first priority perfected lien to secure the
      obligations of the Borrowers under the Loan Documents in (i) all owned
      real property and personal property of the Borrowers located in the United
      States, and (ii) to the extent deemed to be material by the Agent in its
      sole reasonable discretion, all other owned real and personal property of
      the Borrowers.

           (d) The Borrowers shall promptly execute and deliver at its expense
      all further instruments and documents and take all further action that may
      be necessary and desirable or that the Agent may reasonably request in
      order to (i) perfect and protect the security interest created under the
      Collateral Security Documents in the Collateral (as defined in the
<PAGE>

      Collateral Security Documents) and (ii) enable the Agent to exercise and
      enforce its rights and remedies under the Loan Documents in respect of the
      Collateral (as defined in the Collateral Security Documents).

      1.8 Sections 5.15, 5.16 and 5.17 are amended, and a new Section 5.17A is
      added, to read as follows:

           5.15 Funded Debt to Capital Ratio. Maintain as of the last day of
      each fiscal quarter of Funded Debt to Capital of not more than:

                Fiscal Quarter Ended                    Required
                                                          Ratio

                March 31, 1999                           0.75:1

                June 30, 1999                            0.75:1

                September 30, 1999                       0.75:1

                December 31, 1999                        0.75:1

                March 31, 2000                           0.70:1

                June 30, 2000                            0.70:1

                September 30, 2000                       0.70:1

                December 31, 2000                        0.65:1

                March 31, 2001 and thereafter            0.60:1

           5.16 Adjusted Total Debt to Adjusted EBITDAR. Maintain as of the last
      day of each fiscal quarter set forth in the left hand column below a ratio
      of Adjusted Total Debt to Adjusted EBITDAR for the Company and its
      Consolidated Subsidiaries of no more than the applicable ratio set forth
      in the right hand column below:

                   Fiscal Quarter Ended               Required
                                                        Ratio

                March 31, 1999                           5.80:1

                June 30, 1999                            5.80:1

                September 30, 1999                       5.80:1

                December 31, 1999                        5.60:1

                March 31, 2000                           5.50:1

                June 30, 2000                            5.25:1

                September 30, 2000                       5.25:1

                December 31, 2000                        5.00:1

                March 31, 2001 and thereafter            4.50:1
<PAGE>

           5.17 Fixed Charge Coverage Ratio. Maintain as of the last day of each
      fiscal quarter a Consolidated Fixed Charge Coverage Ratio of not less
      than:

                Fiscal Quarter Ended                    Required
                                                          Ratio

                March 31, 1999                           1.35:1

                June 30, 1999 through December 31, 2000  1.35:1

                March 31, 2001 and thereafter            1.50:1

           5.17A Proforma Fixed Charge Coverage Ratio. Maintain as of the last
      day of each fiscal quarter a Consolidated Proforma Fixed Charge Coverage
      Ratio of not less than 1.0:1.

      1.9 Any requirement for additional interest rate protection under Section
      5.22 is hereby waived.

      1.10 In Section 6.1, clause (i) is amended in its entirety to read as
      follows:

           (i) Indebtedness pursuant to the Lease Financing Facility, pursuant
      to the Loan from the Lenders hereunder and pursuant to the Tranche B Loan
      from the Tranche B Lenders hereunder;

      1.11 In Section 6.2, the "and" immediately preceding clause (iv) is
      deleted and a new clause (v) is added at the end of clause (iv) to read as
      follows:

           and (v) guaranties by Borrowers of the Tranche B Loan.

      1.12 In Section 6.4, clause (i) is amended in its entirety to read as
      follows:

           (i) liens in favor of the Lenders in respect of the Loan hereunder,
      in favor of the Tranche B Lenders in respect of the Tranche B Loan
      hereunder and in favor of the Lease Financing Lenders and the Holders in
      respect of the Lease Financing Facility, as security for the Loan, the
      Tranche B Loan and the Lease Financing Facility;

      1.13 Section 6.8(a)(iv), and all language thereafter until the beginning
      of 6.8(b), is hereby deleted and replaced with a new Section 6.8(a)(iv) to
      read as follows:

      "(iv) any other acquisition approved in writing by the Required Lenders
      and by the Tranche B Required Lenders".

      1.14 In Section 8.1, new subsections (m), (n) and (o) are added, to read
      as follows:

           (m) if Borrowers shall fail to pay (i) any installment of principal
      on the Tranche B Loan when due; or (ii) any payment of interest or any
      other sum payable to the Tranche B Lenders hereunder or otherwise within
<PAGE>

      three (3) days of when due;

           (n) if any Borrower shall default in the performance of any other
      agreement or covenant contained herein (other than as provided in
      subparagraphs (a), (b), (d) or (m) hereof) or in any document executed or
      delivered in connection herewith, including without limitation any
      Collateral Security Document and such default shall continue uncured for
      twenty (20) days after notice thereof to any Borrower given by Agent
      pursuant to the direction of the Tranche B Required Lenders;

           (o) if any event or condition shall occur or exist with respect to
      any activity or substance regulated under the Environmental Control
      Statutes and as a result of such event or condition, Borrowers have
      incurred or in the opinion of Tranche B Required Lenders are reasonably
      likely to incur a liability or liabilities in excess of Five Hundred
      Thousand Dollars ($500,000) during any consecutive twelve (12) month
      period.

      1.15 In Section 8.2, the existing paragraph is renumbered as clause "(i)"
      and a new clause (ii) is added to read as follows:

           (ii) Upon the happening of any Event of Default and at any time
      thereafter, at the election of Tranche B Required Lenders, and by notice
      by Agent to Borrowers (except if an Event of Default described in
      Paragraph 8.l(j) shall occur in which case acceleration shall occur
      automatically without notice), the Tranche B Required Lenders may declare
      the entire unpaid balance, principal, interest and fees, of all
      Indebtedness of Borrowers to the Tranche B Lenders, hereunder or
      otherwise, to be immediately due and payable. Upon such declaration, the
      Tranche B Commitment shall immediately and automatically terminate and
      Tranche B Lenders shall have no further obligation to make any Tranche B
      Advance and, subject only to the terms of the Intercreditor Agreement, if
      any, or the terms of the Collateral Security Documents, they shall have
      the immediate right to enforce or realize on any Collateral in a
      commercially reasonable manner in any manner or order they deem expedient
      without regard to any equitable principles of marshaling or otherwise.
      Whether such a declaration has been made by Tranche B Required Lenders
      that the Indebtedness is due and payable following an Event of Default,
      the Tranche B Required Lenders may terminate the Tranche B Commitment at
      any time following an Event of Default by notice thereof by Agent to
      Borrowers. In addition to any rights granted hereunder or in any documents
      delivered in connection herewith, including without limitation, the
      Collateral Security Documents, Tranche B Lenders shall have all the rights
      and remedies granted by any applicable law, all of which shall be
      cumulative in nature, subject only to the terms of the Intercreditor
      Agreement, if any, or the terms of the Collateral Security Documents.

      1.16 In Section 9.1, the existing paragraph is renumbered as clause "(i)",
      the phrase in the second line of clause (i) "to Lenders on the basis" is
      amended to read "in respect of the Loan to the Lenders on the basis" and a
      new clause (ii) is added to read as follows:

           (ii) Agent shall apply all payments of principal, interest,
      commitment fee or other amounts hereunder made to Agent by or on behalf of
      Borrowers, in respect of the Tranche B Loan to the Tranche B Lenders on
<PAGE>

      the basis of their Tranche B Pro Rata Shares of the outstanding principal
      balance of the Tranche B Loan, except for (a) the fees payable under
      Paragraph 2.14 hereof, which shall be paid solely to Agent. Such
      distribution of payments shall be made promptly in federal funds
      immediately available at the office of each Lender set forth above.

      1.17 In Section 9.2, the existing paragraph is renumbered as clause "(i)"
      and a new clause (ii) is added to read as follows:

           (ii) In the event a Tranche B Lender, by exercise of its right of
      set-off, or otherwise, receives any payment of Indebtedness owing to it,
      hereunder or otherwise, in an amount greater than its Tranche B Pro Rata
      Share of such payment based upon the Tranche B Lenders' respective shares
      of principal Indebtedness outstanding hereunder immediately before such
      payment, such Tranche B Lender shall purchase a portion of the
      Indebtedness hereunder owing to each other Tranche B Lenders so that after
      such purchase each Tranche B Lender shall hold its Tranche B Pro Rata
      Share of all the Indebtedness then outstanding hereunder, provided that if
      all or any portion of such excess payment is thereafter recovered from
      such Tranche B Lender, such purchase shall be rescinded and the purchase
      price restored to the extent of any such recovery, with each Tranche B
      Lender paying its Tranche B Pro Rata Share of any interest which the
      Tranche B Lender from which such recovery is obtained is required to pay.

      1.18 In Section 9.3, the existing paragraph is renumbered as clause "(i)"
      and a new clause (ii) is added to read as follows:

           (ii) No modification or amendment hereof, consent hereunder or waiver
      of any Event of Default shall be effective except by written consent of
      the Tranche B Required Lenders; provided, however, that the written
      consent of each of the Tranche B Lenders directly affected thereby shall
      be required to (i) modify, amend, waive, discharge, terminate or suspend
      compliance with (A) any rate of interest applicable to the Tranche B Loan
      to the extent it is proposed to be decreased, (B) the amount of the
      Tranche B Commitment, to the extent it is proposed to be increased, and
      the Tranche B Lenders' respective shares thereof; (C) the dates or amounts
      of payment of the Tranche B Loan, (D) the commitment fee set forth in
      Section 2.1A(l) hereof or other amounts payable by Borrowers in respect of
      the Tranche B Loan hereunder or dates on which they are paid except if
      payable solely to the Agent, to the extent any such amount is proposed to
      be postponed or decreased, (E) the definition of Tranche B Required
      Lenders, or (F) this clause (ii) of this Paragraph 9.3; or (ii) the
      release of any Borrower having net equity value in excess of $500,000 or
      the release of any Collateral valued in excess of $500,000 in the
      aggregate in any calendar year other than in the ordinary course of
      business.

      1.19 In Section 9.4, the existing paragraph is renumbered as clause "(i)"
      and a new clause (ii) is added to read as follows:

           (ii) The obligations of the Tranche B Lenders hereunder are several,
      and each Tranche B Lender hereunder shall not be responsible for the
      obligations of the other Tranche B Lenders hereunder, nor will the failure
      of one Tranche B Lender to perform any of its obligations hereunder
      relieve the other Tranche B Lenders from the performance of their
      respective obligations hereunder.
<PAGE>

      1.20 The provisions of Sections 9.5 through 9.18, and all of the
      provisions of Section 10, shall apply with equal effect to the Tranche B
      Lenders and the Tranche B Loan.

      1.21 Section 10.2 is amended to read as follows:

           10.2 Participations and Assignments.

           (a) Each Lender may assign to one or more Eligible Assignees all or a
      portion of its rights and obligations under this Credit Agreement
      (including, without limitation, all or a portion of its Loans, its Notes,
      and its Commitment); provided, however, that

                (i) each such assignment shall be to an Eligible Assignee;

                (ii) except in the case of an assignment to another Lender, an
           Affiliate of an existing Lender or any fund that invests in bank
           loans and is advised or managed by an investment advisor to an
           existing Lender or an assignment of all of a Lender's rights and
           obligations under this Credit Agreement, any such partial assignment
           shall be in an amount at least equal to $5,000,000 (or, if less, the
           remaining amount of the Commitment being assigned by such Lender) or
           an integral multiple of $1,000,000 in excess thereof;

                (iii) any such assignment shall be of a constant, not varying,
           percentage of (A) all of the Obligations and Commitments hereunder
           and (B) all of the Tranche B Loans and Tranche B Commitments
           hereunder; and

                (iv) the parties to such assignment shall execute and deliver to
           the Agent for its acceptance an Assignment and Acceptance in the form
           of Exhibit K hereto, together with any Note subject to such
           assignment and a processing fee of $3,500.

      Upon execution, delivery, and acceptance of such Assignment and
      Acceptance, the assignee thereunder shall be a party hereto and, to the
      extent of such assignment, have the obligations, rights, and benefits of a
      Lender hereunder and the assigning Lender shall, to the extent of such
      assignment, relinquish its rights and be released from its obligations
      under this Credit Agreement. Upon the consummation of any assignment
      pursuant to this Section 10.2(a), the assignor, the Agent and the
      Borrowers shall make appropriate arrangements so that, if required, new
      Notes are issued to the assignor and the assignee. If the assignee is not
      a United States person under Section 7701(a)(30) of the Code, it shall
      deliver to the Borrower, the Guarantors and the Agent certification as to
      exemption from deduction or withholding of Taxes.

           (b) The Agent shall maintain a copy of each Assignment and Acceptance
      delivered to and accepted by it and a register for the recordation of the
      names and addresses of the Lenders and the Commitment of, and principal
      amount of the Loans owing to, each Lender from time to time (the
      "Register"). The entries in the Register shall be conclusive and binding
      for all purposes, absent manifest error, and the Borrower, the Agent and
      the Lenders may treat each Person whose name is recorded in the Register
      as a Lender hereunder for all purposes of this Credit Agreement. The
<PAGE>

      Register shall be available for inspection by the Borrowers or any Lender
      at any reasonable time and from time to time upon reasonable prior notice.
      Any assignment of any Loan or other obligations shall be effective only
      upon an entry with respect thereto being made in the Register.

           (c) Upon its receipt of an Assignment and Acceptance executed by the
      parties thereto, together with any Note subject to such assignment and
      payment of the processing fee, the Agent shall, if such Assignment and
      Acceptance has been completed and is in substantially the form of Exhibit
      K hereto, (i) accept such Assignment and Acceptance, (ii) record the
      information contained therein in the Register and (iii) give prompt notice
      thereof to the parties thereto.

           (d) Each Lender may sell participations to one or more Persons in all
      or a portion of its rights, obligations or rights and obligations under
      this Credit Agreement (including all or a portion of its Commitment or its
      Loans); provided, however, that (i) such Lender's obligations under this
      Credit Agreement shall remain unchanged, (ii) such Lender shall remain
      solely responsible to the other parties hereto for the performance of such
      obligations, (iii) the participant shall be entitled to the benefit of the
      yield protection provisions contained in Section 2.10, Section 2.16 and
      Section 2.17, and the right of set-off contained in Section 7, and (iv)
      the Borrowers shall continue to deal solely and directly with such Lender
      in connection with such Lender's rights and obligations under this Credit
      Agreement, and such Lender shall retain the sole right to enforce the
      obligations of the Borrowers relating to the Loans and other obligations
      owing to such Lender and to approve any amendment, modification, or waiver
      of any provision of this Credit Agreement (other than amendments,
      modifications, or waivers decreasing the amount of principal of or the
      rate at which interest is payable on such Loans or Notes, extending any
      scheduled principal payment date or date fixed for the payment of interest
      on such Loans or Notes, or extending its Commitment).

           (e) Notwithstanding any other provision set forth in this Credit
      Agreement, any Lender may at any time assign and pledge all or any portion
      of its Loans and its Notes to any Federal Reserve Bank as collateral
      security pursuant to Regulation A and any Operating Circular issued by
      such Federal Reserve Bank. No such assignment shall release the assigning
      Lender from its obligations hereunder.

           (f) Any Lender may furnish any information concerning the members of
      the Consolidated Group in the possession of such Lender from time to time
      to assignees and participants (including prospective assignees and
      participants), subject, however, to the provisions of Section 10.2 hereof.

      1.22 Schedule 2 to the Credit Agreement is (i) updated to reflect updated
      information regarding the Lenders, their respective Maximum Principal
      Amounts and Percentages of Commitment, and (ii) amended and restated to
      include the Tranche B Lenders, their respective Maximum Tranche B
      Principal Amounts and Percentages of Tranche B Commitment, as attached.

      1.23 The Borrowers will, in consideration of the establishment of the
      Tranche B Commitment hereby, permanently terminate commitments under the
      Lease
<PAGE>

      Financing Facility in an aggregate amount equal to the aggregate Tranche B
      Commitment promptly upon the effectiveness of this Amendment and
      establishment of the Tranche B Commitment hereunder.

      1.24 The Lenders, by action of the Required Lenders, acknowledge and
      consent to the terms of, and authorize and direct the Agent to take
      appropriate action to enter into, the Security Agreement and the First
      Amendment to Pledge Agreement, forms of which have been provided to the
      Lenders.

      1.25 The Borrowers covenant and agree that they will deliver Mortgages on
      those property locations agreed upon with the Agent and the Required
      Lenders (i) within 45 days of the date hereof, in the case of unencumbered
      properties, and (ii) within 90 days of the date hereof, in the case of
      encumbered properties, together with, in each case certificates of
      insurance evidencing flood hazard insurance (for improvements located in
      areas having "special flood hazards"), casualty insurance (including
      builders' risk and all-risk permanent policies) and liability conforming
      to the requirements of this Credit Agreement and the other Credit
      Documents, showing the Agent as sole loss payee with respect to the flood
      hazard and casualty insurance and as additional insured with respect to
      liability insurance, together with evidence of payment of premiums
      thereon. Failure to provide the Mortgages and related items in a timely
      manner will constitute an Event of Default under the Credit Agreement.

      2. This Amendment shall be effective upon satisfaction of the following
      conditions:

           (a) execution of this Amendment by the Borrowers and the Required
      Lenders;

           (b) Receipt of the entire amount of the Tranche B Commitments and
      execution of this Amendment by all of the Tranche B Lenders and delivery
      of executed Tranche B Notes;

           (c) receipt by the Agent of corporate resolutions, incumbency
      certificates, corporate documents and legal opinions in form and substance
      reasonably satisfactory to the Agent and the Required Lenders;

           (d) receipt by the Agent of the Security Agreement, the First
      Amendment to Pledge Agreement and UCC financing statements relating
      thereto, in each case duly executed by the Borrowers;

           (e) receipt by the Agent of certificates of insurance on personal
<PAGE>

      property;

           (f) receipt by the Agent of (i) a waiver fee of twelve and one-half
      basis points (0.125%) on the Commitments of the Lenders consenting to the
      Waiver dated May 15, 1999 and an amendment fee of thirty-seven and one-
      half basis points (0.375%) on the Commitments of Lenders consenting to
      this Amendment, and (ii) a commitment fee of thirty-seven and one-half
      basis points (0.375%) on the Tranche B Commitments of the Tranche B
      Lenders; and

           (g) receipt by the Agent if a copy of the executed Amendment to the
      Lease Financing Facility providing, among other things, for the scheduled
      annual escrow payments, and evidence of payment to the lenders and holders
      thereunder of a waiver fee of twelve and one-half basis points (0.125%) on
      the Commitments thereunder (after giving effect to the reduction of
      commitments contemplated in Section 1.24 hereof) and an amendment fee of
      thirty-seven and one-half basis points (0.375%) on the commitments
      thereunder (after giving effect to the reduction of commitments
      contemplated in Section 1.24 hereof).

      3. Except as modified hereby, all of the terms and provisions of the
      Credit Agreement (including Schedules and Exhibits) shall remain in full
      force and effect.

      4. The Borrowers agree to pay all reasonable costs and expenses of the
      Agent in connection with the preparation, execution and delivery of this
      Amendment, including without limitation the reasonable fees and expenses
      of Moore & Van Allen, PLLC.

      5. This Amendment may be executed in any number of counterparts, each of
      which when so executed and delivered shall be deemed an original and it
      shall not be necessary in making proof of this Amendment to produce or
      account for more than one such counterpart.

      6. This Amendment shall be deemed to be a contract made under, and for all
      purposes shall be construed in accordance with the laws of the
      Commonwealth of Pennsylvania.
<PAGE>

      IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this  Amendment  No. 3 to be duly  executed  and  delivered as of the date first
above written.

CENTENNIAL HEALTHCARE             TRANSITIONAL FINANCIAL SERVICES,
INC. CORPORATION                  PARAGON REHABILITATION, INC.
CENTENNIAL/ASHTON PROPERTIES      THS PARTNERS I, INC.
CORPORATION                       THS PARTNERS II, INC.
CENTENNIAL HEALTHCARE             TRANSITIONAL HEALTH PARTNERS
PROPERTIES CORPORATION            BY:  THS PARTNERS I, INC. and THS
CENTENNIAL HEALTHCARE             PARTNERS II, INC., its
general partners
MANAGEMENT CORPORATION       PARKVIEW PARTNERSHIP
CENTENNIAL ACQUISITION            BY:  THS PARTNERS I, INC. and
THS  CORPORATION                     PARTNERS II, INC., its
general partners
CENTENNIAL PROFESSIONAL        TOTAL CARE CONSOLIDATED, INC.
THERAPY SERVICES CORPORATION   TOTAL CARE, INC.
CENTENNIAL HEALTHCARE          TOTAL HEALTH CARE SERVICES, INC.
INVESTMENT CORPORATION       TOTAL CARE OF THE CAROLINAS, INC.
CENTENNIAL HEALTHCARE HOSPITAL HCC HOME HEALTH OF LOUISIANA, INC.
CORPORATION
TRANSITIONAL HEALTH SERVICES, INC.

Attest:

   By:/s/ Daryl Griswold          By:/s/ Alan C. Dahl
      Name: Daryl Griswold          Name: Alan C. Dahl
      Title:Asst. Secretary         Title: EVP


                               FIRST UNION NATIONAL BANK, for itself
                               and as Agent


                                   By:/s/ J. Matt Maclver
                                      Name:J. Matt Maclver, Jr.
                                      Title:Vice President


                      NATIONSBANK, N.A., for itself and as
                                Syndication Agent


                                   By:/s/J. Walter Bland
                                      Name:J. Walter Bland
                                      Title:Vice President


                               AMSOUTH BANK


                                   By:/s/ J. Ken Difatta
                                      Name:J. Ken Difatta
                                      Title:Asst. Vice President


                         CREDIT LYONNAIS NEW YORK BRANCH


                                   By:/s/ Farhood Tavanqar
                                      Name:Farhood Tavanqar
                                      Title:Senior Vice President


                         NATIONAL CITY BANK OF KENTUCKY
<PAGE>

                                   By:/s/ Roderic M. Brown
                                      Name:Roderic M. Brown
                                      Title:Vice President



                               WACHOVIA BANK, N.A.


                                   By:/s/ Gary C.Gaskill
                                      Name:Gary C Gaskill
                                      Title:Vice President


                                 SCOTIABANK INC.


                                   By:/s/ Carolyn A. Calloway
                                      Name:Carolyn A. Calloway
                                      Title:Relationship Manager


                                  COMERICA BANK


                                   By:/s/ Craig F. Durno
                                      Name:Craig F. Durno
                                      Title:Asst. V.P.
<PAGE>

                                   Schedule 2
                               Schedule of Lenders
                                 and respective
             Maximum Principal Amounts and Percentages of Commitments

                           Existing Commitments      Tranche B Commitments

                               Maximum              Maximum Tranche B
                          Principal Amount Percent  Principal Amount   Percent
NationsBank, N.A.           $15,750,000     17.50%    $1,174,062.50     21.81%
Atlanta Plaza Building
600 Peachtree Street NE
GA1-006-19-22
Atlanta, GA  30303
Attn: Melinda Bergbom
Tel:  (404) 607-4761
Fax:  (404) 607-6343

First Union National Bank   $15,750,000     17.50%    $1,174,062.50    21.81%
301 South College Street
One First Union Center, TW-5
Charlotte, NC  28288
Attn: Matt MacIver
Tel:  (704) 374-4187
Fax:  (704) 383-9144

AmSouth Bank                $11,250,000     12.50%     $812,500.00      15.10%
1900 Fifth Avenue North
SONAT - 7th Floor
Birmingham, AL  35203
Attn: Ken DiFatta
Tel:  (205) 801-0103
Fax:  (205) 326-4790

Credit Lyonnais             $11,250,000     12.50%     $788,125.00      14.64%
1301 Avenue of the Americas
New York, NY  10019-6022
Attn: Marty Golden / Henry Reukauf
Tel:  (212) 261-7791 (Mr. Golden)
Fax:  (212) 261-3440

RaboBank                    $9,000,000      10.00%           $0          0%
1201 West Peachtree Street
Suite 3450
Atlanta, GA  30309-3450
Attn: Terrell Boyle
Tel:  (404) 877-9106
Fax:  (404) 877-9150

Comerica Bank               $6,750,000       7.50%     $472,875.00       8.79%
500 Woodward Avenue
9th Floor
Detroit, MI  48226
Attn: Craig Durno
Tel:  (313) 222-7542
Fax:  (313) 222-3420

National City Bank of       $6,750,000       7.50%     $472,875.00       8.79%
Kentucky
101 South Fifth Street
Louisville, KY  40202
Attn: Roderic M. Brown
Tel:  (502) 581-4369
Fax:  (502) 581-4424

Scotiabanc Inc.             $6,750,000       7.50%     $487,500.00       9.06%
600 Peachtree Street, N.E.
Suite 2700
Atlanta, GA  30308
Attn: Carolyn Calloway
Tel:  (404) 877-1507
Fax:  (404) 888-8998

Wachovia Bank, N.A.         $6,750,000       7.50%           $0           .0%
MC:  GA212
191 Peachtree Street NE
Atlanta, GA  30303-1757
Attn: Gary Gaskill
Tel:  (404) 332-6519
Fax:  (404) 332-6920
                          -------------    --------   ------------    ---------
TOTAL                       $90,000,000    100.00%   $5,382,000.00     100.00%