Document:

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                                                                   Exhibit 10.55

                                   AGREEMENT
                                   ---------

     This Separation Agreement and Release of Claims ("Agreement") is entered
into by Frank W. Anastasio and all of his agents, successors and assigns
("Employee"), and Vencor, Inc. ("Vencor") and all companies related to Vencor
and all of its affiliates, subsidiaries or related companies, past and present
(collectively, the "Company").

     WHEREAS, Employee and Company hereby desire to settle all disputes and
issues related to the resignation of Employee from his services to the Company.

     NOW, THEREFORE, in consideration of the premises and the terms and
conditions contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties agree as follows:

          1.   Resignation.  Employee hereby resigns from all capacities and
               -----------
positions with the Company effective October 30, 1999 ("Date of Termination").

          2.   Obligations of the Company.  Following the execution of this
               --------------------------
Agreement, the Company shall pay Employee his base salary through the Date of
Termination and any amounts owed to Employee pursuant to the Company's standard
reimbursement procedures. In addition, subject to the terms and conditions of
this Agreement (including Section 13), Employee shall be entitled to the
following additional payments and benefits:

               (a) $64,500 representing the prorated portion of the Employee's
target bonus for 1999 less amounts previously distributed.

               (b) $322,500 representing an amount equal to 1.5 times the
Employee's base salary for 1999.

               (c) $193,500 representing an amount equal to 1.5 times the
Employee's target bonus for 1999.

               (d) For a period of eighteen months following the Date of
Termination, the Employee shall be treated as if he had continued to be an
executive for all purposes under the Vencor Health Insurance Plan and Dental
Insurance Plan, provided, however, that such benefits shall be provided only as
long as similar benefits are provided to employees of the Company. Following
this continuation period, the Employee shall be entitled to receive

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continuation coverage under Part 6 of Title I of ERISA ("COBRA Benefits")
treating the end of this period as a termination of the Employee's employment if
allowed by law.

               (e) For a period of eighteen months following the Date of
Termination, the Company shall maintain in force, at its expense, the Employee's
life insurance in effect under the Vencor, Inc. Voluntary Life Insurance Benefit
Plan as of the Date of Termination, provided, however, that such benefits shall
be provided only as long as similar benefits are provided to employees of the
Company.

               (f) For a period of eighteen months following the Date of
Termination, the Company shall provide short-term and long-term disability
insurance benefits to Employee equivalent to the coverage that the Employee
would have had had he remained employed under the disability insurance plans
applicable to Employee on the Date of Termination, provided, however, that such
benefits shall be provided only as long as similar benefits are provided to
employees of the Company. Should Employee become disabled during such period,
Employee shall be entitled to receive such benefits, and for such duration, as
the applicable plan provides.

               (g) To the extent not already vested pursuant to the terms of
such plan, the Employee's interests under the Vencor Retirement Savings Plan
shall be automatically fully vested, without regard to otherwise applicable
percentages for the vesting of employer matching contributions based upon the
Employee's years of service with the Company.

               (h) The Company shall adopt such amendments to its employee
benefit plans, if any, as are necessary to effectuate the provisions of this
Agreement.

               (i) The Company shall take such action as is required to cause
the promissory note entered into in connection with the loan to Employee, dated
April 30, 1998, as amended, in an original principal amount of $360,000 (the
"Preferred Stock Loan") to be amended to provide that (x) any payments scheduled
to be made in respect to the Preferred Stock Loan shall not be due and payable
prior to the fifth anniversary of the Date of Termination, (y) if the average
closing price of Vencor common stock for the 90 days prior to any interest
payment date is less than $8.00, such interest payment shall be forgiven and (z)
during the five-day period following receipt of a written notice by the Company
after the expiration of the fifth anniversary of the Date of Termination, the
Employee shall have the right to put the preferred stock underlying the
Preferred Stock Loan to the Company at a price of $1,000 per share.
Notwithstanding the above, nothing in this Agreement shall be deemed to affect
the Employee's rights under that certain Agreement between the Employee and
Vencor, Inc. dated as of August 17, 1999 (the "Preferred Stock Agreement").

                                      -2-
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               (j) Employee shall be credited with an additional eighteen months
of vesting for purposes of all outstanding stock option awards to purchase
Vencor common stock and Employee will have an additional eighteen months in
which to exercise such stock options.

               (k) Employee shall be awarded $14,400 in exchange for all stock
awards that employee may otherwise be entitled to receive.  In addition,
Employee shall be entitled to retain the computer he is currently using.

               (l) All commitments made to Employee under paragraphs (a) through
(c) and paragraph (k) above shall be paid or issued upon the later of 14 days
from the Date of Termination or the expiration of the seven day period
referenced in Section 16 or as otherwise provided by Section 24 of this
Agreement.

          3.   Death after Resignation.  In the event of the death of Employee
               -----------------------
during the period Employee is receiving payments pursuant to this Agreement,
Employee's designated beneficiary shall be entitled to receive the balance of
the payments; or in the event of no designated beneficiary, the remaining
payments shall be made to Employee's estate.

          4.   Employee Acknowledgment and Release. Employee expressly
               -----------------------------------
acknowledges that the above payments include consideration for the settlement,
waiver, release and discharge of any and all claims or actions arising from
Employee's employment, the terms and conditions of Employee's employment, or
Employee's termination of employment with the Company, including claims of
employment discrimination, wrongful termination, unemployment compensation or
any claim arising under law or equity, express or implied contract, tort, public
policy, common law or any federal, state or local statute, ordinance, regulation
or constitutional provision.

               (a) The claims released and discharged by Employee include, but
are not limited to, claims arising under Title VII of the Civil Rights Act of
1964, as amended; the Civil Rights Act of 1991; The Older Workers Benefit
Protection Act ("OWBPA"); the Age Discrimination in Employment Act of 1967
("ADEA"), as amended; the Americans with Disabilities Act ("ADA"); the Fair
Labor Standards Act; the Employee Retirement Income and Security Act of 1974, as
amended; the National Labor Relations Act; the Labor Management Relations Act;
the Equal Pay Act of 1963; the Pregnancy Discrimination Act of 1978; the
Rehabilitation Act of 1973; workers' compensation laws; Kentucky Wage and Hours
Laws, claims before the Kentucky Commission for Human Rights and Kentucky
Revised Statutes sections 341 et seq.

               (b) Employee recognizes that by signing this Agreement, he may be
giving up some claim, demand or cause of action which he now has or may have,
but which is unknown to him.  Employee also acknowledges that he is giving up
any right to seek future

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employment with the Company, that the Company has no obligation to rehire him at
any future date, and agrees that he will not apply for work with the Company.

               (c) Employee agrees not to file any charges, complaints, lawsuits
or other claims against the Company that relate in any manner to the Employee's
employment or the resignation or termination of Employee's employment with the
Company.

               (d) Employee expressly waives any present or future claims
against the Company for alleged race, color, religious, sex, national origin,
age or disability discrimination or harassment under Title VII of the Civil
Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Equal Pay Act
of 1963; the Americans with Disabilities Act; the Family Medical Leave Act; the
Age Discrimination in Employment Act of 1967; the Older Workers Benefit
Protection Act; the Rehabilitation Act of 1973; or any other federal or state
law protecting against such discrimination or harassment.

               (e) Employee acknowledges that the Company has not and does not
admit that it engaged in any discrimination, wrong doing or violation of law on
the Company's part concerning Employee. Employee and the Company agree that by
entering into this Agreement no discrimination, wrong doing, or violation of law
has been acknowledged by the Company or assumed by Employee. Employee and the
Company further acknowledge that this Agreement is not an admission of
liability.

          5.   Confidentiality.  Employee and the Company agree to keep the
               ---------------
contents and terms of this Agreement confidential and not to voluntarily
disclose the terms or amount of settlement to third parties.  The only exception
is that Employee may reveal the terms of this Agreement to his spouse, attorney,
tax preparer or as otherwise required by law.  The Company may reveal the terms
of this Agreement to its attorneys, accountants, financial advisors, managerial
employees, and any disclosure required by law or business necessity. Employee
and the Company agree that in the event the terms of this Agreement are
disclosed to the third parties as allowed or required herein, the third parties
will be advised of the obligation to keep the terms of this Agreement
confidential, and will obtain the third party's agreement to abide by the terms
of the confidentiality provisions set forth in this Agreement.  In the event
that Employee breaches the confidentiality of this Agreement, Employee
understands that the Company shall have the right to pursue all appropriate
legal relief, including, but  not limited to, attorneys' fees and costs.

          6.   Public Statement. Employee further agrees not to make
               ----------------
derogatory or negative remarks or comments about the Company, its affiliates and
their respective directors, officers, shareholders, agents or employees, to any
third parties, and not to otherwise defame the Company in any manner.  In the
event that Employee defames the Company, its affiliates and their respective
directors, officers, shareholders, agents or employees, Employee understands
that the Company shall have the right to pursue all appropriate legal relief,
including but not limited to, attorneys' fees and costs, and reimbursement of
all monies paid hereunder.  Company agrees

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not to make derogatory or negative remarks or comments about Employee to any
third parties, not to otherwise defame the Employee in any manner. In the event
that the Company defames Employee, Company understands that the Employee shall
have the right to pursue all appropriate legal relief, including but not limited
to, attorneys' fees and costs.

          7.   Ability to Revoke.
               -----------------

               (a) Employee acknowledges and agrees that the Company has advised
him and encouraged him to consult with an attorney, and he has consulted with an
attorney regarding this Agreement prior to signing below, and that he has been
given a period of at least twenty one (21) days within which to consider this
Agreement, including waiver of any ADEA and OWBPA age claims before voluntarily
signing this Agreement.

               (b) Employee agrees and understands that he may revoke this
Agreement within seven (7) days after signing the Agreement, and that the
Agreement shall not become effective or enforceable until the revocation period
has expired or as otherwise provided by Section 24.

               (c) Any revocation of this Agreement must be made in writing and
delivered by hand or certified mail to Joseph L. Landenwich, Vencor, Inc., One
Vencor Place, 680 South Fourth Avenue, Louisville, Kentucky 40202, before the
expiration of the revocation period.

          8.   Confidential Information.  At no time shall Employee divulge,
               ------------------------
furnish, or make accessible to anyone any confidential knowledge or information
about the Company's businesses or operations (except as required by law or order
of court or other governmental agency) or any of the clients, patients,
customers or suppliers of the Company or with respect to any other confidential
aspect of the businesses of the Company.  Employee understands and agrees that
any violation of this provision will cause the Company irreparable harm which
cannot adequately be compensated by an award of money damages.  As a result,
Employee agrees that, in addition to any other remedy the Company may have, a
violation of this Agreement may be restrained by issuance of an injunction by
any court of competent jurisdiction.  Employee further agrees to accept service
of process by first class or certified United States mail.

          9.   Cooperation. Employee agrees that should the Company request
               -----------
Employee's cooperation in connection with litigation, government investigations
or other administrative or legal proceeding, Employee shall cooperate fully with
the Company or its designated agents.  Employee further agrees to cooperate
fully in disclosing to the Company or its designated agents, any information
which Employee obtained during the course and scope of his employment with the
Company, and to which other employees of the Company were not privy.

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          10.  Disputes.  Any dispute or controversy arising under, out of, or
               --------
in connection with this Agreement shall, at the election and upon written demand
of either party, be finally determined and settled by binding arbitration in the
City of Louisville, Kentucky, in accordance with the Labor Arbitration rules and
procedures of the American Arbitration Association, and judgment upon the award
may be entered in any court having jurisdiction thereof.  Each party shall pay
their costs of the arbitration and all reasonable attorneys' and accountants'
fees incurred in connection therewith, including any litigation to enforce any
arbitration award.

          11.  Successors. This Agreement is personal to Employee and without
               ----------
the prior written consent of the Company shall not be assignable by Employee
otherwise than by will or the laws of descent and distribution.  This Agreement
shall inure to the benefit of and be enforceable by Employee's legal
representatives. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

          12.  Other Severance Benefits.  Except as specifically provided in
               ------------------------
this Agreement, Employee hereby agrees that in consideration for the payments to
be received under this Agreement, Employee waives any and all rights to any
payments or benefits under any plans, programs, contracts or arrangements of the
Company that provide for severance payments or benefits upon a termination of
employment, including, without limitation, the Employment Agreement between
Employee and Vencor Operating, Inc. dated as of July 28, 1998 as amended,
September 28, 1998, and the Change in Control Severance Agreement between the
Employee and Vencor Operating, Inc.  This Agreement does not affect the
Employee's rights under the Preferred Stock Agreement or the Employee's rights
to receive the benefits accruing to the Employee under the Vencor, Inc.
Supplemental Executive Retirement Plan effective January 1, 1998 as amended
February 20, 1998 (the "SERP") as of the Date of Termination.  Notwithstanding
the above, this Agreement shall not be deemed to constitute either an assumption
or rejection of the Preferred Stock Agreement or the SERP under 11 U.S.C.
Section 365.

          13.  Withholding.  All payments and stock issuances to be made to
               -----------
Employee hereunder will be subject to all applicable required withholding of
taxes.

          14.  No Mitigation.  Employee shall have no duty to mitigate his
               -------------
damages by seeking other employment and, should Employee actually receive
compensation from any such other employment, the payments required hereunder
shall not be reduced or offset by any such compensation.

          15.  Execution by Employee. Employee will execute this Agreement and
               ---------------------
deliver the executed Agreement to Joseph L. Landenwich, Vencor, Inc., One Vencor
Place, 680 South Fourth Avenue, Louisville, Kentucky 40202.

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          16.  Termination of Waiting Period. After receipt of the executed
               -----------------------------
Agreement by Employee, and after the expiration of the seven (7) day waiting
period referenced in Section 7(b) of this Agreement, the Company will execute
the Agreement subject to the conditions set forth in Section 24.

          17.  Voluntary Action. Employee acknowledges that he has read and
               ----------------
fully understands all of the provisions of this Agreement and that he is
entering into this Agreement freely and voluntarily.

          18.  Notices.  Except as expressly provided herein, any notice
               -------
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or sent by telephone
facsimile transmission, personal or overnight couriers, or registered mail with
confirmation of receipt, addressed as follows:

          If to Employee:
          --------------
          Frank W. Anastasio
          10523 Black Iron Road
          Louisville, KY 40291

          If to Company:
          -------------
          Vencor Operating, Inc.
          One Vencor Place
          680 South Fourth Avenue
          Louisville, KY  40202
          Attn:  Legal Department

          19.  Governing Law.  This Agreement shall be governed by the laws of
               -------------
the Commonwealth of Kentucky.

          20.  Waiver of Breach and Severability.  The waiver by either party of
               ---------------------------------
a breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by either party.  In the
event any provision of this Agreement is found to be invalid or unenforceable,
it may be severed from the Agreement and the remaining provisions of the
Agreement shall continue to be binding and effective.

          21.  Entire Agreement; Amendment.  This Agreement contains the
               ---------------------------
entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether written or
oral with respect to the subject matter hereof.  No provisions of this Agreement
may be modified, waived or discharged unless such modification, waiver or
discharge is agreed to in writing signed by Employee and a designated officer of
the Company.

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          22.  Headings.  The headings in this Agreement are for convenience
               --------
only and shall not be used to interpret or construe its provisions.

          23.  Counterparts.  This Agreement may be executed in one or more
               ------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

          24.  Bankruptcy Court Approval.  As a condition to the effectiveness
               -------------------------
of this Agreement, this Agreement, and the Company's entry into this Agreement,
must be authorized by the United States Bankruptcy Court for the District of
Delaware, by an order that has not been stayed, amended or revoked, unless the
Company receives advice of counsel that such an order is not necessary.  The
Company agrees to take reasonable efforts to obtain any such approval.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                VENCOR, INC.

                                By: /s/ Owen E. Dorsey
                                    ---------------------------------
                                Title: Chief Administrative Officer
                                -------------------------------------

                                EMPLOYEE

                                /s/ Frank W. Anastasio
                                -------------------------------------
                                Frank W. Anastasio

                                      -9-<PAGE>

                                                                   Exhibit 10.57

                             EMPLOYMENT AGREEMENT
                             --------------------

          This EMPLOYMENT AGREEMENT is made as of the 28/th/ day of September,
1998 (the "Effective Date"), by and between Vencor Operating, Inc., a Delaware
corporation (the "Company"), and Richard A. Schweinhart (the "Executive").

                             W I T N E S S E T H:
                             - - - - - - - - - -

          WHEREAS, the Executive is employed by the Company, a wholly-owned
subsidiary of Vencor, Inc. ("Parent"), and the parties hereto desire to provide
for Executive's continued employment by the Company; and

          WHEREAS, the Board of Directors of Parent (the "Board") have
determined that it is in the best interests of the Company to enter into this
Agreement.

          NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements contained herein, and intending to be legally bound
hereby, the Company and Executive agree as follows:

          1.  Employment.  The Company hereby agrees to employ Executive and
              ----------
Executive hereby agrees to be employed by the Company on the terms and
conditions herein set forth.  The initial term of this Agreement shall be for a
one-year period commencing on the Effective Date.  The Term shall be
automatically extended by one additional day for each day beyond the Effective
Date that the Executive remains employed by the Company until such time as the
Company elects to cease such extension by giving written notice of such election
to the Executive.  In such event, the Agreement shall terminate on the first
anniversary of the effective date of such election notice.

          2.  Duties.  Executive is engaged by the Company in an executive
              ------
capacity.

          3.  Extent of Services.  Executive, subject to the direction and
              ------------------
control of the Board, shall have the power and authority commensurate with his
executive status and necessary to perform his duties hereunder.  During the
Term, Executive shall devote his entire working time, attention, labor, skill
and energies to the business of the Company, and shall not, without the consent
of the Company, be actively engaged in any other business activity, whether or
not such business activity is pursued for gain, profit or other pecuniary
advantage.

          4.  Compensation. As compensation for services hereunder rendered,
              ------------
Executive shall receive during the Term:

          (a) A base salary ("Base Salary") of not less than Two Hundred
     Thousand Dollars ($200,000.00) per year payable in equal installments in
     accordance with the
<PAGE>

     Company's normal payroll procedures. Executive may receive increases in his
     Base Salary from time to time, as approved by the Board.

          (b) In addition to Base Salary, Executive may be eligible to receive
     up to a 50% bonus of Base Salary and other incentive compensation as the
     Board may approve from time to time.

          5.  Benefits.
              --------

          (a) Executive shall be entitled to participate in any and all
     Executive pension benefit, welfare benefit (including, without limitation,
     medical, dental, disability and group life insurance coverages) and fringe
     benefit plans from time to time in effect for Executives of the Company and
     its affiliates following the Company's standard waiting periods.

          (b) Executive shall be entitled to participate in such bonus, stock
     option, or other incentive compensation plans of the Company and its
     affiliates in effect from time to time for executives of the Company.

          (c) Executive shall be entitled to four weeks of paid vacation each
     year.  The Executive shall schedule the timing of such vacations in a
     reasonable manner.  The Executive may also be entitled to such other leave,
     with or without compensation as shall be mutually agreed by the Company and
     Executive.

          (d) Executive may incur reasonable expenses for promoting the
     Company's business, including expenses for entertainment, travel and
     similar items.  The Company shall reimburse Executive for all such
     reasonable expenses in accordance with the Company's reimbursement policies
     and procedures.

          6.  Termination of Employment.
              -------------------------

          (a)  Death or Disability.  Executive's employment shall terminate
               -------------------
     automatically upon Executive's death during the Term.  If the Company
     determines in good faith that the Disability of Executive has occurred
     during the Term (pursuant to the definition of Disability set forth below)
     it may give to Executive written notice of its intention to terminate
     Executive's employment.  In such event, Executive's employment with the
     Company shall terminate effective on the 30th day after receipt of such
     notice by Executive (the "Disability Effective Date"), provided that,
     within the 30 days after such receipt, Executive shall not have returned to
     full-time performance of Executive's duties.  For purposes of this
     Agreement, "Disability" shall mean Executive's absence from his full-time
     duties hereunder for a period of 90 days.

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          (b)  Cause.  The Company may terminate Executive's employment during
               -----
     the Term for Cause.  For purposes of this Agreement, "Cause" shall mean the
     Executive's (i) conviction of or plea of nolo contendere to a crime
                                              ---- ----------
     involving moral turpitude; or (ii) willful and material breach by Executive
     of his duties and responsibilities, which is committed in bad faith or
     without reasonable belief that such breaching conduct is in the best
     interests of the Company and its affiliates, but with respect to (ii) only
     if the Board adopts a resolution by a vote of at least 75% of its members
     so finding after giving the Executive and his attorney an opportunity to be
     heard by the Board. Any act, or failure to act, based upon authority given
     pursuant to a resolution duly adopted by the Board or based upon advice of
     counsel for the Company shall be conclusively presumed to be done, or
     omitted to be done, by Executive in good faith and in the best interests of
     the Company.

          (c)  Good Reason. Executive's employment may be terminated by
               -----------
     Executive for Good Reason.  "Good Reason" shall exist upon the occurrence,
     without Executive's express written consent, of any of the following
     events:

            (i)  the Company shall assign to Executive duties of a substantially
          nonexecutive or nonmanagerial nature;

            (ii)  an adverse change in Executive's status or position as an
          executive officer of the Company, including, without limitation, an
          adverse change in Executive's status or position as a result of a
          diminution in Executive's duties and responsibilities other than any
          such change directly attributable to the fact that the Company is no
          longer publicly owned);

            (iii)  the Company shall (A) materially reduce the Base Salary or
          bonus opportunity of Executive, or (B) materially reduce his benefits
          and perquisites (other than pursuant to a uniform reduction applicable
          to all similarly situated executives of the Company);

            (iv) the Company shall require Executive to relocate Executive's
          principal business office more than 30 miles from its location on the
          Effective Date; or

             (v)  the failure of the Company to obtain the assumption of this
          Agreement as contemplated by Section 9(c).

     For purposes of this Agreement, "Good Reason" shall not exist until after
     Executive has given the Company notice of the applicable event within 90
     days of such event and which is not remedied within 30 days after receipt
     of written notice from Executive specifically delineating such claimed
     event and setting forth Executive's intention to terminate employment if
     not remedied; provided, that if the specified event cannot reasonably be
                   --------

                                       3
<PAGE>

     remedied within such 30-day period and the Company commences reasonable
     steps within such 30-day period to remedy such event and diligently
     continues such steps thereafter until a remedy is effected, such event
     shall not constitute "Good Reason" provided that such event is remedied
     within 60 days after receipt of such written notice.

          (d)  Notice of Termination.  Any termination by the Company for Cause,
               ---------------------
     or by Executive for Good Reason, shall be communicated by Notice of
     Termination given in accordance with this Agreement.  For purposes of this
     Agreement, a "Notice of Termination" means a written notice which (i)
     indicates the specific termination provision in this Agreement relied upon,
     (ii) sets forth in reasonable detail the facts and circumstances claimed to
     provide a basis for termination of Executive's employment under the
     provision so indicated and (iii) specifies the intended termination date
     (which date, in the case of a termination for Good Reason, shall be not
     more than thirty days after the giving of such notice).  The failure by
     Executive or the Company to set forth in the Notice of Termination any fact
     or circumstance which contributes to a showing of Good Reason or Cause
     shall not waive any right of Executive or the Company, respectively,
     hereunder or preclude Executive or the Company, respectively, from
     asserting such fact or circumstance in enforcing Executive's or the
     Company's rights hereunder.

          (e)  Date of Termination.  "Date of Termination" means (i) if
               -------------------
     Executive's employment is terminated by the Company for Cause, or by
     Executive for Good Reason, the later of the date specified in the Notice of
     Termination or the date that is one day after the last day of any
     applicable cure period, (ii) if Executive's employment is terminated by the
     Company other than for Cause or Disability, or Executive resigns without
     Good Reason, the Date of Termination shall be the date on which the Company
     or Executive notified Executive or the Company, respectively, of such
     termination and (iii) if Executive's employment is terminated by reason of
     death or Disability, the Date of Termination shall be the date of death of
     Executive or the Disability Effective Date, as the case may be.

          7.  Obligations of the Company Upon Termination.  Following any
              -------------------------------------------
termination of Executive's employment hereunder, the Company shall pay Executive
his Base Salary through the Date of Termination and any amounts owed to
Executive pursuant to the terms and conditions of the Executive benefit plans
and programs of the Company at the time such payments are due.  In addition,
subject to Executive's execution of a general release of claims in form
satisfactory to the Company, Executive shall be entitled to the following
additional payments:

          (a)  Death or Disability.  If, during the Term, Executive's employment
               -------------------
     shall terminate by reason of Executive's death or Disability, the Company
     shall pay to Executive (or his designated beneficiary or estate, as the
     case may be) the prorated portion of any Target Bonus (as defined below)
     Executive would have received for the

                                       4
<PAGE>

     year of termination of employment. Such amount shall be paid within 30 days
     of the date when such amounts would otherwise have been payable to the
     Executive if Executive's employment had not terminated.

          (b)  Good Reason; Other than for Cause.  If, during the Term, the
               ---------------------------------
     Company shall terminate Executive's employment other than for Cause (but
     not for Disability), or the Executive shall terminate his employment for
     Good Reason:

               (1) Within 14 days of Executive's Date of Termination, the
          Company shall pay to Executive (i) the prorated portion of the Target
          Bonus and Performance Share Award for Executive for the year in which
          the Date of Termination occurs, and (ii) an amount equal to 1.5 times
          the sum of (x) the Executive's Base Salary and Target Bonus as of the
          Date of Termination, and (y) the number of performance shares awarded
          to the Executive pursuant to the Vencor, Inc. 1998 Incentive
          Compensation Plan (the "1998 Plan") in respect of the year in which
          such Date of Termination occurs (without regard to any acceleration of
          the award for such year), assuming for such purpose that all
          performance criteria applicable to such award with respect to the year
          in which such Date of Termination occurs were deemed to be satisfied
          (the "Performance Share Award").

          For purposes of this Agreement:  "fair market value" shall have the
          meaning ascribed to such term under the 1998 Plan; and "Target Bonus"
          shall mean the full amount of bonuses and/or performance compensation
          (other than Base Salary and awards under the 1998 Plan) that would be
          payable to the Executive, assuming all performance criteria on which
          such bonus and/or performance compensation are based were deemed to be
          satisfied, in respect of services for the calendar year in which the
          date in question occurs.

               (2) For a period of 18 months following the Date of Termination,
          the Executive shall be treated as if he had continued to be an
          Executive for all purposes under the Parent's Health Insurance Plan
          and Dental Insurance Plan; or if the Executive is prohibited from
          participating in such plan, the Company or Parent shall otherwise
          provide such benefits.  Following this continuation period, the
          Executive shall be entitled to receive continuation coverage under
          Part 6 of Title I or ERISA ("COBRA Benefits") treating the end of this
          period as a termination of the Executive's employment if allowed by
          law.

               (3) For a period of 18 months following the Date of Termination,
          Parent shall maintain in force, at its expense, the Executive's life
          insurance in effect under the Vencor, Inc. Voluntary Life Insurance
          Benefit Plan as of the Date of Termination.

                                       5
<PAGE>

               (4) For a period of 18 months following the Executive's Date of
          Termination, the Company or Parent shall provide short-term and long-
          term disability insurance benefits to Executive equivalent to the
          coverage that the Executive would have had he remained employed under
          the disability insurance plans applicable to Executive on the Date of
          Termination.  Should Executive become disabled during such period,
          Executive shall be entitled to receive such benefits, and for such
          duration, as the applicable plan provides.

               (5) To the extent not already vested pursuant to the terms of
          such plan, the Executive's interests under the Vencor Retirement
          Savings Plan shall be automatically fully (i.e., 100%) vested, without
          regard to otherwise applicable percentages for the vesting of employer
          matching contributions based upon the Executive's years of service
          with the Company.

               (6) Parent shall adopt such amendments to its Executive benefit
          plans, if any, as are necessary to effectuate the provisions of this
          Agreement.

               (7) Executive shall be credited with an additional 18 months of
          vesting for purposes of all outstanding stock option awards and
          restricted stock awards and Executive will have an additional 18
          months in which to exercise such stock options.

               (8)  Following the Executive's Date of Termination, the Executive
          shall receive the computer which Executive is utilizing as of the Date
          of Termination.

          (c)  Cause; Other than for Good Reason.  If Executive's employment
               ---------------------------------
     shall be terminated for Cause or Executive terminates employment without
     Good Reason (and other than due to such Executive's death) during the Term,
     this Agreement shall terminate without further additional obligations to
     Executive under this Agreement.

          (d) Death after Termination.  In the event of the death of Executive
              -----------------------
     during the period Executive is receiving payments pursuant to this
     Agreement, Executive's designated beneficiary shall be entitled to receive
     the balance of the payments; or in the event of no designated beneficiary,
     the remaining payments shall be made to Executive's estate.

          8.  Disputes.  Any dispute or controversy arising under, out of, or in
              --------
connection with this Agreement shall, at the election and upon written demand of
either party, be finally determined and settled by binding arbitration in the
City of Louisville, Kentucky, in accordance with the Labor Arbitration rules and
procedures of the American Arbitration Association, and judgment upon the award
may be entered in any court having jurisdiction

                                       6
<PAGE>

thereof. The Company shall pay all costs of the arbitration and all reasonable
attorneys' and accountants' fees of the Executive in connection therewith,
including any litigation to enforce any arbitration award.

          9.  Successors.
              ----------

          (a)  This Agreement is personal to Executive and without the prior
     written consent of the Company shall not be assignable by Executive
     otherwise than by will or the laws of descent and distribution.  This
     Agreement shall inure to the benefit of and be enforceable by Executive's
     legal representatives.

          (b)  This Agreement shall inure to the benefit of and be binding upon
     the Company and its successors and assigns.

          (c)  The Company shall require any successor (whether direct or
     indirect, by purchase, merger, consolidation or otherwise) to all or
     substantially all of the business and/or assets of the Company, or any
     business of the Company for which Executive's services are principally
     performed, to assume expressly and agree to perform this Agreement in the
     same manner and to the same extent that the Company would be required to
     perform it if no such succession had taken place.  As used this Agreement,
     "Company" shall mean the Company as hereinbefore defined and any successor
     to its business and/or assets as aforesaid which assumes and agrees to
     perform this Agreement by operation of law, or otherwise.

          10.  Other Severance Benefits.  Executive hereby agrees that in
               ------------------------
consideration for the payments to be received under this Agreement, Executive
waives any and all rights to any payments or benefits under any plans, programs,
contracts or arrangements of the Company or their respective affiliates that
provide for severance payments or benefits upon a termination of employment,
other than the Change in Control Severance Agreement between the Company and
Executive dated as of September 28, 1998 (the "Severance Agreement"); provided
                                                                      --------
that any payments payable to Executive hereunder shall be offset by any payments
payable under the Severance Agreement.

          11.  Withholding.  All payments to be made to Executive hereunder will
               -----------
be subject to all applicable required withholding of taxes.

          12.  No Mitigation.  Executive shall have no duty to mitigate his
               -------------
damages by seeking other employment and, should Executive actually receive
compensation from any such other employment, the payments required hereunder
shall not be reduced or offset by any such compensation.  Further, the Company's
and Parent's obligations to make any payments hereunder shall not be subject to
or affected by any setoff, counterclaims or defenses which the Company or Parent
may have against Executive or others.

                                       7
<PAGE>

          13.  Notices.  Any notice required or permitted to be given under this
               -------
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or sent by telephone facsimile transmission, personal or overnight
couriers, or registered mail with confirmation or receipt, addressed as follows:

          If to Executive:
          ---------------
          Richard A. Schweinhart

          ___________________
          ___________________

          If to Company:
          -------------
          Vencor Operating, Inc.
          400 West Market Street
          Suite 3300
          Louisville, KY  40202
          Attn:  General Counsel

          14.  Waiver of Breach and Severability.  The waiver by either party of
               ---------------------------------
a breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by either party.  In the
event any provision of this Agreement is found to be invalid or unenforceable,
it may be severed from the Agreement and the remaining provisions of the
Agreement shall continue to be binding and effective.

          15.  Entire Agreement; Amendment.  This instrument contains the entire
               ---------------------------
agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether written or
oral with respect to the subject matter hereof.  No provisions of this Agreement
may be modified, waived or discharged unless such modification, waiver or
discharge is agreed to in writing signed by Executive and such officer of the
Company specifically designated by the Board.

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

          17.  Headings.  The headings in this Agreement are for convenience
               --------
only and shall not be used to interpret or construe its provisions.

          18.  Counterparts.  This Agreement may be executed in two or more
               ------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

                                       8
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                    VENCOR OPERATING, INC.

                                    By: /s/ W. Bruce Lunsford
                                       -------------------------------------
                                    Name: W. Bruce Lunsford
                                    Title: Chairman of the Board, President and
                                             Chief Executive Officer

                                    Solely for the purpose
                                    of Section 7

                                    VENCOR, INC.

                                    By: /s/ W. Bruce Lunsford
                                       -------------------------------------
                                    Name: W. Bruce Lunsford
                                    Title: Chairman of the Board, President and
                                             Chief Executive Officer

                                    /s/ Richard A. Schweinhart
                                    ----------------------------------------
                                    RICHARD A. SCHWEINHART

                                       9

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