Exhibit 10.1

CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE

THIS CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE (this “Severance
Agreement”) is made and entered into effective as of this 31st day of March,
2008, by and between Barrier Therapeutics, a Delaware corporation (the
“Company”) and Geert Cauwenbergh, Ph.D. (“Cauwenbergh”) (collectively, “the
parties”).

WHEREAS, Cauwenbergh has been employed by the Company as its Chief Executive
Officer (“CEO”); and

WHEREAS, Cauwenbergh’s employment with the Company is governed by an employment
agreement, dated December 6, 2006 (the “Employment Agreement”); and

WHEREAS, at the request of the Board of Directors of the Company (the “Board”),
Cauwenbergh will retire from his position as CEO, effective March 31, 2008 (the
“Retirement Date”); and

WHEREAS, following the Retirement Date, Cauwenbergh will continue to serve as a
member of the Board.

NOW, THEREFORE, IT IS HEREBY AGREED by and between Cauwenbergh and the Company
as follows:

1. Release:

Cauwenbergh for and in consideration of the commitments set forth in this
Severance Agreement, and intending to be legally bound, does hereby REMISE,
RELEASE AND FOREVER DISCHARGE the Company, its affiliates, subsidiaries and
parents, and its officers, directors, employees, attorneys, and agents, and its
and their respective successors and assigns, heirs, executors, and
administrators (collectively, “Releasees”) of and from all manner of actions and
causes of actions, suits, debts, claims and demands whatsoever in law or in
equity, which Cauwenbergh ever had, now has or which his heirs, executors or
administrators hereafter may have from the beginning of time, up to and
including the date of this Severance Agreement, and particularly, but without
limitation of the foregoing general terms, any claims concerning or relating in
any way to Cauwenbergh’s employment relationship with RELEASEES, including, but
not limited to, any claims arising under Title VII of the Civil Rights Act of
1964, 42 U.S.C. §2000e et seq., the Americans with Disabilities Act, 42 U.S.C.
§12101 et seq. (“ADA”), the Age Discrimination in Employment Act, as amended, 29
U.S.C. § 621 et seq. (“ADEA”), the Older Workers Benefit Protection Act, 29
U.S.C. § 621 et seq. (“OWBPA”), the Family and Medical Leave Act, 29 U.S.C. §
2601 et seq. (“FMLA”), the Employee Retirement Income Security Act, 29 U.S.C.
§1001 et seq. (“ERISA”), the New Jersey Law Against Discrimination, N.J.S.A.
10:5-1 et seq. (“NJLAD”), the Conscientious Employee Protection Act, N.J.S.A.
34:19-1 et seq. (“CEPA”), the New Jersey Family Leave Act, N.J.S.A. 34:11b-1 et
seq., the New Jersey Equal Pay Act, N.J.S.A. 34:11-56.1 et seq., the New Jersey
Wage and Hour Law, N.J.S.A. 34:1-56a et seq., the New Jersey Wage Payment Act,
N.J.S.A. 34:11-4.2 et seq., the New Jersey Constitution, the common law of the
State of New Jersey including, but not limited to, “Pierce

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claims,” the New Jersey wage and hour laws, and any and all other federal,
state, county, or local common laws, statutes, ordinances, or regulations,
including, without limitation, claims of unlawful discharge, retaliation, fraud,
equitable fraud, negligent misrepresentation, breach of contract, promissory
estoppel, breach of the implied covenant of good faith and fair dealing,
negligent supervision, quantum meruit, violation of public policy, defamation,
physical injury, emotional distress, or claims for additional compensation or
benefits arising up until now, and any claims for attorneys’ fees and costs.

2. In consideration for Cauwenbergh’s agreements as set forth herein and
pursuant to Section 6(c) of the Employment Agreement, and provided that
Cauwenbergh has executed and has not revoked this Severance Agreement pursuant
to Paragraph 17(f) below, the Company agrees as follows:

(a) The Company will, within thirty (30) days of his Retirement Date, pay to
Cauwenbergh an amount equal to 1.5 times his annual base salary (at the rate in
effect as of his Retirement Date) plus 1.0 times his target annual cash bonus
for 2008, each in a lump sum, less applicable withholdings. As of his Retirement
Date, Cauwenbergh’s annual base salary is $338,000 and his target annual cash
bonus for 2008 is $169,000. Thus, the total payment to Cauwenbergh pursuant to
this Paragraph 2(a) is $676,000.

(b) The Company will, within thirty (30) days of his Retirement Date, pay to
Cauwenbergh a pro rata bonus payment for the year in which his Retirement Date
occurs equal to $42,250, which represents 25% of Cauwenbergh’s target annual
cash bonus for 2008.

(c) The Company will provide Cauwenbergh with continued coverage under the
Company’s group health plan until the earlier of either (1) the end of the
twelve month period following his Retirement Date (the “Severance Period”) or
(2) the date on which Cauwenbergh is eligible to receive medical benefits from
another employer. The COBRA health care continuation coverage period under
section 4980B of the Code will run concurrently with the Severance Period (or
such shorter period as may become applicable under (c)(2) hereof).

(d) Cauwenbergh agrees to waive his right to accelerated vesting of the
outstanding stock options, restricted stock and other equity rights held by him
as of the Retirement Date under the terms of the Employment Agreement. Instead,
because Cauwenbergh will continue to serve as a member of the Board following
his Retirement Date, in accordance with the applicable provisions of the Barrier
Therapeutics, Inc. 2002 Equity Compensation Plan and the Barrier Therapeutics,
Inc. 2004 Stock Incentive Plan, to the extent any outstanding equity grants or
awards remain unvested or have not yet become exercisable as of the Retirement
Date, Cauwenbergh will continue to vest in all outstanding equity grants or
awards he holds under such plans as of his Retirement Date so long as he
continues to serve as a member of the Board. In addition, as of the date
Cauwenbergh ceases to serve as a member of the Board, all of Cauwenbergh’s
outstanding stock options, restricted stock and other equity rights granted to
him prior to the Retirement Date and held by him as of the date he ceases to
serve as a member of the Board, if any, which would have vested and become
exercisable within the one (1) year period following the date Cauwenbergh ceases
to be a member of the Board will become vested and/or exercisable, as the case
may be, as of the date Cauwenbergh ceases to be a member of the Board and
Cauwenbergh will have a six (6) month period after the date on which he ceases
to serve as a director of the Company in which to exercise any then outstanding
options granted to him prior to his Retirement Date.

 

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(e) The Company will, within thirty (30) days of his Retirement Date, pay to
Cauwenbergh any other amounts earned, accrued and owing but not yet paid under
Sections 2, 3 and 4 of the Employment Agreement and any benefits accrued and due
under any applicable benefit plans and programs of the Company, whether or not
the terms of such plan or program otherwise require an employee to be employed
with the Company on the date of payment, including without limitation, any cash
bonus earned and accrued but not yet paid for 2007. Cauwenbergh has received
payment of his 2007 annual bonus contemporaneously with the payment of the 2007
annual bonus to other executive officers of the Company, as determined by the
Compensation Committee of the Board. The amounts described in this Paragraph
2(e) will be paid to Cauwenbergh regardless of whether he executes or revokes
this Severance Agreement.In addition, the Company will, within thirty (30) days
of his Retirement Date, pay to Cauwenbergh the amount of any reasonable
out-of-pocket business expenses properly incurred but not yet reimbursed under
Section 5 of the Employment Agreement.

(f) Cauwenbergh will be eligible to receive the same annual compensation as
other non-employee members of the Board for service on the Board for the period
commencing April 1, 2008 and thereafter (with the first expected equity grants
to occur in June 2009).

3. Non-Disparagement:

Cauwenbergh agrees:

(a) not to participate or engage in any trade or commercial disparagement of the
business or operations of the Company and/or any other related entity;

(b) not to subvert the business or operations of the Company and/or any other
related entity; and

(c) not to disparage any of the officers, directors or employees of the Company.

4. Confidential Information, Invention Assignment, Non-Competition and
Non-Solicitation Obligations:

Cauwenbergh acknowledges and further agrees that he remains bound by the terms
of the Company’s Confidential Information and Invention Assignment Agreement (as
described in Section 12 of the Employment Agreement), his obligations under
Section 13 of the Employment Agreement and as member of the Board. Cauwenbergh
agrees that he remains subject to the foregoing terms and obligations regardless
of whether he signs or revokes this Severance Agreement.

 

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5. Entire Agreement:

Cauwenbergh acknowledges and further agrees that this Severance Agreement
supersedes any and all prior agreements or understandings, whether written or
oral, between the parties to the extent this Severance Agreement is inconsistent
with the terms or conditions of any such prior agreements or understandings,
with the exception of the Company’s Confidential Information and Invention
Assignment Agreement (as described in Section 12 of the Employment Agreement)
and Cauwenbergh’s obligations under Section 13 of the Employment Agreement.

Cauwenbergh further acknowledges and agrees that except as set forth expressly
herein, no promises or representations have been made to him in connection with
his separation from the Company, or the terms of this Severance Agreement.

6. No Admission:

The parties agree and acknowledge that the Severance Agreement by the Company
described herein, and the settlement and termination of any asserted or
unasserted claims against the Releasees, are not and will not be construed to be
an admission of any violation of any federal, state or local statute or
regulation, or of any duty owed, contractual or otherwise, by any of the
Releasees to Cauwenbergh.

7. No Reemployment:

Cauwenbergh acknowledges that Releasees have no obligation to employ or
re-employ him in the future. Likewise the Company acknowledges that Cauwenbergh
has no obligation to take on full-time or part-time employment in the future.

8. No Obligations:

Each party agrees and recognizes that should it breach any of the obligations or
covenants set forth in this Severance Agreement, the non-breaching party will
have no obligation, except as set forth in the Employment Agreement, to provide
the other party with the consideration paid under this Severance Agreement. The
parties further agree that the non-breaching party will be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages.

9. No Conflict:

In the event that any portion of the Severance Agreement conflicts with any
portion of the Employment Agreement, the Severance Agreement will control to the
extent necessary to resolve the conflict, and all non-conflicting portions of
the Employment Agreement will remain in effect.

10. Governing Law:

This Severance Agreement and the obligations of the parties hereunder will be
construed, interpreted and enforced in accordance with the laws of the State of
New Jersey.

 

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11. Severability:

The parties agree that if any provision of this Severance Agreement, other than
the General Release set forth in Paragraph 1 above, or the application thereof
to any person, place or circumstance will be held by a court of competent
jurisdiction to be invalid, unenforceable, or void, the remainder of this
Severance Agreement and such provision as applied to other persons, places, and
circumstances will remain in full force and effect.

12. Construction:

This Severance Agreement has been drafted jointly by all parties and there will
be no presumption of construction against any party. The Parties agree that the
terms of all parts of the Severance Agreement will in all cases be construed as
they hold, according to their fair meaning, and not strictly for or against any
party.

13. Counterparts:

This Severance Agreement may be executed in any number of counterparts, and each
such counterpart will be deemed to be an original instrument, but all such
counterparts together will constitute but one agreement. This Severance
Agreement may be executed and delivered by facsimile.

14. Waiver:

The waiver by either party of a breach of any provision of this Severance
Agreement by the other party must be in writing and will not operate or be
construed as a waiver of any subsequent breach by such other party.

15. Arbitration:

The parties agree that any dispute, controversy or claim arising out of or
relating to this Severance Agreement, whether based on contract, tort, statute
or other legal or equitable theory (including without limitation, Title VII,
Americans with Disabilities Act, New Jersey Law Against Discrimination, Age
Discrimination in Employment Act, Conscientious Employment Protection Act or any
claim of fraud, misrepresentation or fraudulent inducement or any question of
validity or effect of this Severance Agreement including this clause) or the
breach or termination thereof (a “Dispute”), will be resolved by binding
arbitration in accordance with the following provisions; provided, however, that
this Paragraph 16 will not limit the right of any party to seek from a court of
competent jurisdiction any equitable relief with respect to the Dispute to which
such party may otherwise be entitled, including, without limitation, specific
performance or injunctive or other relief, and no party will have any obligation
to arbitrate such claim for equitable relief.

(a) Any Dispute will be resolved by binding arbitration to be conducted before
JAMS/Endispute, Inc. (“JAMS”) in accordance with the provisions of JAMS’
Comprehensive Arbitration Rules and Procedures as in effect at the time of the
arbitration.

 

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(b) The arbitration will be held before a single arbitrator appointed by JAMS,
in accordance with its rules, who is not an affiliate of any party to such
arbitration and does not have any potential for bias or conflict of interest
with respect to any of the parties, directly or indirectly, by virtue of any
direct or indirect financial interest, family relationship or close friendship.

(c) Such arbitration will be held at such place as the arbitrator appointed by
JAMS may determine within the State of New Jersey or such other location to
which the parties may agree.

(d) The arbitrator will have the authority, taking into account the parties’
desire that any arbitration proceeding hereunder be reasonably expedited and
efficient, to permit the parties to conduct discovery. Any such discovery will
be (A) guided generally by and be no broader than permitted under the United
States Federal Rules of Civil Procedure, and (B) subject to the arbitrator and
the parties entering into a mutually acceptable confidentiality agreement.

(e) The arbitrator’s decision and award in any such arbitration will be made and
delivered within 120 days of the date on which such arbitration proceedings
commenced.

(f) The arbitrator’s decision will be in writing and will be as brief as
possible and will include the basis for the arbitrator’s decision. A record of
the arbitration proceeding will be kept.

(g) Judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.

(h) The arbitrator will have the power but not the obligation to award to the
party it deems to have prevailed, all or a portion of the costs of the
arbitration (including, transcripts, room rental fees and fees and expenses of
the arbitrator and JAMS, and the reasonable legal fees, costs and disbursements
of the other party thereto); provided, that if court proceedings to stay
litigation or compel arbitration are necessary, the non-prevailing party in such
proceedings will pay all reasonable costs, expenses, and attorney’s fees
incurred in connection with such court proceeding.

(i) The parties agree to participate in any arbitration in good faith.

16. Compliance with Section 409A.

This Severance Agreement will be interpreted to avoid any penalty sanctions
under section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”). If any payment or benefit cannot be provided or made at the time
specified herein without incurring sanctions under section 409A of the Code,
then such benefit or payment will be provided in full at the earliest time
thereafter when such sanctions will not be imposed. For purposes of section 409A
of the Code, all payments to be made upon a termination of employment under this
Severance Agreement may only be made upon Cauwenbergh’s “separation from
service” within the meaning of such term under section 409A of the Code, each
payment made under this Severance Agreement will be treated as a separate
payment and the right to a series of installment payments under this Severance
Agreement is to be treated as a right to a series of separate payments. In no
event will Cauwenbergh, directly or indirectly, designate the calendar year of
payment.

 

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Payments under this Agreement are intended to be exempt from section 409A of the
Code because they will be paid within the short-term deferral rule and
separation pay plan exception thereto; however, to the extent it is determined
to be necessary to postpone the commencement of any severance payments otherwise
payable pursuant to this Agreement as a result of such separation from service
to prevent any accelerated or additional tax under section 409A of the Code,
then the Company will postpone the commencement of the payment of any such
payments or benefits hereunder (without any reduction in such payments or
benefits ultimately paid or provided to Cauwenbergh) that are not otherwise
excepted from section 409A of the Code, until the first payroll date that occurs
after the date that is six (6) months following Cauwenbergh’s separation from
service with the Company (as defined under section 409A of the Code). If any
payments are postponed due to such requirements, such postponed amounts will be
paid on the first payroll date that occurs after the date that is six (6) months
following Cauwenbergh’s separation from service with the Company in a lump sum.
If Cauwenbergh dies during the postponement period prior to the payment of the
postponed amount, the amounts withheld on account of section 409A of the Code
will be paid to the personal representative of Cauwenbergh’s estate within sixty
(60) days after the date of Cauwenbergh’s death.

All reimbursements and in-kind benefits provided under this Severance Agreement
will be made or provided in accordance with the requirements of section 409A of
the Code, including, where applicable, the requirement that (i) any
reimbursement is for expenses incurred during Cauwenbergh’s lifetime (or during
a shorter period of time specified in this Severance Agreement), (ii) the amount
of expenses eligible for reimbursement, or in-kind benefits provided, during a
calendar year may not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other calendar year, (iii) the reimbursement of
an eligible expense will be made on or before the last day of the calendar year
following the year in which the expense is incurred, and (iv) the right to
reimbursement or in-kind benefits is not subject to liquidation or exchange for
another benefit.

17. Certification:

Cauwenbergh certifies and acknowledges as follows:

(a) That he has read the terms of this Severance Agreement, and that he
understands its terms and effects, including the fact that he has agreed to
RELEASE AND FOREVER DISCHARGE the Company and each and everyone of its
affiliated entities from any legal action arising out of his employment
relationship with the Company and/or the termination of that relationship;

(b) That he has signed this Severance Agreement voluntarily and knowingly in
exchange for the consideration described herein, which he acknowledges is
adequate and satisfactory to him and which he acknowledges is in addition to any
other benefits to which he is otherwise entitled;

 

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(c) That he has been and is hereby advised in writing to consult with an
attorney prior to signing this Severance Agreement, and has in fact consulted
with an attorney;

(d) That he does not waive rights or claims that may arise after the date this
Severance Agreement is executed;

(e) That the Company has provided Cauwenbergh with a period of twenty-one
(21) calendar days within which to consider this Severance Agreement, and that
he has signed on the date indicated below after concluding that this Severance
Agreement is satisfactory to him; and

(f) Cauwenbergh acknowledges that he may revoke this Severance Agreement within
seven (7) calendar days after execution, and it will not become effective until
the expiration of such seven-day revocation period. In order to be effective,
any revocation by Cauwenbergh must be in writing, directed to the Company,
Barrier Therapeutics, Inc., 600 College Road East, Suite 3200, Princeton, New
Jersey 08540, Attention: General Counsel; Telecopier: (609) 945-1255, and be
received on or before the 7th day following the execution of this Severance
Agreement (the “Revocation Period”). In the event of a timely revocation by
Cauwenbergh, this Severance Agreement will be deemed null and void and neither
the Company nor Cauwenbergh will have any obligations hereunder.

[SIGNATURE PAGE FOLLOWS]

 

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Intending to be legally bound hereby, Cauwenbergh and the Company executed the
foregoing Confidential Separation Agreement and General Release this 31st day of
March, 2008.

 

/s/ Geert Cauwenbergh

Geert Cauwenbergh

 

Barrier Therapeutics, Inc. By:  

/s/ Peter Ernster

Name:   Peter Ernster Title:   Chairman

 

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