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                                                                     Exhibit 4.2

                         VENCOR RESTRICTED SHARE PLAN

1.    Purpose of the Plan
      -------------------

          The purpose of the Vencor Restricted Share Plan, dated as of February
16, 2001 (the "Plan"), is to promote the success of the Company and the
               ----
interests of its shareholders by attracting, motivating, retaining and rewarding
key employees of the Company for assisting the Company and its Affiliates to
emerge from bankruptcy and to provide them with incentives to induce
Participants to contribute toward the improvement and growth of the Company.

2.    Definitions
      -----------
      As used in this Plan, the following capitalized terms shall have the
following meanings:

        (a)  "Administrator" shall mean the Board, or a committee thereof duly
              -------------
appointed by the Board to administer the Plan.

        (b)  "Affiliate" shall mean any of Vencor, Inc.'s direct or indirect
              ---------
subsidiaries within the meaning of Section 424 of the Code.

        (c)  "Award" shall mean an award of shares of Common Stock as provided
              -----
in Section 4 hereof.

        (d)  "Board" shall mean the Board of Directors of Vencor, Inc.
              -----

        (e)  "Cause", when used in connection with the termination of a
              -----
Participant's employment with the Company, shall mean (i) dishonesty; (ii)
deliberate and continual refusal to perform employment duties on substantially a
full-time basis; (iii) failure to act in accordance with any specific lawful
instructions given to the Participant in connection with the performance of his
duties for the Company or any of its subsidiaries or affiliates, unless the
Participant has an existing Disability; (iv) deliberate misconduct that is
reasonably likely to be materially damaging to the Company without a reasonable
good faith belief by the Participant that such conduct was in the best interests
of the Company; or (v) conviction of or plea of nolo contendere to a crime
                                                ---------------
involving moral turpitude.

        (f)  "Change in Control" shall mean any one of the following events:
              -----------------

             (i)   any Person (as this term is used in Sections 3(a)(9) and
13(d)(3) of the Exchange Act, but excluding any person described in and
satisfying the conditions of Rule 13d-1)b)(i) thereunder) (an "Acquiring
                                                               ---------
Person") becomes the "beneficial owner" (as such term is defined in Rule 13d-3
------
promulgated under the Exchange Act (a "Beneficial Owner"), directly or
                                       ----------------
indirectly, of securities of Vencor, Inc. representing 50% or more of the
combined voting power of Vencor, Inc.'s then outstanding securities, other than
beneficial ownership by a Participant, the Company, any employee benefit plan of
the Company or any Person organized, appointed or established pursuant to the
terms of any such benefit plan;
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             (ii)  Vencor, Inc.'s stockholders approve an agreement to merge or
consolidate Vencor, Inc. with another corporation, or an agreement providing for
the sale of substantially all of the assets of Vencor, Inc. to one or more
Persons, in any case other than with or to an entity 50% or more of which is
controlled by, or is under common control with, Vencor, Inc.;

             (iii) during any two-year period, commencing after the Effective
Date, individuals who at the date on which the period commences constitute a
majority of the Board of Directors (the "Incumbent Directors") cease to
constitute a majority thereof for any reason; provided, however, that a director
                                              --------  -------
who was not an Incumbent Director shall be deemed to be an Incumbent Director if
such director was elected by, or on the recommendation of, at least two-thirds
of the Incumbent Directors (either actually or by prior operation of this
provision), other than any director who is so approved in connection with any
actual or threatened contest for election to positions on the Board of
Directors; or

             (iv) the Company is merged, combined, consolidated, recapitalized
or otherwise organized with one or more other entities that are not Affiliates,
as a result of which less than 50% of the outstanding voting securities of the
surviving or resulting entity immediately after the reorganization are, or will
be, owned, directly or indirectly, by shareholders of the Company, determined on
the basis of record ownership as of the date of determination of holders
entitled to vote on the transaction (or in the absence of a vote, the day
immediately prior to the event).

        (g)  "Code" shall mean the Internal Revenue Code of 1986, as amended.
              ----
        (h)  "Company" shall mean Vencor, Inc. and its Affiliates.
              -------
        (i)  "Common Stock" shall mean the common stock of Vencor, Inc., par
              ------------
value $ 0.25 per share.

        (j)  "Disability" shall mean a physical or mental condition that
              ----------
entitles the Participant to benefits under the Company's long-term disability
plan. For purposes of this Plan, a Participant's employment shall be deemed to
have terminated as a result of Disability on the date as of which he is first
entitled to receive disability benefits under such policy.

        (k)  "Effective Date" shall mean the date on which the Company's
              --------------
bankruptcy plan is confirmed by the United States Bankruptcy Court for the
District of Columbia .

        (l)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
              ------------
amended.

        (m)  "Grant Date" shall mean the date on which an Award is granted.
              ----------

        (n)  "Participant" shall mean an employee of the Company who has been
              -----------
recommended to participate in the Plan by the Chief Executive Officer of the
Company and whose participation in the Plan has been approved by the
Administrator.

        (o)  "Plan" shall mean this Vencor Restricted Share Plan.
              ----

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3.   Administration
     --------------

     This Plan shall be administered by the Administrator.  The Administrator
shall have full authority to interpret and construe any provision of the Plan,
to adopt such rules and regulations and make any decisions necessary for the
administration of the Plan, and to determine the eligibility of Participants
under the Plan.  Determinations of the Administrator shall be conclusively
binding and final upon all parties.  The Administrator shall not be liable to
any Participant or other person for any action, omission or determination
relating to the Plan.

4.   Awards
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           (a)  Subject to adjustment as provided in Section 7 hereof, each
Participant shall be entitled to receive an Award as determined by the
Administrator.

           (b)  The maximum number of shares of Common Stock of the Company with
respect to which Awards may be made under the Plan shall be 600,000 shares (the
"Shares"). The Administrator shall grant Awards comprised of all 600,000 shares
 ------
on the Effective Date. The Administrator shall also have the discretion to grant
any Shares forfeited for any reason among the other Participants; provided that
                                                                  --------
no such grant of forfeited Shares may reduce any Participant's prior existing
Award; provided further that any Shares forfeited and not granted according to
       -------- -------
this Section shall be held by the Company as treasury shares.

          (c)   Subject to the provisions of Section 4(d) hereof, the Shares
subject to an Award made to a Participant shall not be transferred, pledged,
assigned or otherwise encumbered and shall be subject to forfeiture, provided
                                                                     --------
that such Shares shall vest and become fully transferable without restriction as
follows:

                (1)  one-third (1/3) of the Shares subject to each Award shall
          vest on the Grant Date; and

                (2)  the remaining two-thirds (2/3) of the Shares (the
          "Remaining Shares") subject to each Award shall vest according to the
           ----------------
          following schedule: 15% of the Remaining Shares shall vest on each of
          the first and second anniversaries of the Grant Date; 20% of the
          Remaining Shares shall vest on the third anniversary of the Grant
          Date; and 50% of the Remaining Shares shall vest on the fourth
          anniversary of the Grant Date.

          (d)   Notwithstanding the foregoing, in the event that a Participant's
Employment is terminated prior to such Participant's Shares becoming fully
vested (i) by the Company for Cause or by the Participant for any reason, all
Shares in such Participant's Award that have not vested shall be forfeited on
the date of such termination without payment of any consideration therefor; (ii)
by the Company without Cause, all Shares in such Participant's Award shall vest
according to the vesting schedule in this Section 4; or (iii) without Cause at
any time after a Change in Control, or by reason of death or Disability, all
Shares in such Participant's Award shall immediately vest.

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5.   Restricted Shares
     -----------------

     Upon the making of each Award, certificates representing Shares subject
thereto shall be issued in the name of the Participant and delivered to such
Participant, or the ownership of such shares shall be otherwise recorded in a
book-entry or similar system utilized by the Company; provided that such Shares
                                                      --------
shall be legended, and may be held in the custody of the Company as determined
by the Administrator in order to effectuate the purposes of this Plan.

6.   Dividends
     ---------

     In the event that the Company declares any dividends or distributions on
the Shares, whether stock or cash dividend or otherwise, the Participants to
whom the Shares have been awarded shall be entitled to such dividends or
distributions, provided that the dividends or distributions shall be subject to
the vesting and forfeiture provisions of Section 4 and shall be held by the
Company or subject to a legend as determined by the Administrator to effectuate
the purposes of this Plan.

7.  Compliance with Applicable Law
    ------------------------------

          Notwithstanding anything herein to the contrary, the Company shall not
be required to issue or deliver any certificates evidencing shares of Common
Stock pursuant to the terms of this Plan or to remove any legend inserted
thereon, unless and until the Administrator has determined, with advice of
counsel, that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authorities and, if
applicable, the requirements of any exchange on which the shares of Common Stock
are listed or traded. The Company shall use its reasonable efforts to comply
with any such law, regulation or requirement with respect to the issuance and
delivery of such certificates. In addition to the terms and conditions provided
herein, the Administrator may require that a Participant make such reasonable
covenants, agreements and representations as the Administrator, in its sole
discretion, deems advisable in order to comply with any such laws, regulations
or requirements.

8.  Adjustment Upon Changes in Company Stock
    ----------------------------------------

            (a)  Increase or Decrease in Issued Shares Without Consideration.
Subject to any required action by the stockholders of the Company, in the event
of any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend (but only on the shares of Common Stock), or any
other change in the corporate structure of the Company, the Administrator shall
make such adjustments with respect to the number of Shares available for grant
as the Administrator may consider appropriate to prevent the enlargement or
dilution of rights.

            (b)  Other Changes. In the event of any change in the capitalization
of the Company or a corporate change other than those specifically referred to
in Section 7(a) hereof, the Administrator may, in its absolute discretion, make
such adjustments in the number and class of shares available for grant as the
Administrator may consider appropriate to prevent dilution or enlargement of
rights.

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            (c)  No Other Rights. Except as expressly provided in the Plan and
except with respect to Shares that are issued and outstanding (as to which
Participants shall have the same rights as other holders of Shares), the
Participants shall not have any rights by reason of (i) any subdivision or
consolidation of shares of Common Stock or shares of stock of any class, or (ii)
any dissolution, liquidation, merger or consolidation of the Company or any
other corporation. Except as expressly provided in the Plan, no issuance by the
Company of shares of Common Stock or shares of stock of any class, or securities
convertible into shares of Common Stock or shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock available under the Plan.

9.   Term of Plan
     ------------

     No Award shall be granted under this Plan after the date that is the tenth
anniversary of the date that this Plan is approved by the Board (the
"Termination Date"). Unless otherwise expressly provided in this Plan or in any
 ----------------
writing setting forth the terms of any Award authorized by the Administrator,
any Award granted prior to the Termination Date may extend beyond such date, and
all authority of the Administrator with respect to Awards hereunder, including
the authority to amend an Award, shall continue during any suspension of this
Plan and shall continue in respect of Awards outstanding on the Termination
Date.

10.  Miscellaneous Provisions
     ------------------------

        (a)  Non-Assignability. Except as expressly provided in the Plan, Awards
shall not be assigned, transferred, pledged or encumbered, and any purported
assignment, transfer, pledge or encumbrance shall be null and void.

        (b)  Applicable Law. This Plan and all rights under the Plan shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware without regard to the provisions governing conflict of laws.

        (c)  Applicable Withholdings. All distributions of shares of Common
Stock or other property required to be made under the Plan and the vesting of
all Awards shall be subject to any required governmental withholdings or
deductions as determined by the Company. At the request of a Participant,
subject to the consent of the Company, the Administrator shall withhold from
each Award a portion of the Shares subject thereto to satisfy the applicable
federal, state and local withholding taxes incurred in connection with the
Award.

        (d)  No Contract of Employment. Nothing contained in the Plan shall
confer upon any Participant any right with respect to the continuation of such
Participant's employment by the Company or prohibit the Company at any time from
terminating such employment or increasing or decreasing the base salary or other
compensation of any Participant.

        (e)  Amendment, Modification or Termination. The Company reserves the
right to amend, modify or terminate the Plan at any time; provided that no such
                                                          --------
amendment, modification or termination shall be effective to reduce any
Participant's Award under the Plan, or to otherwise materially affect the rights
of such Participant under the Plan, without the consent of such Participant.

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<PAGE>

        (f)  Plan Construction

             (i)    Rule 16b-3; Bifurcation. It is the intent of the Company
that the Awards hereunder satisfy and be interpreted in a manner that, in the
case of Participants who are or may be subject to Section 16 of the Exchange
Act, satisfies the applicable requirements of Rule 16b-3 so that such persons
(unless they otherwise agree) will be entitled to the benefits of Rule 16b-3 or
other exemptive rules under Section 16 of the Exchange Act and will not be
subjected to avoidable liability thereunder. Notwithstanding anything to the
contrary in this Plan, the provisions of this Plan may at any time be bifurcated
by the Board or the Administrator in any manner so that certain provisions of
any Award Agreement intended (or required in order) to satisfy the applicable
requirements of Rule 16b-3 are only applicable to Section 16 Persons and to
those Awards to Section 16 Persons intended to satisfy the requirements of Rule
16b-3.

             (ii)   Headings. Headings and captions are given to the sections
and subsections of this Plan solely as a convenience to facilitate reference,
and shall not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.

        (g)  Non-Exclusivity of Plan

             Nothing in this Plan shall limit or be deemed to limit the
authority of the Board to grant awards or authorize any other compensation, with
or without reference to the Common Stock, under any other plan or authority;
provided that any other award or compensation shall be made in accordance with
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the Company's Certificate of Incorporation and Bylaws.



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<PAGE>

Appendix
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                       RESTRICTED SHARE AWARD AGREEMENT

          THIS AGREEMENT, made as of this __ day of _________ 2001 between
Kindred Healthcare, Inc., a Delaware corporation and its successors (the
"Company"), and _________________ (the "Participant").

          WHEREAS, the Company adopted and maintains the Restricted Share Plan
(the "Plan");

          WHEREAS, Section 1 of the Plan provides for the award to participants
in the Plan of shares of common stock of Kindred Healthcare, Inc., par value
$.25 per share (the "Common Stock").

          NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:

          1.  Grant of Restricted Stock. Pursuant and subject to the terms and
              -------------------------
conditions set forth herein and in the Plan, the Company hereby grants to the
Participant _______ shares of Common Stock (the "Shares," and this grant shall
be referred to herein as the "Award"). The Shares shall vest only in accordance
with the provisions of this Agreement and of the Plan. The certificates
representing the Shares, together with stock powers duly authorized in blank by
the Participant, shall be deposited with the Company to be held by it until the
Shares vest in accordance with Section 3 hereof. All capitalized terms used
herein and not defined herein shall have the meanings assigned to them in the
Plan.

          2.  Non-Transferability.  Prior to the vesting of a Share as described
              -------------------
in Section 3 hereof, neither the Shares nor the rights represented thereby shall
be assignable or transferable under any circumstances. Any purported or
attempted transfer of such Shares or such rights shall be null and void and
shall result in the immediate forfeiture of the Shares.

          3.  Vesting of Shares.
              -----------------

          (a) The Shares subject to this Award shall vest and become fully
transferable without restriction according to the following schedule:

          (i) One-third of the Shares subject to this Award shall vest on the
date hereof.


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<PAGE>

          (ii)  The remaining two-thirds of the Shares subject to this Award
                (the "Remaining Shares") shall vest according to the following
                schedule: 15% of the Remaining Shares shall vest on each of the
                first and second anniversaries of the date hereof; 20% of the
                Remaining Shares shall vest on the third anniversary of the date
                hereof; and 50% of the Remaining Shares shall vest on the fourth
                anniversary of the date hereof.

          (b)   Notwithstanding the foregoing, upon the termination of the
Participant's employment (i) by the Company for Cause or by the Participant for
any reason, all Shares in this Award that have not vested prior to the opening
of business on the effective date of such termination shall be forfeited on the
effective date of such termination without payment of any consideration
therefor; (ii) without Cause at any time after a Change in Control, or by reason
of death or Disability, all Shares in this Award shall immediately vest; or
(iii) by the Company without Cause prior to the occurrence of a Change in
Control, all Shares in this Award shall vest according to the vesting schedule
set forth in Section 3(a) hereof.

          4.    Modification and Waiver.  Except as provided in the Plan with
                -----------------------
respect to determinations of the Administrator and subject to the Company's
right to amend the Plan, neither this Agreement nor any provision hereof can be
changed, modified, amended, discharged, terminated or waived orally or by any
course of dealing or purported course of dealing, but only by an agreement in
writing signed by the Participant and the Company. No such agreement shall
extend to or affect any provision of this Agreement not expressly changed,
modified, amended, discharged, terminated or waived or impair any right
consequent on such a provision. The waiver of or failure to enforce any breach
of this Agreement shall not be deemed to be a waiver or acquiescence in any
other breach thereof.

          5.  Governing Law.  This Agreement shall be governed by and construed
              -------------
in accordance with the laws of the State of Delaware.

          6.  Participant Acknowledgment.  The Participant hereby acknowledges
              --------------------------
receipt of a copy of the Plan.

          7.  Incorporation of Plan.  All terms and provisions of the Plan are
              ----------------------
incorporated herein and made part hereof as if stated herein. If any provision
hereof and of the Plan shall be in conflict, the terms of the Plan shall govern.

          8.  Entire Agreement.  This Agreement and the Plan represent the
              ----------------
final, complete and total agreement of the parties hereto respecting the Shares
and the matters

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<PAGE>

discussed herein and this Agreement supersedes any and all previous agreements
and understandings, whether written, oral or otherwise, relating to the Shares
and such matters.

          9.  No Contract of Employment.  This Agreement shall not confer upon
              -------------------------
the Participant any right with respect to the continuation of such Participant's
employment by the Company or prohibit the Company at any time from terminating
such employment or increasing or decreasing the base salary or other
compensation for such Participant.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its duly authorized officer and said Participant has hereunto signed
this Agreement on his own behalf, thereby representing that the participant has
carefully read and understands this Agreement and the Plan, as of the day and
year first above written.


                                        KINDRED HEALTHCARE, INC.



                                        ____________________________________
                                        By:



                                        _____________________________________


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