Document:

<PAGE>

                                                                   Exhibit 10.74

                              EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT is made as of the 28th day of October, 2002
(the "Effective Date"), by and between Kindred Healthcare Operating, Inc., a
Delaware corporation (the "Company"), and Lane M. Bowen (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 Kindred Healthcare, Inc. ("Parent"), and the parties hereto desire
to provide for the terms of Executive's employment by the Company; and

          WHEREAS, the Company has 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 (the "Term"). 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 as President-Health
Services Division, reporting directly to Paul J. Diaz, President and Chief
Operating Officer.

          3.   Extent of Services. Executive, subject to the direction and
control of the Board of Directors (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.

<PAGE>

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

          (a)  A base salary of $265,000 per year ("Base Salary") payable in
     equal installments in 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 will be eligible to receive
     a bonus of his Base Salary and other incentive compensation as the Board
     may approve from time to time. Beginning in 2003, Executive will
     participate in the Company bonus and incentive plans at the executive
     committee level.

          5.   Benefits.

          (a)  Executive shall be entitled to participate in any and all 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 officers of the Company and its affiliates
     following the Company's standard waiting periods, if any.

          (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 officers of the Company.

          (c)  Executive shall be entitled to paid time off each year consistent
     with the Company's policies. The Executive shall schedule the timing of
     such paid time off in a reasonable manner. The Executive also may 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.

          (e)  The Company shall reimburse all reasonable travel and relocation
     expenses incurred by Executive in accordance with the Company's standard
     relocation policy. As an exception to this policy, the Company will provide
     Executive with temporary housing for a period not to exceed one year from
     the Effective Date. In the event Executive voluntarily terminates his
     employment with the Company within one year from Executive's move date,
     Executive will reimburse the Company for a pro rata amount of Executive's
     relocation expenses.

                                       2

<PAGE>

          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.

          (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);

                                       3

<PAGE>

               (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, provided that the
          Executive and the Company acknowledge that Executive's principal
          business office is 680 South Fourth Street, Louisville, Kentucky
          40202; 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
     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

                                       4

<PAGE>

     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 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 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 for Executive for the year in which the Date of Termination
          occurs, and (ii) an amount equal to 1.5 times the sum of the
          Executive's Base Salary and Target Bonus as of the Date of
          Termination.

          For purposes of this Agreement: "Target Bonus" shall mean the full
          amount of the targeted annual incentive bonus that would be payable to
          the Executive, assuming the targeted performance criteria on which
          such annual incentive bonus is 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

                                       5

<PAGE>

               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 Parent's Voluntary
               Life Insurance Benefit Plan as of the Date of Termination.

                    (4)  For a period of 18 months following the 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 Parent's
               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 may adopt such amendments to its executive
               benefit plans, if any, as are necessary to effectuate the
               provisions of this Agreement.

                    (7)  Executive shall be entitled to 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 following the Date of Termination 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

                                       6

<PAGE>

     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 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 severance plans
or arrangements of the Company or their respective affiliates that specifically
provide for severance payments,

                                       7

<PAGE>

other than the Change in Control Severance Agreement between the Company and
Executive (the "Change in Control Severance Agreement"); provided that any
payments payable to Executive hereunder shall be offset by any payments payable
under the Change in Control 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.

          13.  Non-solicitation. During the Term and for a period of one year
thereafter (collectively, the "Non-solicitation Period"), Executive shall not
directly or indirectly, individually or on behalf of any person other than the
Company, aid or endeavor to solicit or induce any of the Company's or its
affiliates' employees to leave their employment with the Company or such
affiliates in order to accept employment with Executive or any other person,
corporation, limited liability company, partnership, sole proprietorship or
other entity. If the restrictions set forth in this section would otherwise be
determined to be invalid or unenforceable by a court of competent jurisdiction,
the parties intend and agree that such court shall exercise its discretion in
reforming the provisions of this Agreement to the end that the Executive will be
subject to a non-solicitation covenant which is reasonable under the
circumstances and enforceable by the Company. It is agreed that no adequate
remedy at law exists for the parties for violation of this section and that this
section may be enforced by any equitable remedy, including specific performance
and injunction, without limiting the right of the Company to proceed at law to
obtain such relief as may be available to it. The running of the
Non-solicitation Period shall be tolled for any period of time during which
Executive is in violation of any covenant contained herein, for any reason
whatsoever.

          14.  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:

                                       8

<PAGE>

          If to Executive:
          Lane M. Bowen
          680 South Fourth Street
          Louisville, KY 40202

          If to Company:
          Kindred Healthcare Operating, Inc.
          680 South Fourth Street
          Louisville, KY 40202
          Attn: General Counsel

          15.  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.

          16.  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.

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

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

          19.  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.

          20.  Cancellation of Prior Agreement. The Executive hereby
acknowledges and agrees that this Agreement is intended to and does hereby
replace that certain employment agreement, between the Company (or its
predecessor) and the Employee, and that such agreement is cancelled, terminated
and of no further force and effect.

                                       9

<PAGE>

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

                                  KINDRED HEALTHCARE OPERATING, INC.

                                  By: /s/ Edward L. Kuntz
                                      ----------------------------------------
                                      Edward L. Kuntz
                                      Chairman and Chief Executive Officer

                                  Solely for the purpose
                                  of Section 7

                                  KINDRED HEALTHCARE, INC.

                                  By: /s/ Edward L. Kuntz
                                      ----------------------------------------
                                      Edward L. Kuntz
                                      Chairman and Chief Executive Officer

                                  /s/ Lane M. Bowen
                                  --------------------------------------------
                                  LANE M. BOWEN

                                       10<PAGE>

                                                                   Exhibit 10.75

                      CHANGE-IN-CONTROL SEVERANCE AGREEMENT

     THIS CHANGE-IN-CONTROL SEVERANCE AGREEMENT (the "Agreement") is made as of
October 28, 2002 by and between KINDRED HEALTHCARE OPERATING, INC., a Delaware
corporation, (the "Company") and Lane M. Bowen, (the "Employee").

     RECITALS:

     A.   The Employee is employed by the Company, a wholly owned subsidiary of
Kindred Healthcare, Inc. (the "Parent").

     B.   The Company recognizes that the Employee's contribution to the
Company's growth and success has been and continues to be significant.

     C.   The Company wishes to encourage the Employee to remain with and devote
full time and attention to the business affairs of the Company and wishes to
provide income protection to the Employee for a period of time in the event of a
Change in Control.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     AGREEMENT:

     1.   Definitions.

          a.   "Base Salary" shall mean the Employee's regular annual rate of
base pay in gross as of the date in question as elected under Paragraph 3(a).

          b.   "Cause" shall mean the Employee's (i) conviction of or plea of
nolo contendere to a crime involving moral turpitude; or (ii) willful and
material breach by Employee 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, but with respect to (ii) only if the
Board of Directors of Parent (the "Board") adopts a resolution by a vote of at
least 75% of its members so finding after giving the Employee and his attorney
an opportunity to be heard by the Board.

          c.   "Change in Control" The term "Change in Control" shall mean any
one of the following events occurring after the date of this Agreement:

<PAGE>

               (i)   An acquisition (other than directly from Parent) of any
voting securities of Parent (the "Voting Securities") by any "Person" (as
defined in Paragraph 1(f) hereof) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 under the 1934 Act) of
20% or more of the combined voting power of Kindred Healthcare, Inc.'s then
outstanding Voting Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities which are acquired in an
acquisition by (i) Parent or any of its subsidiaries, (ii) an employee benefit
plan (or a trust forming a part thereof) maintained by Parent or any of its
subsidiaries or (iii) any Person in connection with an acquisition referred to
in the immediately preceding clauses (i) and (ii) shall not constitute an
acquisition which would cause a Change in Control.

               (ii)  The individuals who, as of October 28, 2002, constituted
the Board of Directors of Parent (the "Incumbent Board") cease for any reason to
constitute over 50% of the Board; provided, however, that if the election, or
nomination for election by Kindred Healthcare, Inc.'s stockholders, of any new
director was approved by a vote of over 50% of the Incumbent Board, such new
director shall, for purposes of this Section 1(c)(ii), be considered as though
such person were a member of the Incumbent Board; provided, further, however,
that no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated under the
1934 Act) or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of Directors of Parent (a "Proxy
Contest"), including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest.

               (iii) Consummation of a merger, consolidation or reorganization
involving Parent, unless each of the following events occurs in connection with
such merger, consolidation or reorganization:

                     (A)  the stockholders of Parent, immediately before such
merger, consolidation or reorganization, own, directly or indirectly immediately
following such merger, consolidation or reorganization, over 50% of the combined
voting power of all voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving Company") over which
any Person has Beneficial Ownership in substantially the same proportion as
their ownership of the Voting Securities immediately before such merger,
consolidation or reorganization;

                     (B)  the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute over 50% of the members of
the board of directors of the Surviving Company; and

                     (C)  no Person (other than Parent, any of its subsidiaries,
any employee benefit plan (or any trust forming a part thereof) maintained by
Parent, the Surviving Company or any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial

                                       -2-

<PAGE>

Ownership of 20% or more of the then outstanding Voting Securities) has
Beneficial Ownership of 20% or more of the combined voting power of the
Surviving Company's then outstanding voting securities.

               (iv)  Approval by Parent's stockholders of a complete liquidation
or dissolution of Parent.

               (v)   Approval by Parent's stockholders of an agreement for the
sale or other disposition of all or substantially all of the assets of Parent to
any Person (other than a transfer to a subsidiary of Parent).

               (vi)  Any other event that the Board shall determine constitutes
an effective Change in Control of Parent.

               (vii) Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by Parent which,
by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person; provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by Parent, and after such
share acquisition by Parent, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.

          d.   "Change-in-Control Date" shall mean the date immediately prior to
the effectiveness of the Change in Control.

          e.   "Good Reason" The Employee shall have good reason to terminate
employment with the Company if (i) the Employee's title, duties,
responsibilities or authority is reduced or diminished from those in effect on
the Change-in-Control Date without the Employee's written consent; (ii) the
Employee's compensation is reduced; (iii) the Employee's benefits are reduced,
other than pursuant to a uniform reduction applicable to all managers of the
Company; or (iv) the Employee is asked to relocate his office to a place more
than 30 miles from his business office on the Change-in-Control Date.

          f.   "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d).

          g.   "Target Bonus" shall mean the full amount of target annual
incentive bonus that would be payable to the Employee, assuming the target
performance criteria on which such annual incentive bonus were deemed to be
satisfied, in respect of services for the calendar year in which the date in
question occurs.

                                       -3-

<PAGE>

          h.   "Termination of Employment" shall mean (i) the termination of the
Employee's employment by the Company other than such a termination in connection
with an offer of immediate reemployment by a successor or assign of the Company
or a purchaser of the Company or its assets under terms and conditions which
would not permit the Employee to terminate his employment for Good Reason or
otherwise during any Window Period; or (ii) the Employee's termination of
employment with the Company for Good Reason or during any Window Period.

          i.   "Window Period" shall mean either of two 30-day periods of time
commencing 30 days after (i) a Change in Control and (ii) one year after a
Change in Control.

     2.   Term. The initial term of this Agreement shall be for a three-year
period commencing on October 28, 2002 (the "Effective Date") (the "Term"). The
Term shall be automatically extended by one additional day for each day beyond
the Effective Date that the Employee 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 Employee. In such event, the Agreement shall terminate on
the third anniversary of the effective date of such election notice.
Notwithstanding the foregoing, this Agreement shall automatically terminate if
and when the Employee terminates his employment with the Company or two years
after the Change-in-Control Date, whichever first occurs.

     3.   Severance Benefits. If at any time following a Change in Control and
continuing for two years thereafter, the Company terminates the Employee without
Cause, or the Employee terminates employment with the Company either for Good
Reason or during any Window Period, then as compensation for services previously
rendered the Employee shall be entitled to the following benefits:

          a.   Cash Payment. The Employee shall be paid cash equal to three
times the greater of:

               (i)  the sum of the Employee's Base Salary and Target Bonus as of
the Termination of Employment, or

               (ii) the sum of the Employee's Base Salary and Target Bonus as of
the Change-in-Control Date.

Payment shall be made in a single lump sum upon the Employee's effective date of
termination.

          b.   Continuation of Benefits.

               (i)  For a period of three years following the Termination of
Employment, the Employee shall be treated as if he had continued to be an
employee for all purposes under Parent's Health Insurance Plan and Dental
Insurance Plan; or if the Employee is prohibited from participating in such
plan, the Company or Parent shall otherwise provide such benefits. Following
this continuation period, the Employee shall be entitled to receive continuation

                                       -4-

<PAGE>

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

               (ii)  For a period of three years following the Termination of
Employment, Parent shall maintain in force, at its expense, the Employee's life
insurance in effect under Parent's Voluntary Life Insurance Benefit Plan as of
the Change-in-Control Date or as of the date of Termination of Employment,
whichever coverage limits are greater.

               (iii) For a period of three years following the Employee's
Termination of Employment, the Company or Parent 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 of Employment,
or, at the Employee's election, the plans applicable to Employee as of the
Change-in-Control Date. Should Employee become disabled during such period,
Employee shall be entitled to receive such benefits, and for such duration, as
the applicable plan provides.

          c.   Retirement Savings Plan. To the extent not already vested
pursuant to the terms of such plan, the Employee's interests under the Parent's
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 Employee's years of service with
the Company.

          d.   Plan Amendments. Parent shall adopt such amendments to its
employee benefit plans, if any, as are necessary to effectuate the provisions of
this Agreement.

          e.   Fringe Benefits. Following the Employee's Termination of
Employment, the Employee shall receive the computer that Employee is utilizing
as of the date of such Termination of Employment. In addition, for a period of
one year following Employee's Termination of Employment, Employee shall be
entitled to be reimbursed for any legal or accounting services utilized by
Employee to minimize any personal income tax obligations arising from the Change
in Control, in an amount not to exceed $5,000.

     4.   Golden Parachute Tax Reimbursement. Whether or not any payments are
made pursuant to Section 3 above, if a Change in Control occurs at any time and
the Employee reasonably determines that any payment or distribution by the
Company or any of its affiliates to or for the benefit of the Employee, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any restricted stock,
stock option, stock appreciation right or similar right, or the lapse or
termination of any restriction on or the vesting or exercisablility of any of
the foregoing (individually and collectively, the "Payment"), would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code") (or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control," within the meaning
of Section 280G of the Code (or any successor provision thereto), or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest and penalties, being

                                       -5-

<PAGE>

hereinafter collectively referred to as the "Excise Tax"), then the Company or
Parent shall pay to the Employee an additional payment or payments (individually
and collectively, the "Gross-Up Payment"). The Gross-Up Payment shall be in an
amount such that, after payment by the Employee of all taxes required to be paid
by the Employee with respect to the receipt thereof under the terms of any
federal, state or local government or taxing authority (including any interest
or penalties imposed with respect to such taxes), including any Excise Tax
imposed with respect to the Gross-Up Payment, the Employee retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. The
Gross-Up Payment shall be paid to the Employee within 30 days of the Company's
receipt of written notice from the Employee that such Excise Tax has been paid
or will be payable at any time in the future.

     5.   No Mitigation Required or Setoff Permitted. In no event shall Employee
be obligated to seek other employment or take other action by way of mitigation
of the amounts payable to Employee under the terms of this Agreement, and all
such amounts shall not be reduced whether or not Employee obtains other
employment. 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 Employee or others.

     6.   Waiver of Other Severance Benefits. The benefits payable pursuant to
this Agreement are in lieu of any other severance benefits which may otherwise
be payable by the Company or its affiliates to the Employee upon termination of
employment pursuant to a severance program of the Company or its affiliates
(including, without limitation, any benefits to which Employee might otherwise
be entitled under any other severance or change in control or similar agreement
previously entered into between Employee and the Company or any of its
affiliates).

     7.   Employment at Will. Notwithstanding anything to the contrary contained
herein, the Employee's employment with the Company is not for any specified term
and may be terminated by the Employee or by the Company at any time, for any
reason, with or without cause, without any liability, except with respect to the
payments provided hereunder or as required by law or any other contract or
employee benefit plan.

     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 attorneys' and accountants' fees of the
Employee in connection therewith, including any litigation to enforce any
arbitration award.

     9.   Non-solicitation. During the Term and for a period of one year
thereafter (collectively, the "Non-solicitation Period"), Employee shall not
directly or indirectly, individually or on behalf of any person other than the
Company, aid or endeavor to solicit or induce any of the Company's or its
affiliates' employees to leave their employment with the Company or such
affiliates in order to accept employment with Employee or any other person,
corporation, limited liability company, partnership,

                                       -6-

<PAGE>

sole proprietorship or other entity. If the restrictions set forth in this
section would otherwise be determined to be invalid or unenforceable by a court
of competent jurisdiction, the parties intend and agree that such court shall
exercise its discretion in reforming the provisions of this Agreement to the end
that the Employee will be subject to a non-solicitation covenant which is
reasonable under the circumstances and enforceable by the Company. It is agreed
that no adequate remedy at law exists for the parties for violation of this
section and that this section may be enforced by any equitable remedy, including
specific performance and injunction, without limiting the right of the Company
to proceed at law to obtain such relief as may be available to it. The running
of the Non-solicitation Period shall be tolled for any period of time during
which Employee is in violation of any covenant contained herein, for any reason
whatsoever.

     10.  Successors; Binding Agreement. This Agreement shall not be terminated
by the voluntary or involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or upon any
transfer of all or substantially all of the Company's stock or assets. In the
event of such merger, consolidation or transfer, the provisions of this
Agreement shall be binding upon and shall inure to the benefit of the surviving
corporation or corporation to which such stock or assets of the Company shall be
transferred.

     11.  Notices. Any notice or other communication hereunder shall be in
writing and shall be effective upon receipt (or refusal of receipt) if delivered
personally, or sent by overnight courier if signature for the receiving party is
obtained, or sent by certified or registered mail, postage prepaid, to the other
party at the address set forth below:

               If to the Company:            Kindred Healthcare Operating, Inc.
                                             680 South Fourth Street
                                             Louisville, KY 40202
                                             Attention: General Counsel

               If to Employee:               Lane M. Bowen
                                             680 South Fourth Street
                                             Louisville, KY 40202

          Either party may change its specified address by giving notice in
writing to the other.

     12.  Indemnification. The Company shall indemnify, defend and hold the
Employee harmless from and against any liability, damages, costs and expenses
(including attorneys' fees) in connection with any claim, cause of action,
investigation, litigation or proceeding involving him by reason of his having
been an officer, director, employee or agent of the Company, except to the
extent it is judicially determined that the Employee was guilty of gross
negligence or willful misconduct in connection with the matter giving rise to
the claim for indemnification. This indemnification shall be in addition to and
shall not be substituted for any other indemnification or similar agreement or
arrangement which may be in effect between the Employee and the Company or may
otherwise exist. The Company also agrees to maintain adequate directors and
officers

                                       -7-

<PAGE>

liability insurance, if applicable, for the benefit of Employee for the term of
this Agreement and for five years thereafter.

     13.  ERISA. Many or all of the employee benefits addressed in Paragraph
3(b) and (c) exist under plans which constitute employee welfare benefit plans
("Welfare Plans") within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). Any payments pursuant to this
Agreement which could cause any of such Plans not to constitute a Welfare Plan
shall be deemed instead to be made pursuant to a separate "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA or a "top hat" plan
under Section 201(2) of ERISA as to which the applicable portions of the
document constituting the Welfare Plan shall be deemed to be incorporated by
reference. None of the benefits hereunder may be assigned in any way.

     14.  Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision, which other provision shall remain in full force and effect.

     15.  Interpretation. The headings used herein are for convenience only and
do not limit or expand the contents of this Agreement. Use of any male gender
pronoun shall be deemed to include the female gender also.

     16.  No Waiver. No waiver of a breach of any provision of this Agreement
shall be construed to be a waiver of any other breach of this Agreement. No
waiver of any provision of this Agreement shall be enforceable unless it is in
writing and signed by the party against whom it is sought to be enforced.

     17.  Survival. Any provisions of this Agreement creating obligations
extending beyond the term of this Agreement shall survive the expiration or
termination of this Agreement, regardless of the reason for such termination.

     18.  Amendments. Any amendments to this Agreement shall be effective only
if in writing and signed by the parties hereto.

     19.  Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof.

     20.  Governing Law. This Agreement shall be interpreted in accordance with
and governed by the law of the State of Delaware.

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

                                       -8-

<PAGE>

     22.  Cancellation of Prior Agreement. The Employee hereby acknowledges and
agrees that this Agreement is intended to and does hereby replace that certain
change-in-control severance agreement, between the Company (or its predecessor)
and the Employee, and that such agreement is cancelled, terminated and of no
further force and effect.

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

                                     KINDRED HEALTHCARE OPERATING, INC.

                                       /s/ Edward L. Kuntz
                                       -----------------------------------------
                                       By: Edward L. Kuntz
                                           Chairman and Chief Executive Officer

                                       Solely for the purposes of
                                       Sections 3, 4, 5 and 12:

                                       KINDRED HEALTHCARE, INC.

                                       /s/ Edward L. Kuntz
                                       -----------------------------------------
                                       By: Edward L. Kuntz
                                           Chairman and Chief Executive Officer

                                       /s/ Lane M. Bowen
                                       -----------------------------------------
                                       LANE M. BOWEN

                                       -9-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]