Document:

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                                                                   EXHIBIT 10.46

                   VENCOR, INC. 2000 LONG-TERM INCENTIVE PLAN

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

     The purpose of the Vencor, Inc. 2000 Long-Term Incentive Plan, dated
effective as of January 1, 2000 (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) "Affiliate" shall mean any of Vencor, Inc.'s direct or indirect
          ---------
subsidiaries within the meaning of Section 424 of the Code.

     (b) "Award" shall mean a cash bonus payable pursuant to the terms and
          -----
conditions of this Plan.

     (c) "Award Percentage" shall mean, with respect to each Performance Period,
          ----------------
a percentage corresponding to the achievement of the Performance Targets for
such Performance Period.  The Award Percentage shall represent the portion of
the Maximum Award that each Participant is entitled to receive with respect to
each Performance Period.

     (d) "Base Salary" shall mean, with respect to each Participant, such
          -----------
Participant's annual base compensation, exclusive of any bonuses (whether under
this Plan or otherwise), stock option benefits, or other compensatory or fringe
benefits.

     (e) "Beneficiary" shall mean either (i) the person designated in the manner
          -----------
specified in Section 11(f) by a Participant to receive any amounts payable to
him pursuant to this Plan following his death, or (ii), in the event of the
failure of a Participant to so designate a Participant, the Participant's
estate.

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

     (g) "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 permanent 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.

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     (h) "Change of 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;

         (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).

     (i) "Code" shall mean the Internal Revenue Code of 1986, as amended.
          ----

     (j) "Committee" shall mean the Compensation Committee of the Board or such
          ---------
other committee as the Board may designate from time to time.

     (k) "Common Stock" shall mean the common stock of Vencor, Inc., par value $
          ------------
0.25 per share.

     (l) "Company" shall mean Vencor, Inc. and its Affiliates.
          -------

     (m) "Disability" shall mean a physical or mental condition entitling a
          ----------
Participant to benefits under the long-term disability policy maintained by the
Company and applicable to him.  For purposes of this Plan, a Participant's
employment shall be deemed to

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have terminated as a result of Disability on the date as of which he is first
entitled to receive disability benefits under such policy.

     (n) "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.

     (o) "Maximum Award" shall mean the highest amount that may be awarded to
          -------------
Participants in certain positions or employment levels of the Company, expressed
as percentages of such Participants' Base Salary, as follows:

  Position/Level:                        Percentage of Base Salary:
  --------------                         -------------------------

  Chief Executive Officer...................     100%
  Members of Executive Committee............     90%
  Vice Presidents...........................     40%
  Senior Corporate Managers.................     25%
  Other Key Employees.......................     15%

     (p) "Participant" shall mean an officer or key employee of the Company who
          -----------
is in a position to contribute materially to the success of the Company, as
selected for participation in the Plan by the Committee in its sole discretion.

     (q) "Performance Period" shall mean any period of one or more years during
          ------------------
which the Company's performance against the Performance Targets is measured for
the purpose of determining whether and at what level Awards under this Plan
shall be granted.

     (r) "Performance Targets" shall mean the performance targets for the
          -------------------
Company that the Committee shall establish in its discretion for each
Performance Period to be used in determining Participants' Awards.

     (s) "Person" shall mean an individual, partnership, corporation, limited
          ------
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.

     (t) "Plan" shall mean this Vencor, Inc. 2000 Long-Term Cash Incentive
          ----
Compensation Plan.

     (u) "Retirement" shall mean the termination of the employment of a
          ----------
Participant on or after the Participant's attainment of fifty-five (55) years of
age.

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

     This Plan shall be administered by the Committee.  The Committee 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 Committee shall be conclusively binding
and final upon all parties.  The Committee shall not be liable to any
Participant or other person for any action, omission or determination relating
to the Plan.

4.   Eligibility
     -----------

     The Committee may, in its sole discretion, select to participate in the
Plan those officers and other key employees of the Company who are in a position
to contribute materially to the success of the Company.

5.   Determination of Awards
     -----------------------

     The Award payable to each Participant for each Performance Period shall be
determined as follows:

          (a) Not later than ninety (90) days after the commencement of each
Performance Period, the Committee shall identify (i) the Participants in the
Plan for such Performance Period, (ii) the Maximum Award for each such
Participant (based on positions or employment levels in the Company) as provided
in Section 2(o) hereof, and (iii) the Award Percentages applicable to the
Performance Targets established for such Performance Period.

          (b) Not later than ninety (90) days after the commencement of each
Performance Period, the Committee shall establish Performance Targets for such
Performance Period.

          (c) As soon as practicable, but not later than ninety (90) days,
following the end of each Performance Period, the Committee shall (i) determine
the level at which the Performance Targets for such Performance Period were
reached, if at all and (ii) calculate the amount of the Award payable to each
Participant with respect to such Performance Period, which shall be the product
of (A) the Participant's Maximum Award for such Performance Period, (B) the
Award Percentage for such Performance Period, and (C) such Participant's Base
Salary in effect on the last day of the applicable Performance Period, but which
shall not exceed $1.5 million per year in such Performance Period.

6.   Payment of Awards
     -----------------

     Except as otherwise provided herein, the Award, as calculated pursuant to
Section 5(c) hereof, shall be payable to each Participant with respect to any
Performance Period, in a lump sum in cash as follows:  one-third (1/3) shall be
payable on or about each of the first, second and third anniversaries of the
termination of the applicable Performance Period.

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7.   Effect of Termination of Employment
     -----------------------------------

          (a)  In the event of the termination of the employment of a
Participant by the Company for Cause or by the Participant for any reason prior
to the payment to him of any portion of the Award related to any Performance
Period, the Participant shall not be entitled to such unpaid portion.

          (b)  In the event of the termination of the employment of a
Participant as a result of the Participant's Retirement, or by the Company other
than for Cause, during a Performance Period, the Participant shall be entitled
to receive a prorated Award for such Performance Period based on the number of
full months elapsed in such Performance Period before the date of such
termination of employment. Such prorated Award shall be paid following the end
of such Performance Period at the time and in the manner specified in Section 6
hereof. In addition, in the event of the termination of the employment of a
Participant as a result of the Participant's Retirement, or by the Company other
than for Cause, following the termination of a Performance Period and prior to
the payment to the Participant of any portion of the Award with respect to such
Performance Period, such unpaid portion shall continue to be paid at the time
and in the manner specified in Section 6 hereof.

          (c)  In the event of a Participant's death or Disability during a
Performance Period, the Participant (or in the event of his death, his
Beneficiary) shall be entitled to receive a prorated Award for such Performance
Period equal to the Award that would be payable to him if the Award Percentage
would have been fifty percent (50%) based on the number of full months elapsed
in such Performance Period before the date of the Participant's death or
Disability.  Such Award shall be paid no later than fifteen (15) days after the
date of the Participant's death or Disability, in a lump sum in cash.  In
addition, in the event of a Participant's death or Disability following the
termination of a Performance Period and prior to the payment to the Participant
of any portion of the Award with respect to such Performance Period, such unpaid
portion shall be paid no later than fifteen (15) days after the date of the
Participant's death or Disability, in a lump sum in cash.

          (d)  The provisions of this Section 7 shall be subject to the terms of
any separate written employment or similar agreement between the Company and a
Participant in effect at the time of his termination of employment.

8.   Certain Adjustments
     -------------------

          (a)  In the event of the merger or consolidation of the Company, or
the acquisition or disposition by the Company of any substantial business unit,
or the occurrence of any other transaction or event, which could reasonably be
expected to have a substantial impact on the Performance Targets, the Committee
will review, in good faith, the effect of such occurrence on the operation of
this Plan and will adjust the Performance Targets and Award Percentages for such
Performance Period as the Committee, in its absolute discretion, exercised in
good faith, determines to be appropriate in light of the circumstances. The
Committee shall consult with management of the Company concerning the magnitude
of any such adjustment prior to coming to a final decision with respect thereto.

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          (b)  The Committee may, in its absolute discretion, designate an
individual who commences employment with the Company more than ninety (90) days
following the beginning of a Performance Period as a Participant for such
Performance Period, in which case the Committee shall simultaneously determine
the Maximum Award for such Participant for such Performance Period in accordance
with Section 2(o), and the Committee may specify that the Award otherwise
payable to such Participant for such Performance Period shall be prorated to
reflect the Participant's performance of services for less than the entire
Performance Period. In the event that a Participant is a promoted or demoted
during a Performance Period, the Committee may, in its absolute discretion,
adjust the Maximum Award for such Participant for such Performance Period to
reflect such change.

9.   Change of Control
     -----------------

     No later than fifteen (15) days after a Change of Control, the Company
shall pay, in lump sum in cash, to each Participant an amount equal to the sum
of (i) the upaid portion of any Award relating to a Performance Period that ends
prior to the occurrence of such Change of Control and (ii) the amount of the
Maximum Award for such Participant for the Performance Period during which such
Change in Control occurs (determined, for purposes of clarity, without proration
and as if the highest applicable Performance Target had been reached.

10.  Amendment, Modification and 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
          --------
affect the determination or payment of Awards for any Performance Period that
commences prior to such amendment, modification or termination, except that the
Committee may at any time determine to accelerate the payment of Awards.

11.  Miscellaneous
     -------------

          (a)  Awards shall not be assigned, transferred, pledged or encumbered,
and any purported assignment, transfer, pledge or encumbrance shall be null and
void.

          (b)  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)  All payments required to be paid hereunder shall be subject to
any required governmental withholdings or deductions as determined by the
Company.

          (d)  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)  This Plan shall be unfunded. Awards shall be paid from the
general assets of the Company and Participants in this Plan shall be general
unsecured creditors of the

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Company. No Participant shall have any right, title, claim or interest in or
with respect to any specific assets of the Company in connection with his
participation in this Plan.

          (f)  Each Participant shall be entitled to designate a Beneficiary by
filing a written notice with the Committee in the form prescribed by the
Committee from time to time. A Beneficiary designation filed with the Committee
by a Participant may be withdrawn at any time or may be changed at any time by
the Participant filing with Committee a subsequent Beneficiary designation in
the form prescribed by the Committee from time to time.

          (g)  In addition to the remedies of the Company elsewhere provided for
herein, if a Participant is terminated for Cause, the Committee may cancel and
cause the Participant to forfeit any Award to which such Participant would have
otherwise been entitled, in whole or in part.

          (h)  Headings and captions are given to the sections 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. All references herein to the masculine gender shall
include the feminine.

                                       7<PAGE>

                                                                   EXHIBIT 10.65

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

          This EMPLOYMENT AGREEMENT is made as of the 9/th/ day of November,
1998 (the "Effective Date"), by and between Vencor Operating, Inc., a Delaware
corporation (the "Company"), and William M. Altman (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 One Hundred Twenty
     Thousand Dollars ($120,000.00) per year payable in equal installments in
<PAGE>

     accordance with the 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
     such other bonuses or 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);  or

            (iv)  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
                   --------
     remedied within such 30-day

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     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

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<PAGE>

     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 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 1.0 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 one year 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.

                                       5
<PAGE>

               (3)  For a period of one year 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.

               (4)  For a period of one year 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 one year of
          vesting for purposes of all outstanding stock option awards and
          restricted stock awards and Executive will have an additional one year
          in which to exercise such stock options.

          (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.

                                       6
<PAGE>

          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 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 November 9, 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.

                                       7
<PAGE>

          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.

          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:
          ---------------
          William M. Altman
          2701 Sycamore Woods Court
          Louisville, KY 40241

          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
               -------------

                                       8
<PAGE>

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.

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

                                        VENCOR OPERATING, INC.

                                        By: /s/ W. Bruce Lunsford
                                            --------------------------------
                                                W. Bruce Lunsford
                                                Chairman and Chief
                                                Executive Officer

                                        Solely for the purpose of Section 7

                                        VENCOR, INC.

                                        By: /s/ W. Bruce Lunsford
                                            --------------------------------
                                                W. Bruce Lunsford
                                                Chairman and Chief
                                                Executive Officer

                                        /s/ William M. Altman
                                        ------------------------------------
                                        WILLIAM M. ALTMAN

                                       9

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