Document:

<PAGE>

                                                                    EXHIBIT 10.3

                              EIGHTH AMENDMENT TO
                     DEBTOR-IN-POSSESSION CREDIT AGREEMENT
                                  AND CONSENT

                                 June 8, 2000

          Reference is made to that certain Debtor-In-Possession Credit
Agreement dated as of September 13, 1999 (as heretofore amended, supplemented or
otherwise modified, the "DIP Credit Agreement"), by and among Vencor, Inc., a
Delaware corporation ("Vencor"), and Vencor Operating, Inc., a Delaware
corporation ("Vencor Opco"), each as debtor and debtor-in-possession, and each
of Vencor's subsidiaries listed on the signature pages thereof, each as debtor
and debtor-in-possession (each such subsidiary, Vencor and Vencor Opco
individually referred to herein as a "Borrower" and, collectively, on a joint
and several basis, as the "Borrowers"); the Lenders listed on the signature
pages thereof; and Morgan Guaranty Trust Company of New York, as arranger,
collateral agent and administrative agent (in such capacity, "Administrative
Agent") for the Lenders, and as an issuing bank for Letters of Credit
thereunder. Capitalized terms used herein without definition herein shall have
the meanings assigned to such terms in the DIP Credit Agreement.

          The Borrowers have requested that Lenders (i) extend the termination
date of the Commitments, (ii) extend the deadline for filing a plan of
reorganization acceptable to the Required Lenders in the Cases, (iii) amend
certain financial covenants, and (iv) make certain other amendments to the DIP
Credit Agreement, in each case as more fully set forth below. Accordingly,
Borrowers and the undersigned Lenders hereby agree as follows:

          1.   The definition of "Borrowing Base" in Section 1.01 of the DIP
Credit Agreement is hereby amended by adding at the end of the table contained
therein three additional rows as follows:

               July 2000                     $65,568,883

               August 2000                   $65,568,883

               September 2000                $65,568,883

          2.   The definition of "Stated Maturity Date" in Section 1.01 of the
DIP Credit Agreement is hereby amended by deleting the reference to "June 30,
2000" contained therein and substituting therefor "September 30, 2000".

          3.   Section 2.05(a) of the DIP Credit Agreement is hereby amended by
deleting the reference to "April 30, 2000" contained therein and substituting
therefor "July 31, 2000".
<PAGE>

          4.   Section 5.01(b) of the DIP Credit Agreement is hereby amended by
adding at the end of the table contained therein three additional rows as
follows:

               -------------------------------------------------------
                  Fiscal Quarter ending      August 15, 2000
                  June 30, 2000
               -------------------------------------------------------
                  July 2000                  August 31, 2000
               -------------------------------------------------------

                  August 2000                September 30, 2000
               -------------------------------------------------------

          5.   Section 5.10 of the DIP Credit Agreement is hereby amended by
deleting the reference to "June 15, 2000" contained therein and substituting
therefor "June 30, 2000"; provided, however, that upon the effectiveness of
numbered paragraphs 2 and 3 hereof, the reference to "June 30, 2000" shall be
deleted and "July 18, 2000" shall be substituted therefor.

          6.   Section 6.01 of the DIP Credit Agreement is hereby amended by
adding at the end of the table contained therein three additional rows as
follows:

               July 2000                     $149,000,000

               August 2000                   $178,000,000

               September 2000                $208,000,000

          7.   Section 6.03 of the DIP Credit Agreement is hereby amended by
adding at the end of the table contained therein three additional rows as
follows:

               July 2000                          2,550

               August 2000                        2,500

               September 2000                     2,500

          8.   Section 6.06 of the DIP Credit Agreement is hereby amended by
adding at the end of the table contained therein three additional rows as
follows:

               July 2000                     $45,000,000

               August 2000                   $51,000,000

               September 2000                $58,000,000

                                       2
<PAGE>

          9.   Section 7.12 of the DIP Credit Agreement is hereby amended by
deleting the last sentence therefrom in its entirety and substituting therefor
the following:

     "Without limiting the foregoing, the aggregate base rental
     (as such term is used in the Master Lease Agreements) payments
     (together with any additional amounts escrowed for such purpose)
     by all Vencor Companies to all Ventas Companies in respect of
     Master Lease Properties shall not exceed, in any month,
     $15,150,000."

          10.  Section 8.01 of the DIP Credit Agreement is hereby amended by (i)
deleting "or" at the end of subdivision (p) thereof, (ii) adding "or" at the end
of subdivision (q) thereof, and (iii) adding immediately after subdivision (q)
thereof a new subdivision (r) as follows:

          "(r) the commencement of any action or proceeding in the
     Cases by any Vencor Company against any Ventas Company with
     respect to the Master Leases or the spin-off of the Vencor
     Companies from the Vencor Companies;"

          The Borrowers have also submitted to Lenders an amendment and
supplement to the Cash Plan, attached hereto as Annex A (the "Cash Plan
                                                -------
Supplement"), setting forth, for July 2000 and August 2000, a consolidated cash
forecast for the Borrowers. Each of the undersigned Lenders hereby (i)
acknowledges that the substance of the Cash Plan Supplement is satisfactory to
such Lender and (ii) consents to supplementing the Cash Plan with the forecast
for July 2000 and August 2000 contained in the Cash Plan Supplement.

          On and after the Eighth Amendment Effective Date (as defined below),
each reference in the DIP Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the DIP Credit
Agreement, and each reference in the other Financing Documents to the "DIP
Credit Agreement", "thereunder", "thereof" or words of like import referring to
the DIP Credit Agreement, shall mean and be a reference to the DIP Credit
Agreement as amended by this Eighth Amendment to Debtor-In-Possession Credit
Agreement (this "Eighth Amendment"; the DIP Credit Agreement, as so amended,
being the "Amended Agreement").

          Without limiting the generality of the provisions of Section 11.05 of
the DIP Credit Agreement, the amendments and the consent set forth in the
paragraphs above shall be limited precisely as written, and nothing in this
Eighth Amendment shall be deemed to (a) constitute a consent to any other
supplement to the Cash Plan or any other document, transaction, occurrence,
event or condition under Section 5.01(m) of the DIP Credit Agreement or any
other term, provision or condition of the DIP Credit Agreement or any of such
other Financing Documents, or (b) prejudice any right or remedy that the
Administrative Agent or any Lender may now have or may have in the future under
or in connection with the DIP Credit Agreement or any of such other Financing
Documents. Except as specifically amended by this Eighth Amendment, the DIP
Credit Agreement and such other Financing Documents shall remain in full force
and effect and are hereby ratified and confirmed.

          In order to induce Lenders to enter into this Eighth Amendment, each
Borrower, by its execution of a counterpart of this Eighth Amendment, represents
and warrants that (a) such

                                       3
<PAGE>

Borrower has the corporate or other power and authority and all material
Governmental Approvals required to enter into this Eighth Amendment and to carry
out the transactions contemplated by, and perform its obligations under, the
Amended Agreement, (b) the execution and delivery of this Eighth Amendment and
the performance of the Amended Agreement have been duly authorized by all
necessary corporate or other action on the part of such Borrower, (c) the
execution and delivery by such Borrower of this Eighth Amendment and the
performance by such Borrower of the Amended Agreement do not and will not
contravene, or constitute a default under, any Applicable Laws (including an
applicable order of the Court) or any provision of its Organizational Documents,
or of any agreement or other instrument binding upon it or result in or require
the imposition of any Liens (other than the Liens created by the Collateral
Documents) on any of its assets, (d) the execution and delivery by such Borrower
of this Eighth Amendment and the performance by such Borrower of the Amended
Agreement do not and will not require any action by or in respect of, or filing
with, any governmental body, agency or official (except for the Court and such
as shall have been made at or before the time required and shall be in full
force and effect on and after the date when made), (e) this Eighth Amendment and
the Amended Agreement have been duly executed and delivered by such Borrower and
constitute the valid and binding obligations of such Borrower, enforceable in
accordance with their respective terms, except as may be limited by general
principles of equity, (f) for purposes of the Borrowing Order notice of this
Eighth Amendment has been given to and received by counsel to the Committee (as
defined in the Borrowing Order), and (g) after giving effect to this Eighth
Amendment, no event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Eighth Amendment that
would constitute a Default.

          This Eighth Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Eighth Amendment
(other than numbered paragraphs 2 and 3 hereof) shall become effective (the date
of such effectiveness being the "Eighth Amendment Effective Date") upon the
earliest date on or prior to June 15, 2000 that (a) the Borrowers and Lenders
shall have executed counterparts of this Eighth Amendment and the Borrowers and
the Administrative Agent shall have received written or telephonic notification
of such execution and authorization of delivery thereof; and (b) the
Administrative Agent shall have received evidence satisfactory to it that all
outstanding statements of O'Melveny & Myers LLP, Davis Polk & Wardwell and
Policano & Manzo that are received by Vencor prior to 12:00 Noon (New York City
time) on June 9, 2000 have been paid in full. Numbered paragraphs 2 and 3 of
this Eighth Amendment shall not become effective unless and until (i) the
Administrative Agent shall have received from the Borrowers an amendment fee in
the aggregate amount of $200,000 on or prior to the Commitment Termination Date
for ratable distribution to each Lender that has executed and delivered this
Eighth Amendment on or prior to June 15, 2000 according to the ratio of (x) the
Commitment of such executing Lender to (y) the aggregate Commitments of all such
executing Lenders, and (ii) the Court shall have approved both the terms of this
Eighth Amendment in their entirety and the payment of such $200,000 amendment
fee.

          THIS EIGHTH AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL

                                       4
<PAGE>

OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.

                 [Remainder of page intentionally left blank.]

                                       5
<PAGE>

BORROWERS:

                    Advanced Infusion Systems, Inc.
                    American X-Rays, Inc.
                    C.P.C. of Louisiana, Inc.
                    Community Behavioral Health System, Inc.
                    Community Psychiatric Centers of Arkansas, Inc.
                    Community Psychiatric Centers of California
                    Community Psychiatric Centers of Florida, Inc.
                    Community Psychiatric Centers of Idaho, Inc.
                    Community Psychiatric Centers of Indiana, Inc.
                    Community Psychiatric Centers of Kansas, Inc.
                    Community Psychiatric Centers of Mississippi, Inc.
                    Community Psychiatric Centers of Missouri, Inc.
                    Community Psychiatric Centers of North Carolina, Inc.
                    Community Psychiatric Centers of Oklahoma, Inc.
                    Community Psychiatric Centers of Utah, Inc.
                    Community Psychiatric Centers Properties Incorporated
                    Community Psychiatric Centers Properties of Oklahoma, Inc.
                    Community Psychiatric Centers Properties of Texas, Inc.
                    Community Psychiatric Centers Properties of Utah, Inc.
                    Courtland Gardens Health Center, Inc.
                    CPC Investment Corp.
                    CPC Managed Care Health Services, Inc.
                    CPC of Georgia, Inc.
                    CPC Properties of Arkansas, Inc.
                    CPC Properties of Illinois, Inc.
                    CPC Properties of Indiana, Inc.
                    CPC Properties of Kansas, Inc.
                    CPC Properties of Louisiana, Inc.
                    CPC Properties of Mississippi, Inc.
                    CPC Properties of Missouri, Inc.
                    CPC Properties of North Carolina, Inc.
                    First Rehab, Inc.
                    Florida Hospital Properties, Inc.
                    Health Care Holdings, Inc.
                    Health Care Technology, Inc.
                    Helian ASC of Northridge, Inc.
                    Helian Health Group, Inc.
                    Helian Recovery Corporation
                    Homestead Health Center, Inc.
                    Horizon Healthcare Services, Inc.

                                      S-1
<PAGE>

                    Interamericana Health Care Group
                    J.B. Thomas Hospital, Inc.
                    Lafayette Health Care Center, Inc.
                    MedEquities, Inc.
                    Medisave of Tennessee, Inc.
                    Medisave Pharmacies, Inc.
                    Old Orchard Hospital, Inc.
                    Palo Alto Surgecenter Corporation
                    Peachtree-Parkwood Hospital, Inc.
                    PersonaCare, Inc.
                    PersonaCare Living Center of Clearwater, Inc.
                    PersonaCare of Bradenton, Inc.
                    PersonaCare of Clearwater, Inc.
                    PersonaCare of Connecticut, Inc.
                    PersonaCare of Georgia, Inc.
                    PersonaCare of Huntsville, Inc.
                    PersonaCare of Little Rock, 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 Robbins, Inc.
                    PersonaCare of Wisconsin, Inc.
                    PersonaCare Properties, Inc.
                    Prodata Systems, Inc.
                    Recovery Inns of America, Inc.
                    Respiratory Care Services, Inc.
                    Stamford Health Facilities, Inc.
                    THC-Chicago, Inc.
                    THC-Hollywood, Inc.
                    THC-Houston, Inc.
                    THC-Minneapolis, Inc.
                    THC-North Shore, Inc.
                    THC-Orange County, Inc.
                    THC-San Diego, Inc.
                    THC-Seattle, Inc.
                    TheraTx Healthcare Management, Inc.
                    TheraTx Health Services, Inc.
                    TheraTx Management Services, Inc.
                    Theratx Medical Supplies, Inc.

                                      S-2
<PAGE>

                    TheraTx Rehabilitation Services, Inc.
                    Theratx Staffing, Inc.
                    Transitional Hospitals Corporation, a Delaware Corporation
                    Transitional Hospitals Corporation, a Nevada Corporation
                    Transitional Hospitals Corporation of Indiana, Inc.
                    Transitional Hospitals Corporation of Louisiana, Inc.
                    Transitional Hospitals Corporation of Michigan, 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.
                    Tunstall Enterprises, Inc.
                    VC-OIA, Inc.
                    VC-TOHC, Inc.
                    VC-WM, Inc.
                    Vencare, Inc.
                    Vencare Rehab Services, Inc.
                    Vencor Facility Services, Inc.
                    Vencor Holdings, L.L.C.
                    Vencor Home Care Services, Inc.
                    Vencor Hospice, Inc.
                    Vencor Hospitals East, L.L.C.
                    Vencor Hospitals West, L.L.C.
                    Vencor, Inc.
                    Vencor Insurance Holdings, Inc.
                    Vencor Investment Company
                    Vencor Nevada, L.L.C.
                    Vencor Nursing Centers East, L.L.C.
                    Vencor Nursing Centers Central L.L.C.
                    Vencor Nursing Centers North, L.L.C.
                    Vencor Nursing Centers South, L.L.C.
                    Vencor Nursing Centers West, L.L.C.
                    Vencor Operating, Inc.
                    Vencor Pediatric Care, Inc.

                                      S-3
<PAGE>

                    Vencor Provider Network, Inc.
                    Ventech Systems, Inc.

                    BY:  Vencor Operating, Inc., as agent and attorney-in-fact
                          for each of the foregoing entities

                         By: ______________________________________
                             Name:
                             Title:

                    Stamford Health Associates, L.P.

                    BY:  Stamford Health Facilities, Inc., Its General Partner

                         By: ______________________________________
                             Name:
                             Title:

                    Vencor Home Care and Hospice Indiana Partnership

                    BY:  Vencor Home Care Services, Inc., Its General Partner

                         By: ______________________________________
                             Name:
                             Title:

                    BY:  Vencor Hospice, Inc., Its General Partner

                         By: ______________________________________
                             Name:
                             Title:

                                      S-4
<PAGE>

                    Vencor Hospitals Limited Partnership

                    BY:  Vencor Operating, Inc., Its General Partner

                         By: ______________________________________
                             Name:
                             Title:

                    BY:  Vencor Nursing Centers Limited Partnership,
                         Its General Partner

                         BY:  VENCOR OPERATING, INC., ITS GENERAL
                                    PARTNER

                              By: _________________________________
                                  Name:
                                  Title:

                    Vencor Nursing Centers Central Limited Partnership

                    BY:  Vencor Operating, Inc., Its General Partner

                         By: ______________________________________
                             Name:
                             Title:

                    BY:  Vencor Nursing Centers Limited Partnership,
                         Its General Partner

                         BY:  Vencor Operating, Inc., Its General
                              Partner

                              By: _________________________________
                                  Name:
                                  Title:

                                      S-5
<PAGE>

                    Vencor Nursing Centers Limited Partnership

                    BY:  Vencor Operating, Inc., Its General Partner

                         By: ______________________________________
                             Name:
                             Title:

                    BY:  Vencor Hospitals Limited Partnership, Its
                         General Partner

                         BY:  Vencor Operating, Inc., Its General
                              Partner

                              By: _________________________________
                                  Name:
                                  Title:

                                      S-6
<PAGE>

AGENTS AND LENDERS:

                             MORGAN GUARANTY TRUST COMPANY OF NEW
                             YORK, as Arranger, Collateral Agent
                             and Administrative Agent and as a
                             Lender

                             By: ______________________________________
                                 Name:
                                 Title:

                                      S-7
<PAGE>

                             ABLECO FINANCE LLC, as a Lender

                             By: ______________________________________
                                 Name:
                                 Title:

                                      S-8
<PAGE>

                              APPALOOSA INVESTMENT LIMITED
                              PARTNERSHIP I, as a LENDER

                              By: _____________________________________
                                  Name:
                                  Title:

                                      S-9
<PAGE>

                             BANKERS TRUST COMPANY, as a Lender

                              By: _____________________________________
                                  Name:
                                  Title:

                                     S-10
<PAGE>

                              CHASE SECURITIES INC, AS AGENT FOR THE CHASE
                              MANHATTAN BANK, as a Lender

                              By: _____________________________________
                                  Name:
                                  Title:

                                     S-11
<PAGE>

                             GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lender

                              By: _____________________________________
                                  Name:
                                  Title:

                                     S-12
<PAGE>

                             PARIBAS, as a Lender

                              By: _____________________________________
                                  Name:
                                  Title:

                              By: _____________________________________
                                  Name:
                                  Title:

                           [INTENTIONALLY OMMITTED]

                                     S-13
<PAGE>

                             VAN KAMPEN PRIME RATE INCOME TRUST, as a Lender

                             By:   VAN KAMPEN INVESTMENT ADVISORY CORP.

                                   By: _____________________________________
                                       Name:
                                       Title:

                             VAN KAMPEN CLO I, LIMITED, as a Lender

                             By:   VAN KAMPEN MANAGEMENT INC.

                                   By: _____________________________________
                                       Name:
                                       Title:

                             VAN KAMPEN SENIOR FLOATING RATE FUND, as a Lender

                             By:   VAN KAMPEN INVESTMENT ADVISORY CORP.

                                   By: _____________________________________
                                       Name:
                                       Title:

                             VAN KAMPEN SENIOR INCOME TRUST, as a Lender

                             By:   VAN KAMPEN INVESTMENT ADVISORY CORP.

                                   By: _____________________________________
                                       Name:
                                       Title:

                                     S-14
<PAGE>

                              FRANKLIN MUTUAL ADVISERS LLC, as a Lender

                              By: __________________________________________
                                  Name:
                                  Title:

                                     S-15
<PAGE>

                              FRANKLIN FLOATING RATE TRUST, as a Lender

                              By: __________________________________________
                                  Name:
                                  Title:

                                     S-16
<PAGE>

                              FOOTHILL CAPITAL CORPORATION, as a Lender

                              By: __________________________________________
                                  Name:
                                  Title:

                                     S-17
<PAGE>

                              FOOTHILL INCOME TRUST II, L.P., as a Lender

                              By:  FIT II GP, LLC, its general partner

                                   By: ______________________________________
                                       Name:
                                       Title:

                                     S-18
<PAGE>

              ACKNOWLEDGEMENT AND CONSENT OF SUBSIDIARY GUARANTOR

          By its execution of a counterpart of this Eighth Amendment, the
undersigned, as a Subsidiary Guarantor under that certain Guaranty Agreement
dated as of September 13, 1999 (the "Guaranty") for the benefit of Lenders, and
as an Original Lien Grantor under that certain Security Agreement dated as of
September 13, 1999 (the "Security Agreement") between the undersigned, the
Borrowers and Collateral Agent, as Secured Party, hereby acknowledges that it
has read this Eighth Amendment and consents to the terms thereof and further
hereby confirms and agrees that, notwithstanding the effectiveness of this
Eighth Amendment, the obligations of the undersigned under the Guaranty and the
Security Agreement shall not be impaired or affected and each of the Guaranty
and the Security Agreement is, and shall continue to be, in full force and
effect and is hereby confirmed and ratified in all respects.

                                             CARIBBEAN BEHAVIORAL HEALTH
                                             SYSTEMS, INC.

                                             By: _____________________________
                                                 Name:
                                                 Title:

                                     S-19<PAGE>

June 12, 2000                                                      EXHIBIT 10.4

Vencor, Inc. and the Borrowers under the
   Existing DIP Credit Agreement referred to below
One Vencor Place
680 South Fourth Street
Louisville, KY 40202

Attention:     Edward Kuntz
               President and Chief Executive Officer

               Re: Amended and Restated Debtor-In-Possession Credit Agreement
                   ----------------------------------------------------------

Ladies and Gentlemen:

          Reference is made to that certain Debtor-In-Possession Credit
Agreement dated as of September 13, 1999 (as heretofore amended, supplemented or
otherwise modified, the "Existing DIP Credit Agreement"), by and among Vencor,
Inc., a Delaware corporation ("Vencor"), and Vencor Operating, Inc., a Delaware
corporation ("Vencor Opco"), each as debtor and debtor-in-possession, and each
of Vencor's subsidiaries listed on the signature pages thereof, each as debtor
and debtor-in-possession (each such subsidiary, Vencor and Vencor Opco
individually referred to herein as a "Borrower" and, collectively, on a joint
and several basis, as the "Borrowers"); the lenders party thereto (the "Existing
DIP Lenders"); and Morgan Guaranty Trust Company of New York, as arranger,
collateral agent and administrative agent for the Existing DIP Lenders, and as
an issuing bank for letters of credit thereunder. Capitalized terms used herein
without definition herein shall have the meanings assigned to such terms in the
Existing DIP Credit Agreement.

          You have advised us that one or more of the Borrowers may become
involved in an action, proceeding or contested matter (the commencement of any
such action, proceeding or contested matter by any Ventas Company or any Vencor
Company being a "Litigation Event") against one or more Ventas Companies with
respect to the Master Leases or the spin-off of the Vencor Companies from the
Ventas Companies. You have also advised us that, in order to finance the
Borrowers' litigation expenses, working capital needs and other general
corporate purposes if such a Litigation Event occurs, the Borrowers desire (i)
to restructure the credit facilities available under the Existing DIP Credit
Agreement to consist of two revolving loan facilities of $60,000,000 (the
"Tranche A Facility") and $30,000,000 (the "Tranche B Facility") with a maturity
date of one year, extendible to two years, with a sublimit for letters of credit
of $15,000,000 (collectively, the "DIP Facility"), and (ii) to make certain
other changes to the Existing DIP Credit Agreement.
<PAGE>

          Each of Appaloosa Investment Limited Partnership I ("Appaloosa"),
Ableco Finance LLC ("Ableco"), and Franklin Mutual Advisers LLC ("Franklin
Mutual") (each, together with Van Kampen Prime Rate Income Trust, Van Kampen
Senior Floating Rate Fund and Van Kampen Senior Income Trust (collectively, "Van
Kampen"), being referred to herein as an "Underwriting Lender") is pleased to
confirm its commitment to provide $16 million of the Tranche A Facility and $8
million of the Tranche B Facility; Van Kampen Senior Floating Rate Fund is
pleased to confirm its commitment to provide $2.333 million of the Tranche A
Facility and $1.167 million of the Tranche B Facility; Van Kampen Prime Rate
Income Trust is pleased to confirm its commitment to provide $6.667 million of
the Tranche A Facility and $3.333 million of the Tranche B Facility; and Van
Kampen Senior Income Trust is pleased to confirm its commitment to provide $3.0
million of the Tranche A Facility and $1.5 million of the Tranche B Facility; in
each case on the terms and subject to the conditions contained in this letter
and the attached Annex A. Each of the Underwriting Lenders reserves the right to
arrange for other banks and financial institutions meeting the criteria for
being an Eligible Assignee (as defined in the Existing DIP Credit Agreement) to
provide a portion of its share of the DIP Facility; provided that the
commitments of the Underwriting Lenders shall be reduced ratably by the
commitments allocated to those institutions executing and delivering
counterparts hereto in the form of Annex B attached hereto. Morgan Guaranty
Trust Company of New York will act as arranger for the Lenders (in such
capacity, the "Arranger"), Morgan Guaranty Trust Company of New York will act as
syndication agent for the Lenders (in such capacity, the "Syndication Agent"),
and Morgan Guaranty Trust Company of New York will act as administrative agent
for the Lenders (in such capacity, the "Administrative Agent"; collectively, the
Arranger, the Syndication Agent and the Administrative Agent are the "Agents").
Certain of the terms of each of the DIP Facility are set forth in the Summary
Term Sheet attached hereto as Annex A (the "Term Sheet").
                              -------

          Our commitments are subject, in our respective reasonable discretion,
to the following conditions: (i) the continued accuracy in all material respects
of all written information, other than Projections (as defined below), which has
been or is hereafter made available to us or the Existing DIP Lenders or any of
their representatives by Vencor or its representatives in connection with the
transactions contemplated hereby (the "Information"), and (ii) there shall not
have been any adverse change in the condition (financial or otherwise), results
of operations, business or prospects of Vencor and its Consolidated
Subsidiaries, taken as a whole, which any of Appaloosa, Ableco, Franklin Mutual
or Van Kampen, in its judgment, deems material. Our commitments are also
subject, in our respective reasonable discretion, to the satisfactory
negotiation, execution and delivery an amended and restated debtor-in-possession
credit agreement, and other related definitive documents (collectively, the
"Loan Documents") to be based upon and substantially consistent with the terms
set forth in this letter and the attached Term Sheet, and to the satisfaction of
the conditions to be set forth in the Loan Documents, including without
limitation those conditions set forth in the Term Sheet.

          The Borrowers hereby represent that (a) all information heretofore
furnished in writing by any Vencor Company to any Agent or any Underwriting
Lender for purposes of or in connection with this letter or any transaction
contemplated hereby was, and all such information hereafter furnished in writing
by the Vencor Companies to any Agent or Underwriting Lender will be, true and
accurate in every material respect or based on reasonable estimates on the date
as of which such information is or was stated or certified, and Vencor has
disclosed to the

                                       2
<PAGE>

Underwriting Lenders in writing any and all facts which are known to it and
which have had or could reasonably be expected to have a Material Adverse
Effect, and (b) all financial projections (including without limitation the Cash
Plan (as defined in the Existing DIP Credit Agreement) for July and August 2000)
concerning the Vencor Companies that have been or are hereafter made available
to the Underwriting Lenders by the Borrowers or any of their representatives in
connection with the transactions contemplated hereby (the "Projections") have
been (or will be, in the case of Projections made available after the date
hereof) prepared in good faith based upon reasonable assumptions. The Borrowers
agree to supplement such Information and the Projections from time to time until
the Effective Date (as defined in the Term Sheet) so that the representation and
warranty in the preceding sentence is correct on the Effective Date. In
arranging and syndicating the DIP Facility, the Arranger and the Syndication
Agent will be using and relying on the Information and the Projections without
independent verification thereof. The representations and covenants contained in
this paragraph shall remain effective until a definitive amended and restated
debtor-in-possession credit agreement is executed and thereafter the disclosure
representations contained herein shall be superseded by those contained in such
definitive amended and restated debtor-in-possession credit agreement.

          The Borrowers hereby agree, jointly and severally, to pay (without
duplication) the costs and expenses arising in connection with the preparation,
execution and delivery of this letter and the Loan Documents and the syndication
of the DIP Facility on the terms set forth in Section 11.03 of the Existing DIP
Credit Agreement as if this letter, the Loan Documents, the DIP Lenders, the
Agents, the loans and the commitments with respect to the DIP Facility were the
Financing Documents, the Lenders, the Agents, the Loans and the Commitments
referred to in such Section. The Borrowers further hereby agree, jointly and
severally, to indemnify and hold harmless (without duplication) each of the DIP
Lenders, the Agents and each director, officer, employee, agent and affiliate
thereof (each an "indemnified person") on the terms set forth in Section 11.03
of the Existing DIP Credit Agreement as if the DIP Lenders, the Agents and such
other indemnified persons were Indemnitees (as defined under the Existing DIP
Facility) and as if this letter, the Loan Documents, the loans and the
commitments under the DIP Facility were the Financing Documents, the Loans and
the Commitments referred to in such Section. The obligations to indemnify each
DIP Lender and such indemnified persons and to pay such expenses shall remain
effective until the effectiveness of the definitive amended and restated debtor-
in-possession credit agreement and thereafter the indemnification and expense
reimbursement obligations contained herein shall be superseded by those
contained in such definitive amended and restated debtor-in-possession credit
agreement. No Underwriting Lender or other DIP Lender or Agent shall be
responsible or liable to any other party or any other person for consequential
damages which may be alleged as a result of this letter. The foregoing
provisions of this paragraph shall be in addition to any rights that any
Underwriting Lender or DIP Lender or any indemnified person may have at common
law or otherwise.

          In connection with the services to be provided hereunder by the
Underwriting Lenders and the Agents, each Underwriting Lender and Agent may
employ the services of its respective affiliates. Each Underwriting Lender and
Agent may share with such affiliates, and such affiliates may share with such
Underwriting Lender or Agent, any information concerning the Borrowers; provided
                                                                        --------
that each Underwriting Lender and Agent agrees, and will cause such respective
affiliates to agree, to hold any non-public information confidential in
accordance with their respective customary policies relating to non-public
information and in accordance with

                                       3
<PAGE>

Section 11.11 of the Existing DIP Credit Agreement. Any such affiliate so
employed (and its directors, officers, employees, agents, attorneys and
affiliates) shall be entitled to all of the benefits afforded to the relevant
Underwriting Lender or Agent hereunder.

          This letter is confidential and shall not be disclosed by you to any
person other than the Court and other parties in interest in the Chapter 11
cases of the Vencor Companies as may be required by law, and your accountants,
attorneys, financial advisors and, to the extent approved by the Underwriting
Lenders, other advisors, and then only on a confidential basis and in connection
with the transactions contemplated herein. Additionally, you may make
disclosures of this letter as are required by law or judicial process or as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation; provided that you will use your best efforts to
                                --------
notify us of any such disclosure prior to making such disclosure.

          Our offer will terminate on June 15, 2000 unless on or before that
date you sign and return an enclosed counterpart of this letter; provided,
however, that the commitments herein shall terminate on August 31, 2000 unless
on or before such date the Borrowers (i) shall have obtained from the Court
authorization to execute and deliver this letter agreement (and the Term Sheet)
and to pay the fees described in the Term Sheet and (ii) shall have paid to the
Administrative Agent, for distribution to the Arranger, the Underwriting Lenders
and such other Persons as may be entitled thereto, as the case may be, the
arranging fees and the financing fees described in the Term Sheet which are due
and payable upon Court approval of this letter agreement. The DIP Facility
referred to herein shall in no event be available unless the Effective Date
shall have occurred on or prior to September 30, 2000.

          This letter agreement shall be governed by and construed in accordance
with the internal laws of the State of New York. This letter agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.

                 [Remainder of page intentionally left blank]

                                       4
<PAGE>

                                   Very truly yours,

                                   ABLECO FINANCE LLC

                                   By: _____________________________________
                                       Name:
                                       Title:

                                   APPALOOSA INVESTMENT LIMITED PARTNERSHIP I

                                   By: _____________________________________
                                       Name:
                                       Title:

                                   FRANKLIN MUTUAL ADVISERS LLC

                                   By: _____________________________________
                                       Name:
                                       Title:

                                      S-1
<PAGE>

                                   VAN KAMPEN PRIME RATE INCOME TRUST

                                   By:  VAN KAMPEN INVESTMENT ADVISORY CORP.

                                        By: ___________________________________
                                            Name:
                                            Title:

                                   VAN KAMPEN SENIOR FLOATING RATE FUND

                                   By:  VAN KAMPEN INVESTMENT ADVISORY CORP.

                                        By: ___________________________________
                                            Name:
                                            Title:

                                   VAN KAMPEN SENIOR INCOME TRUST

                                   By:  VAN KAMPEN INVESTMENT ADVISORY CORP.

                                        By: ___________________________________
                                            Name:
                                            Title:

                                      S-2
<PAGE>

                       AGREED AND ACCEPTED
                       this 12th day of June, 2000

                       Advanced Infusion Systems, Inc.
                       American X-Rays, Inc.
                       C.P.C. of Louisiana, Inc.
                       Community Behavioral Health SYSTEM, Inc.
                       Community Psychiatric Centers of Arkansas, Inc.
                       Community Psychiatric Centers of California
                       Community Psychiatric Centers of Florida, Inc.
                       Community Psychiatric Centers of Idaho, Inc.
                       Community Psychiatric Centers of Indiana, Inc.
                       Community Psychiatric Centers of Kansas, Inc.
                       Community Psychiatric Centers of Mississippi, Inc.
                       Community Psychiatric Centers of Missouri, Inc.
                       Community Psychiatric Centers of North Carolina, Inc.
                       Community Psychiatric Centers of Oklahoma, Inc.
                       Community Psychiatric Centers of Utah, Inc.
                       Community Psychiatric Centers Properties Incorporated
                       Community Psychiatric Centers Properties of OKlahoma,
                         Inc.
                       Community Psychiatric Centers Properties of Texas, Inc.
                       Community Psychiatric Centers Properties of Utah, Inc.
                       Courtland Gardens Health Center, Inc.
                       CPC Investment Corp.
                       CPC Managed Care Health Services, Inc.
                       CPC of Georgia, Inc.
                       CPC Properties of Arkansas, Inc.
                       CPC Properties of Illinois, Inc.
                       CPC Properties of Indiana, Inc.
                       CPC Properties of Kansas, Inc.
                       CPC Properties of Louisiana, Inc.
                       CPC Properties of Mississippi, Inc.
                       CPC Properties of Missouri, Inc.
                       CPC Properties of North Carolina, Inc.
                       First Rehab, Inc.
                       Florida Hospital Properties, Inc.
                       Health Care Holdings, Inc.
                       Health Care Technology, Inc.
                       Helian ASC of Northridge, Inc.
                       Helian Health Group, Inc.
                       Helian Recovery Corporation

                                      S-3
<PAGE>

                       Homestead Health Center, Inc.
                       Horizon Healthcare Services, Inc.
                       Interamericana Health Care Group
                       J.B. Thomas Hospital, Inc.
                       Lafayette Health Care Center, Inc.
                       MedEquities, Inc.
                       Medisave of Tennessee, Inc.
                       Medisave Pharmacies, Inc.
                       Old Orchard Hospital, Inc.
                       Palo Alto Surgecenter Corporation
                       Peachtree-Parkwood Hospital, Inc.
                       PersonaCare, Inc.
                       PersonaCare Living Center of Clearwater, Inc.
                       PersonaCare of Bradenton, Inc.
                       PersonaCare of Clearwater, Inc.
                       PersonaCare of Connecticut, Inc.
                       PersonaCare of Georgia, Inc.
                       PersonaCare of Huntsville, Inc.
                       PersonaCare of Little Rock, 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 Robbins, Inc.
                       PersonaCare of Wisconsin, Inc.
                       PersonaCare Properties, Inc.
                       Prodata Systems, Inc.
                       Recovery Inns of America, Inc.
                       Respiratory Care Services, Inc.
                       Stamford Health Facilities, Inc.
                       THC-Chicago, Inc.
                       THC-Hollywood, Inc.
                       THC-Houston, Inc.
                       THC-Minneapolis, Inc.
                       THC-North Shore, Inc.
                       THC-Orange County, Inc.
                       THC-San Diego, Inc.
                       THC-Seattle, Inc.
                       TheraTx Healthcare Management, Inc.
                       TheraTx Health Services, Inc.

                                      S-4
<PAGE>

                       TheraTx Management Services, Inc.
                       TheraTx Medical Supplies, Inc.
                       TheraTx Rehabilitation Services, Inc.
                       TheraTx Staffing, Inc.
                       Transitional Hospitals Corporation, a Delaware
                         Corporation
                       Transitional Hospitals Corporation, a Nevada Corporation
                       Transitional Hospitals Corporation of Indiana, Inc.
                       Transitional Hospitals Corporation of Louisiana, Inc.
                       Transitional Hospitals Corporation of Michigan, 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.
                       Tunstall Enterprises, Inc.
                       VC-OIA, Inc.
                       VC-TOHC, Inc.
                       VC-WM, Inc.
                       Vencare, Inc.
                       Vencare Rehab Services, Inc.
                       Vencor Facility Services, Inc.
                       Vencor Holdings, L.L.C.
                       Vencor Home Care Services, Inc.
                       Vencor Hospice, Inc.
                       Vencor Hospitals East, L.L.C.
                       Vencor Hospitals West, L.L.C.
                       Vencor, Inc.
                       Vencor Insurance Holdings, Inc.
                       Vencor Investment Company
                       Vencor Nevada, L.L.C.
                       Vencor Nursing Centers East, L.L.C.
                       Vencor Nursing Centers Central L.L.C.
                       Vencor Nursing Centers North, L.L.C.
                       Vencor Nursing Centers South, L.L.C.
                       Vencor Nursing Centers West, L.L.C.
                       Vencor Operating, Inc.
                       Vencor Pediatric Care, Inc.
                       Vencor Provider Network, Inc.
                       Ventech Systems, Inc.

                                      S-5
<PAGE>

                       BY:  Vencor Operating, Inc., as agent and attorney-in-
                            fact for each of the foregoing entities

                            By: ______________________________________
                            Name:
                            Title:

                       Stamford Health Associates, L.P.

                       BY:  Stamford Health Facilities, Inc., Its General
                             Partner

                            By: ______________________________________
                            Name:
                            Title:

                       Vencor Home Care and Hospice Indiana Partnership

                       BY:  Vencor Home Care Services, Inc., Its General Partner

                            By: ______________________________________
                            Name:
                            Title:

                       BY:  Vencor Hospice, Inc., Its General Partner

                            By: ______________________________________
                            Name:
                            Title:

                                      S-6
<PAGE>

                       Vencor Hospitals Limited Partnership

                       BY:  Vencor Operating, Inc., Its General Partner

                            By: ______________________________________
                            Name:
                            Title:

                       BY:  Vencor Nursing Centers Limited Partnership, Its
                             General Partner

                            BY:  Vencor Operating, Inc., Its General
                                   Partner

                             By: ______________________________________
                             Name:
                             Title:

                       Vencor Nursing Centers Central Limited Partnership

                       BY:  Vencor Operating, Inc., Its General Partner

                            By: ______________________________________
                            Name:
                            Title:

                       BY:  Vencor Nursing Centers Limited Partnership, Its
                             General Partner

                            BY:  Vencor Operating, Inc., Its General
                                   Partner

                              By: _____________________________________
                              Name:
                              Title:

                                      S-7
<PAGE>

                       Vencor Nursing Centers Limited Partnership

                       BY:    Vencor Operating, Inc., Its General Partner

                              By: _____________________________________
                              Name:
                              Title:

                       BY:    Vencor Hospitals Limited Partnership, Its General
                               Partner

                              BY:  Vencor Operating, Inc., Its General
                                   Partner

                                   By: _________________________________
                                   Name:
                                   Title:

                                      S-8
<PAGE>

                              ACKNOWLEDGED AND AGREED:

                              MORGAN GUARANTY TRUST COMPANY OF NEW
                              YORK, as Arranger, Collateral Agent
                              and Administrative Agent

                              By: _______________________________________
                                  Name:
                                  Title:

                                      S-9
<PAGE>

                                    ANNEX A
                                    -------

                              SUMMARY TERM SHEET

                     FOR AMENDED AND RESTATED DIP FACILITY

This Term Sheet summarizes the material terms of a proposed amendment and
restatement of the existing debtor-in-possession financing for Vencor, Inc.
("Vencor") and its subsidiaries. This Term Sheet is intended merely as an
outline of the material terms of such amended and restated credit facilities. It
does not include descriptions of all of the terms, conditions and other
provisions that are to be contained in the definitive documentation relating to
such amended and restated credit facilities and it is not intended to limit the
scope of discussion and negotiation of any matters not inconsistent with the
specific matters set forth herein. All terms defined in the commitment letter to
which this Term Sheet is attached (the "Commitment Letter") and not otherwise
defined herein shall have the same meanings when used herein.

Borrowers:                   Vencor and each of its subsidiaries which is a
---------
                             borrower under the existing Debtor-In-Possession
                             Credit Agreement dated as of September 13, 1999
                             (the "Existing DIP Facility"), as debtors and
                             debtors-in-possession in the Chapter 11 cases (the
                             "Cases") of such entities commenced with the United
                             States Bankruptcy Court for the District of
                             Delaware (the "Court"), will be joint and several
                             borrowers (collectively, the "Borrowers").

Guarantors:                  The obligations of the Borrowers will be guaranteed
----------
                             by each subsidiary of Vencor which is a guarantor
                             under the documentation relating to the Existing
                             DIP Facility.

Administrative               Morgan Guaranty Trust Company of New York (in such
--------------
Agent and                    capacity, and "Administrative Agent").
---------
Collateral Agent:            The Administrative Agent shall have the absolute
----------------
                             right to resign in such capacity upon notice to the
                             Borrowers consistent with the notice provisions of
                             the Existing DIP Facility.

Arranger:                    Morgan Guaranty Trust Company of New York (in such
--------                     capacity, the "Arranger").

Syndication Agent:           Morgan Guaranty Trust Company of New York (in such
-----------------            capacity, the "Syndication Agent").

Other Agents:                Each of the Underwriting Lenders shall be a Co-
------------
                             Agent. Except for the fees described herein, no
                             fees shall be payable to the Agents in connection
                             with the DIP Facility.

DIP Lenders:                 Appaloosa, Ableco, Franklin Mutual and Van Kampen
-----------                  shall underwrite the DIP Facility, and each shall
                             be entitled to arrange

                                      A-1
<PAGE>

                             for other banks and financial institutions which
                             are holders of pre-petition debt as of the
                             Effective Date to provide a portion of the DIP
                             Facility (Appaloosa, Ableco, Franklin Mutual, Van
                             Kampen and such other banks and financial
                             institutions being, collectively, the "DIP
                             Lenders"). On the Effective Date, all commitments
                             and loans outstanding under the Existing DIP
                             Facility will be converted to commitments and loans
                             under the DIP Facility (as defined below) and will
                             be transferred to and reallocated amongst the DIP
                             Lenders.

Amount of DIP Facility:      The amended and restated debtor-in-possession
----------------------
                             credit facility (the "DIP Facility") will consist
                             of a revolving credit line of up to $90 million,
                             consisting of a $60,000,000 revolving credit
                             facility (the "Tranche A Facility") and a
                             $30,000,000 revolving credit facility (the "Tranche
                             B Facility"). Aggregate borrowings under the
                             Tranche A Facility and the Tranche B Facility shall
                             be subject to the limitations described below.

Effective Date:              The date (which shall be no earlier than the date
--------------
                             of Court approval of the DIP Facility and no later
                             than September 30, 2000) on which the conditions
                             described under the heading "Conditions Precedent"
                             below have been satisfied or waived (the "Effective
                             Date").

Availability:                Amounts available for borrowing under the Tranche A
------------
                             Facility shall be limited each month to a
                             "Borrowing Base" to be calculated in the same
                             manner as provided in the Existing DIP Facility.
                             Amounts under the Tranche B Facility will be
                             available only upon the consent of Required DIP
                             Lenders, in their sole discretion. At the time such
                             consent is given, Required DIP Lenders may, in
                             their sole discretion, prescribe additional
                             limitations on the aggregate amount which may be
                             borrowed under the Tranche B Facility, the times
                             such borrowings may be made and the other terms and
                             conditions relating to the availability of the
                             Tranche B Facility.

Purpose/Use of Proceeds:     To finance the Borrowers' litigation expenses,
-----------------------
                             working capital needs and other general corporate
                             purposes more specifically identified in the cash
                             plan delivered by the Borrowers on or prior to the
                             Effective Date and updated periodically by the
                             Borrowers (as so updated, the "Cash Plan"), which
                             updates shall be satisfactory in form and substance
                             to Required DIP Lenders. Other than as described in
                             the preceding sentence, proceeds shall not be used
                             for any purposes for which the proceeds of loans
                             under the Existing DIP Facility could not have been
                             used.

Stated Maturity Date:        1 year from the Effective Date; provided that,
--------------------
                             subject to the remainder of this paragraph, the
                             Stated Maturity Date with

                                      A-2
<PAGE>

                             respect to each DIP Lender's loans and commitments
                             shall be extended to the date which is one year
                             from the original Stated Maturity Date unless DIP
                             Lenders holding 25% or more of the total credit
                             exposure under the DIP Facility notify the
                             Administrative Agent and the Borrowers at least 45
                             days prior to the first such Stated Maturity Date
                             that such DIP Lenders elect not to extend their
                             loans and commitments. In any event, if one or more
                             DIP Lenders elects not to extend its loans and
                             commitments beyond the original Stated Maturity
                             Date, the Administrative Agent shall notify each
                             DIP Lender promptly of such election, and each DIP
                             Lender which has not theretofore made such election
                             shall be entitled to make such election by
                             notifying the Administrative Agent and the
                             Borrowers at least 30 days prior to the first such
                             Stated Maturity Date. Any DIP Lender that has so
                             notified the Administrative Agent and the Borrowers
                             of its election not to extend shall not be required
                             to extend its loans and commitments. In the event
                             fewer than 25% of the DIP Lenders elect not to
                             extend their loans and commitments on or prior to
                             the date which is 30 days prior to the first Stated
                             Maturity Date, the commitments and loans of any DIP
                             Lender not giving such notice of such election
                             shall be automatically extended to the later Stated
                             Maturity Date. Any loans of any DIP Lender not
                             giving such notice of such election shall be
                             automatically extended to the later Stated Maturity
                             Date.

Letters of Credit:           Up to $15 million of the DIP Facility will be made
-----------------
                             available for the issuance of letters of credit
                             ("Letters of Credit"), subject to the limitations
                             on availability set forth above.

Interest Rate:               All loans outstanding under the Tranche A Facility
-------------
                             shall bear interest at the Prime Rate (as defined
                             in the DIP Credit Agreement) plus 2.50% per annum
                             until paid in full. All loans outstanding under the
                             Tranche B Facility shall bear interest at the Prime
                             Rate plus 4.50% per annum until paid in full.

Default Rate:                Upon the occurrence and during the continuation of
------------
                             an Event of Default (as defined below), (a) loans
                             outstanding under the Tranche A Facility shall bear
                             interest at the Prime Rate plus 4.50% per annum and
                             (b) loans outstanding under the Tranche B Facility
                             shall bear interest at the Prime Rate plus 6.50%
                             per annum.

Interest Payments:           Monthly and upon any prepayment, in each case
-----------------
                             payable in arrears and computed on the basis of a
                             360-day year and the actual number of days elapsed.

Financing Fees, Commitment   The Borrowers shall pay to the Administrative
--------------------------
Fees and Other Fees:         Agent non-refundable financing fees equal to (i)
-------------------
                             2% of the entire amount of the commitments under
                             the commitments Letter, payable on the date
                             immediately following the date of authorization by
                             the Court of both the execution and delivery of the
                             Commitment

                                      A-3
<PAGE>

                             Letter and the payment of fees described herein
                             (such authorization being the "Court Approval") to
                             the DIP Lenders party to the Commitment Letter
                             (including those DIP Lenders that execute and
                             return to the administrative agent under the
                             Existing DIP Facility a counterpart to the
                             Commitment Letter attached hereto as Annex B prior
                                                                  -------
                             to 11:00 a.m. (New York time) on June 15, 2000)
                             ratably in accordance with their relative
                             commitments to the DIP Facility, and (ii) 3% of the
                             entire amount of the commitments under the DIP
                             Facility, payable on the Effective Date ratably to
                             all DIP Lenders. The Borrowers shall also pay to
                             the Arranger for its own account, on the date
                             immediately following the date of Court Approval, a
                             non-refundable arranging fee equal to $100,000, and
                             to the Syndication Agent for its own account, on
                             the date immediately following the date of Court
                             Approval, a non-refundable syndication fee of
                             $150,000.

                             After the Effective Date, the Borrowers shall pay
                             to the Administrative Agent, for ratable
                             distribution to the DIP Lenders, unused commitment
                             fees equal to (i) 1.00% per annum of the daily
                             average unused amount of the Tranche A Facility and
                             (ii) 0.25% (increasing to 1.00% upon and after the
                             Tranche B Facility becomes available for borrowing)
                             of the daily average unused amount of the Tranche B
                             Facility, which fees shall commence accruing on the
                             Effective Date and be payable monthly in arrears
                             and shall be computed on the basis of a 360-day
                             year and the actual number of days elapsed.

                             If the Tranche B Facility becomes available for
                             borrowing, on the date of termination of all
                             commitments of the DIP Lenders the Borrowers shall
                             pay to the Administrative Agent, for ratable
                             distribution to the DIP Lenders, a fee equal to
                             0.50% of the entire amount of the commitments under
                             the DIP Facility (determined as of the date the
                             Tranche B Facility becomes available for
                             borrowing).

                             The Borrowers shall also pay to the Administrative
                             Agent for its own account a non-refundable monthly
                             administrative agent's fee of $25,000 payable in
                             advance each month.

Letter of Credit Fees:       A letter of credit fee shall be payable monthly in
---------------------
                             arrears to the Administrative Agent for ratable
                             distribution to the DIP Lenders on the aggregate
                             amount available to be drawn under outstanding
                             Letters of Credit (regardless of whether the
                             conditions to drawing have been satisfied) equal to
                             4.50% per annum (or 6.50% per annum upon the
                             occurrence and during the continuation of an Event
                             of Default), calculated on the basis of a 360-day
                             year and the actual number of days elapsed.
                             Additional

                                      A-4
<PAGE>

                             customary fees and expenses shall be payable as
                             agreed between the Borrowers and the DIP Lenders
                             issuing the letters of credit.

Collateral:                  All obligations of the Borrowers in respect of the
----------
                             DIP Facility shall be secured by first priority
                             priming security interests and liens in favor of
                             the Collateral Agent on behalf of the DIP Lenders
                             in all existing and future personal, mixed and real
                             property of the Borrowers and the Guarantors which
                             serves as Collateral for the Existing DIP Facility
                             (collectively, the "Collateral"), subject and
                             subordinate only to liens that are senior to the
                             Existing DIP Facility under the final order of the
                             Court approving the same.

Priority:                    In addition to the collateral security arrangements
--------
                             described above, all obligations of the Borrowers
                             in respect of the DIP Facility shall constitute
                             allowed, administrative expense claims with
                             priority under Section 364(c)(1) of the Bankruptcy
                             Code over all other administrative expense claims
                             in the Cases subject to the exceptions set forth in
                             the Existing DIP Facility.

Mandatory Prepayments:       The net proceeds of any casualty insurance and the
---------------------
                             net proceeds of any income tax refunds (exclusive
                             of amounts applied to PIP payments), debt and
                             equity issuances and asset sales, subject to
                             certain limited exceptions substantially the same
                             as those contained in the Existing DIP Facility,
                             shall be applied to repay outstanding amounts and
                             reduce commitments under the DIP Facility.

Representations and          Substantially the same as those set forth in the
-------------------
Warranties:                  Existing DIP Facility.
----------

Covenants:                   As set forth in the Existing DIP Facility, except
---------
                             that (i) financial covenant levels and periods for
                             reporting shall be revised in accordance with the
                             memorandum from counsel to the Borrowers dated May
                             19, 2000 to the lenders under the Existing DIP
                             Facility, (ii) the maximum amount of Permitted
                             Encumbrances described in subparagraph (d) of the
                             definition of such term shall be increased to $15
                             million, and (iii) Section 7.04(d) of the Existing
                             DIP Facility will be revised to permit an
                             additional $1 million of capital contributions to
                             Cornerstone. In addition, the Borrowers shall
                             covenant to file a plan of reorganization
                             acceptable to Required DIP Lenders by July 18,
                             2000.

Events of Default:           As set forth in the Existing DIP Facility,
-----------------
                             including without limitation an Event of Default if
                             the Borrowers are required to pay base rent (or
                             escrow rent) to the Ventas Companies in an amount
                             greater than $15.15 million per month, except that
                             (i) the Event of Default in Section 8.01(p) of the
                             Existing DIP Facility shall be deleted, (ii) the
                             Event of Default in Section 8.01(q) of the Existing
                             DIP Facility shall be deleted, (iii) the Event of
                             Default under Section 8.01(f) of

                                      A-5
<PAGE>

                             the Existing DIP Facility occurring upon the
                             occurrence of an event of default under any Master
                             Lease Agreement shall be deleted, and (iv) an Event
                             of Default shall be deemed to occur if the
                             Borrowers enter into a settlement agreement with
                             Ventas or the United States without prior approval
                             of Required DIP Lenders.

                             Notwithstanding anything to the contrary contained
                             in the covenants or events of default under the
                             Existing DIP Facility, the commencement of any
                             action or proceeding, and/or the filing of a
                             complaint, in the Cases by one or more Vencor
                             Companies (as defined in the Existing DIP Facility)
                             against one or more Ventas Companies (as defined in
                             the Existing DIP Facility), and/or the response by
                             one or more Vencor Companies to the commencement of
                             any action or proceeding, and/or the filing of a
                             complaint, in the Cases by one or more of the
                             Ventas Companies against one or more Vencor
                             Companies, with respect to the Master Leases or the
                             spin-off of the Vencor Companies from the Ventas
                             Companies (such commencement being a "Litigation
                             Event") shall not constitute an Event of Default
                             under the DIP Facility.

Remedies:                    As set forth in the Existing DIP Facility.
--------
Conditions Precedent:        Customary and appropriate for amended and restated
--------------------
                             financings of this type, including without
                             limitation (i) execution and delivery of an
                             amendment providing for the DIP Facility, in
                             accordance with the terms set forth herein and
                             otherwise in form and substance reasonably
                             satisfactory to the DIP Lenders, (ii) absence of
                             any Event of Default or Default under (and as
                             defined in) the Existing DIP Facility (other than
                             an Event of Default resulting from the occurrence
                             of a Litigation Event), (iii) receipt of all
                             required approvals with respect to the amendments
                             to the Existing DIP Facility being effected
                             pursuant to the DIP Facility, including entry of a
                             final order satisfactory to the Agents approving
                             the material modification of the Existing DIP
                             Facility pursuant to the DIP Facility and
                             confirming its superpriority administrative expense
                             claim status and all first priority liens securing
                             the DIP Facility, and (iv) delivery of the Cash
                             Plan for the two months immediately following the
                             Effective Date in form and substance satisfactory
                             to the DIP Lenders. The effectiveness of the DIP
                             Facility shall also be conditioned upon the
                             occurrence of a Litigation Event.

Conditions to all            As set forth in the Existing DIP Facility.
-----------------
Borrowings:
----------

Indemnity and                As set forth in the Existing DIP Facility.
-------------

                                      A-6
<PAGE>

Expenses:
--------

Taxes, Reserve               As set forth in the Existing DIP Facility.
--------------
Requirements &
--------------
Indemnities:
-----------

Governing Law and            The Borrowers and each guarantor of the DIP
-----------------
Jurisdiction:                Facility will submit to the non-exclusive
------------
                             jurisdiction and venue of the federal and state
                             courts of the State of New York and shall waive any
                             right to trial by jury. New York law shall govern
                             the definitive documentation under the DIP
                             Facility.

Required DIP Lenders:        DIP Lenders holding 75% of the aggregate exposure
--------------------
                             (including loans and commitments) under the DIP
                             Facility.

Assignments:                 Institutions which are DIP Lenders as of the
-----------
                             Effective Date shall have a right of first refusal
                             with respect to any proposed assignment by a DIP
                             Lender to any entity other than an institution
                             which is a DIP Lender at the time of such proposed
                             assignment.

Counsel to the Arranger:     O'Melveny & Myers LLP.
-----------------------

                                      A-7
<PAGE>

                                    ANNEX B
                                    -------
                       COUNTERPART TO COMMITMENT LETTER

Subject to satisfactory documentation and the other conditions set forth in the
Commitment Letter to which this Counterpart is attached, the undersigned is
pleased to commit up to $__________ (the "Committed Amount") in the aggregate to
the DIP Facility. We understand that our allocated commitment will not exceed
$24,000,000 and not be less than $5,000,000; provided that if that portion of
the DIP Facility which represents our ratable portion thereof, determined on the
basis of our and our affiliates' pre-petition debt exposure (to Vencor
Companies) relative to the pre-petition debt exposure (to Vencor Companies) of
all committing Lenders, is less than $5,000,000, whether we are allocated a
commitment and the amount thereof shall be determined in the discretion of the
Co-Agents. We further understand that except as set forth in the preceding
sentence, the amount of our allocation shall not exceed the Committed Amount and
shall be determined in the discretion of the Co-Agents. We further understand
that this Counterpart shall not be effective unless completed, executed and
delivered to O'Melveny & Myers LLP prior to 11:00 a.m. (New York time) on June
15, 2000.

                                            ____________________________________
                                            [Name of DIP Lender]

                                            By: ________________________________
                                                Name:
                                                Title:

                                            Notice Address:

                                            _________________

                                            _________________

                                            _________________
                                            Tel:
                                            Fax:

                                      B-1

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