May 22, 2007

KBL Healthcare Acquisition Corp. III

12,500,000 Units¹

Common Stock

Warrants

Underwriting Agreement

New York, New York

[?], 2007

Citigroup Global Markets Inc.

As Representative of the several Underwriters

388 Greenwich Street

New York, New York 10013

Ladies and Gentlemen:

KBL Healthcare Acquisition Corp. III, a corporation organized under the laws of Delaware (the ?Company?), proposes to sell to the several underwriters named in Schedule I hereto (the ?Underwriters?), for whom you (the ?Representative?) are acting as sole representative, an aggregate of 12,500,000 units of the Company (the ?Units?) (said Units to be issued and sold by the Company being hereinafter called the ?Underwritten Securities?). The Company also proposes to grant to the Underwriters an option to purchase up to 1,875,000 additional Units to cover over-allotments, if any (the ?Option Securities?; the Option Securities, together with the Underwritten Securities, being hereinafter called the ?Securities?).

Each Unit consists of one share of the Company?s common stock, par value $0.0001 per share (the ?Common Stock?), and one warrant to purchase one share of Common Stock (the ?Warrant(s)?). The shares of Common Stock and the Warrants included in the Units will not be separately transferable until five (5) business days following the earlier of the expiration of the Underwriters? over-allotment option (as described below) or the exercise in full of such option, subject to (a) the preparation of an audited balance sheet of the Company reflecting receipt by the Company of the proceeds of the offering and the filing by the Company of such audited balance sheet with the Commission (as defined herein) on a Form 8-K or similar form and (b) the Company issuing a press release announcing when such separate trading will begin. Each Warrant entitles its holder, upon exercise, to purchase one share of Common Stock for $6.00 during the period commencing on the later of the completion by the Company of its initial Business Combination (as defined below) or one year from the Effective Date (as defined below) of the Registration Statement (as defined below) and terminating on the four-year anniversary of the Effective Date or earlier upon redemption by the Company. As used herein, the term ?Business Combination? shall mean any acquisition by the Company, through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination, of one or more operating businesses meeting the criteria set forth in the Registration Statement, the Statutory Prospectus and the Prospectus (each as defined below).

The Company has entered into an investment management trust agreement dated as of the date hereof (the ?Trust Agreement?) with Continental Stock Transfer & Trust Company (?CST?) as trustee, in substantially the form filed as an exhibit to the Registration Statement, pursuant to which certain proceeds of the offering will be deposited and held in a trust account (?Trust Account?) for the benefit of the Company and holders of the Underwritten Securities and the Option Securities, if and when issued.

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