EXHIBIT 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the 10th day of July,
2013 (the “Effective Date”), by and between Kindred Healthcare Operating, Inc.,
a Delaware corporation (the “Company”), and Richard A. Lechleiter (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 Executive Compensation Committee of the Board of Directors of the
Parent has determined that it is in the best interests of the Company and Parent
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 term of this Agreement shall be for the period commencing on the
Effective Date and ending January 15, 2014 (the “Term”), subject to earlier
termination as provided in Section 6 hereof.

2. Duties. Executive is engaged by the Company as Executive Vice President and
Chief Financial Officer of Kindred Healthcare, Inc.

3. Extent of Services. Executive, subject to the direction and control of the
Board of Directors of the Parent (the “Board”) and the Company, 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 his current base salary per
year payable in equal installments in accordance with the Company’s normal
payroll procedures.

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(b) During the Term, in addition to Base Salary, Executive will be eligible to
participate in the Company’s short-term and long-term incentive plans, as such
plans may be in effect from time to time.

5. Benefits.

(a) Executive shall be entitled to participate in any and all pension benefit
(whether tax qualified or non-qualified), 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.

(b) Executive may be entitled to participate in such other bonus 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 earn paid time off subject to the Company’s
policies, as in effect from time to time. 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, as may be in effect
from time to time.

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 due to disability as defined in the long-term
disability plan provided to Executive by the Company.

(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 and a reasonable
opportunity of not less than 30 days to remedy or correct the purported
breaching conduct.

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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 during
the Term for Good Reason. “Good Reason” shall exist upon the occurrence, without
Executive’s express written consent, of any of the following events:

(1) a material adverse change in Executive’s authority, duties or
responsibilities (including, without limitation, the Company assigning to
Executive duties of a substantially nonexecutive or nonmanagerial nature) (other
than any such change directly attributable to the fact that the Company is no
longer publicly owned); provided, however, “Good Reason” shall not exist in the
event the Company hires a replacement chief financial officer during the Term.

(2) the Company shall materially reduce the Base Salary or annual bonus
opportunity of Executive;

(3) 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

(4) a material breach by the Company of Section 5(a) or Section 9(c) of this
Agreement.

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
the initial occurrence 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) Expiration of the Term. In the event the Executive is an employee of the
Company on January 15, 2014, the Executive’s employment with the Company shall
terminate as of such date and shall, for purposes of this Agreement, be deemed a
termination by the Company other than for Cause.

(e) 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

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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.

(f) 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 (other
than as set forth in Section 6(d) hereof) 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, (iii) January 15, 2014, if Executive’s employment is terminated as
a result of the expiration of the Term as provided for in Section 6(d) hereof
and (iv) 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 the termination of
Executive’s employment hereunder for any reason, 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
Sections 7(e) and 7(f) hereof and the conditions set forth below, Executive
shall be entitled to the following additional payments:

(a) Good Reason; Other than for Cause; Death or Disability. If the Company shall
terminate Executive’s employment other than for Cause (including for this
purpose, any termination pursuant to Section 6(d) hereof), or the Executive
shall terminate his employment for Good Reason, or Executive’s employment
terminates due to death or Disability:

(1) on the first business day following the conclusion of the fourteenth
(14) day calendar period following the Date of Termination, the Company shall
pay to Executive a cash severance payment in an amount equal to $1,072,800.

(2) in satisfaction of the bonus Executive would otherwise be eligible to earn
under the short-term incentive plan in respect of the 2013 calendar year, the
Company shall pay to Executive an amount equal to the annual bonus, if any, to
which the Executive would have been entitled for the year of 2013 had
Executive’s employment with the Company not been terminated, as determined in
accordance with the terms and conditions of the short-term incentive plan of the
Company. Such amount, if any, shall be paid on the date when such amounts would
otherwise have been payable to the Executive

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if Executive’s employment with the Company had not terminated as determined in
accordance with the terms and conditions of the short-term incentive plan of the
Company. Executive acknowledges that he will not participate in the Company’s
short-term incentive plan for the 2014 calendar year.

(3) in satisfaction of the bonus Executive would otherwise be eligible to earn
under the long-term incentive plan in respect of the 2013 calendar year, the
Company shall pay to Executive an amount equal to the bonus, if any, to which
the Executive would have been entitled for the year of 2013 had Executive’s
employment with the Company not been terminated, as determined in accordance
with the terms and conditions of the long-term incentive plan of the Company.
Such amount, if any, and any amounts previously earned by Executive under the
long-term incentive plan shall be paid on the date when such amounts would
otherwise have been payable to the Executive if Executive’s employment with the
Company had not terminated as determined in accordance with the terms and
conditions of the long-term incentive plan of the Company. Executive
acknowledges that he will not participate in the Company’s long-term incentive
plan for the 2014 calendar year.

(4) For a period of 30 months following the Date of Termination (the “Benefit
Continuation Period”), the Executive shall be treated as if he had continued to
be an Executive for all purposes under the Company’s health insurance plan and
dental insurance plan; or if the Executive is prohibited from participating in
such plans, the Company shall otherwise provide such benefits. Executive shall
be responsible for any costs for such insurance coverage; provided, however,
that the Company will pay to Executive a lump sum payment equal to the monthly
employer subsidy of such costs for the duration of the Benefit Continuation
Period, plus an amount necessary to cover any incremental taxes incurred by
Executive related to such payment. Following the Benefit Continuation Period,
the Executive shall be entitled to receive continuation coverage under Part 6 of
Title I of ERISA by treating the end of this period as the applicable qualifying
event (i.e., as a termination of employment) for the purposes of ERISA
Section 603(2) and with the concurrent loss of coverage occurring on the same
date, to the extent allowed by applicable law.

(5) For the Benefit Continuation Period, the Company shall maintain in force the
Executive’s life insurance in effect under the Company’s voluntary life
insurance benefit plan as of the Date of Termination. Executive shall be
responsible for any costs for such insurance coverage; provided, however, that
the Company will pay to Executive a lump sum payment equal to the monthly
employer subsidy of such costs for the duration of the Benefit Continuation
Period, plus an amount necessary to cover any incremental taxes incurred by
Executive related to such payment. For purposes of clarification, the portion of
the premiums in respect of such plan for which Executive and Company are
responsible, respectively, shall be the same as the portion for which Company
and Executive are responsible, respectively, immediately prior to the Date of
Termination.

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(6) For the Benefit Continuation Period, the Company shall provide short-term
and long-term disability insurance benefits to Executive equivalent to the
coverage that the Executive would have had if he had remained employed under the
disability insurance plans applicable to Executive on the Date of Termination.
Executive shall be responsible for any costs for such insurance coverage;
provided, however, that the Company will pay to Executive a lump sum payment
equal to the monthly employer subsidy of such costs for the duration of the
Benefit Continuation Period, plus an amount necessary to cover any incremental
taxes incurred by Executive related to such payment. Should Executive become
disabled during such period, Executive shall be entitled to receive such
benefits, and for such duration, as the applicable plan provides. For purposes
of clarification, the portion of the premiums in respect of such short-term and
long-term disability benefits for which Executive and Company are responsible,
respectively shall be the same as the portion for which Executive and Company
are responsible, respectively, immediately prior to the Date of Termination.

(7) Any outstanding unvested stock options or performance shares held by
Executive on the Date of Termination shall continue to vest in accordance with
their original terms (including any related performance measures) through
July 15, 2015 as if Executive had remained an employee of the Company through
the end of such period and any such stock option or performance shares that has
not vested as of the conclusion of such period shall be immediately cancelled
and forfeited as of such date. In addition, Executive shall have the right to
continue to exercise any outstanding vested stock options held by Executive
through July 15, 2015; provided that in no event shall Executive be entitled to
exercise any such option beyond the original expiration date of such option. Any
outstanding restricted stock award held by Executive as of the Date of
Termination that would have vested on or before April 15, 2016 had Executive
remained an employee of the Company through the end of such date shall be
immediately vested as of the Date of Termination and any restricted stock award
that would not have vested as of the conclusion of such period shall be
immediately cancelled and forfeited as of such date.

(8) Notwithstanding anything in this Agreement to the contrary, in no event
shall the provision of in-kind benefits pursuant to this Section 7 during any
taxable year of Executive affect the provision of in-kind benefits pursuant to
this Section 7 in any other taxable year of Executive.

(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 or Disability) during the Term, this
Agreement shall terminate without further additional obligations to Executive
under this Agreement.

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(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
owed to the Executive hereunder; or in the event of no designated beneficiary,
the remaining payments shall be made to Executive’s estate.

(e) General Release of Claims. Notwithstanding anything herein to the contrary,
the amounts payable pursuant to this Section 7 are subject to the condition that
Executive (or Executive’s guardian or executor, if applicable) has delivered to
the Company an executed copy of an irrevocable general release of claims in the
form attached hereto as Exhibit A on the Date of Termination.

(f) Consulting Agreement. Notwithstanding anything herein to the contrary, the
amounts payable pursuant to this Section 7 are subject to the condition that
Executive has delivered to the Company an executed copy of the Consulting
Agreement in the form attached hereto as Exhibit B (the “Consulting Agreement”)
on the Date of Termination unless such termination is a result of Executive’s
death, Disability or for Cause. The Company agrees to execute the Consulting
Agreement unless Executive’s termination is a result of Executive’s death,
Disability or for Cause.

(g) Six Month Delay for Specified Employee. Notwithstanding anything herein to
the contrary, if at the time of Executive’s separation from service Executive is
a “specified employee” as defined in Section 409A of the Internal Revenue Code
of 1986, as amended and the regulations promulgated thereunder (the “Code”) and
the deferral of the commencement of any payments or benefits otherwise payable
hereunder is necessary in order to prevent any accelerated or additional tax
under Section 409A of the Code, then the payments to which Executive would
otherwise be entitled during the first six months following his separation from
service shall be deferred and accumulated (without any reduction in such
payments or benefits ultimately paid or provided to Executive) for a period of
six months from the date of separation from service and paid in a lump sum on
the first day of the seventh month following such separation from service (or,
if earlier, the date of the Executive’s death), together with interest during
such period at a rate computed by adding 2.00% to the Prime Rate as published in
the Money Rates section of the Wall Street Journal, or other equivalent
publication if the Wall Street Journal no longer publishes such information, on
the first publication date of the Wall Street Journal or equivalent publication
after the date of Executive’s separation from service (provided that if more
than one such Prime Rate is published on any given day, the highest of such
published rates shall be used).

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 incurred in connection therewith, including any litigation to
enforce any arbitration award.

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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, its Parent and their 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 its affiliates that specifically provide for severance payments,
other than the Change in Control Severance Agreement between the Company and
Executive (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. From the Effective Date until January 15, 2016 (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; provided, however,
that the foregoing shall not restrict Executive or any other person from
conducting general solicitations or advertisements not directed specifically at
employees of the Company or its affiliates, or from employing any employee who
responds to any such general solicitation or advertisement or who otherwise
initiates a request for employment. 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

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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. This Section 13 shall survive this Agreement.

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:

If to Executive:

Richard A. Lechleiter

601 Club Lane

Louisville, KY 40207

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 Commonwealth of Kentucky.

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.

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20. Survival. Any provision 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.

21. Cancellation of Prior Agreement. The Executive hereby acknowledges and
agrees that this Agreement is intended to and does hereby replace that certain
employment agreement dated December18, 2008, between the Company and the
Executive, and that such agreement is cancelled, terminated and of no further
force and effect.

22. Section 409A. If any provision of this Agreement (or any award of
compensation or benefits provided under this Agreement) would cause Executive to
incur any additional tax or interest under Section 409A of the Code, the Company
shall reform such provision to comply with 409A and agrees to maintain, to the
maximum extent practicable without violating 409A of the Code, the original
intent and economic benefit to Executive of the applicable provision; provided
that nothing herein shall require the Company to provide Executive with any
gross-up for any tax, interest or penalty incurred by Executive under
Section 409A of the Code.

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

 

KINDRED HEALTHCARE OPERATING, INC. By:   /s/ Paul J. Diaz   Paul J. Diaz   Chief
Executive Officer Solely for the purpose of Section 7 and Section 9 KINDRED
HEALTHCARE, INC. By:   /s/ Paul J. Diaz   Paul J. Diaz   Chief Executive Officer
/s/ Richard A. Lechleiter RICHARD A. LECHLEITER

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EXHIBIT A

This Separation Agreement and Release of Claims (“Agreement”) is entered into by
Richard A. Lechleiter and all of his agents, successors and assigns
(“Employee”), and Kindred Healthcare Operating, Inc. (“Kindred”) and all
companies related to Kindred and all of its affiliates, subsidiaries or related
companies, past and present (collectively, the “Company”).

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

WHEREAS, Employee acknowledges the cash payments and other consideration
provided to Employee under the terms of that Employment Agreement dated July 10,
2013 (the “Employment Agreement”).

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

1. Resignation. Employee is hereby terminated from all capacities and positions
with the Company effective January 15, 2014 (“Date of Termination”).

2. Employee Acknowledgment and Release. Employee expressly acknowledges that the
cash payments and other consideration provided to Employee under Section 7 of
the Employment Agreement include consideration for the settlement, waiver,
release and discharge of any and all claims or actions arising from Employee’s
employment, the terms and conditions of Employee’s employment, or Employee’s
termination of employment with the Company, including claims of employment
discrimination, wrongful termination, unemployment compensation or any claim
arising under law or equity, express or implied contract, tort, public policy,
common law or any federal, state or local statute, ordinance, regulation or
constitutional provision. In addition, Employee expressly acknowledges that such
payments include consideration for the satisfaction, settlement, waiver, release
and discharge of any and all amounts that may otherwise be due to Employee under
the Company’s short-term incentive plan and the Company’s long-term incentive
plan.

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

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

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

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

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

3. Employee Representations, Acknowledgements and Affirmations. Employee
represents, acknowledges and affirms as follows:

(a) Employee has not filed, caused to be filed, or presently is a party to any
claim, complaint, or action against the Company;

(b) Except as expressly provided in the Employment Agreement, Employee has
received all compensation, wages, bonuses, commissions, and/or benefits to which
Employee may be entitled, other than the Company’s 401(k) plan if Employee is a
plan participant and so vested;

(c) Employee affirms that he has been granted all leave to which he is/was
entitled under the Family and Medical Leave Act or related state or local leave
or disability accommodation laws and has not been subjected to retaliation for
taking such leave;

(d) Employee has no known workplace injuries or occupational diseases and
Employee has not been subjected to workers compensation retaliation;

(e) Employee has not divulged the Company’s proprietary or confidential
information and will maintain the confidentiality of such information consistent
with the Company’s policies and common law;

(f) Employee has no knowledge of any facts or circumstances that could
constitute a violation of the Federal False Claims Act or similar state laws,
and, with respect to the Company’s business, Employee has not reported any such
potential claims to any government agency;

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(g) Employee agrees that the Company has not retaliated against Employee for
reporting any allegations of wrongdoing by the Company or its officers,
including any allegations of corporate fraud;

(h) Employee has returned all files, memoranda, documents, records, electronic
records, credit cards, keys, passwords, REACH token, identification badge or
other the Company property in his possession or will do so before accepting any
monetary payment pursuant to the Employment Agreement; and

(i) Employee affirms that all of the Company’s decisions regarding Employee’s
pay and benefits were not discriminatory based on age, disability, race, color,
sex, religion, national origin or any other classification protected by law.

4. Released Claims. Both parties acknowledge that this Agreement does not limit
either party’s right, where applicable, to file or participate in an
investigative proceeding of any federal, state or local governmental agency. To
the extent permitted by law, Employee agrees that if any such claim is made,
Employee shall not be entitled to recover any individual monetary relief or
other individual remedies.

5. Confidentiality. Employee and the Company agree to keep the contents and
terms of this Agreement confidential and not to voluntarily disclose the terms
or amount of settlement to third parties. The only exception is that Employee
may reveal the terms of this Agreement to his spouse, attorney, tax preparer or
as otherwise required by law. The Company may reveal the terms of this Agreement
to its attorneys, accountants, financial advisors, managerial employees, and any
disclosure required by law or business necessity. In the event that either party
breaches the confidentiality of this Agreement, the breaching party understands
that the other party shall have the right to pursue all appropriate legal
relief, including, but not limited to, attorneys’ fees and costs.

6. Public Statement. Employee further agrees not to make derogatory or negative
remarks or comments about the Company, its affiliates and their respective
directors, officers, shareholders, agents or employees, to any third parties,
and not to otherwise defame the Company in any manner, including through any
form of social media, except that Employee is privileged to comply with any
legal obligation, including responding to a duly-authorized subpoena, to testify
under oath or to provide documents that relate to the Company. In the event that
Employee defames the Company, its affiliates and their respective directors,
officers, shareholders, agents or employees, Employee understands that the
Company shall have the right to pursue all appropriate legal relief, including
but not limited to, attorneys’ fees and costs, and reimbursement of all monies
paid under the Employment Agreement. Company agrees not to make derogatory or
negative remarks or comments about Employee to any third parties, nor to
otherwise defame the Employee in any manner. In the event that the Company
defames Employee, Company understands that the Employee shall have the right to
pursue all appropriate legal relief, including but not limited to, attorneys’
fees and costs.

7. Ability to Revoke.

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

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

(c) Any revocation of this Agreement must be made in writing and must actually
be received by Joseph L. Landenwich, Kindred Healthcare, Inc., 680 South Fourth
Street, Louisville, Kentucky 40202, before the expiration of the revocation
period.

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

9. Cooperation. Employee agrees that should the Company request Employee’s
cooperation in connection with litigation, government investigations or other
administrative or legal proceeding arising out of events that are alleged to
have occurred during, or which relate to, Employee’s employment with the
Company, Employee shall cooperate fully with the Company or its designated
agents. Employee shall be paid $350 per hour for all time required by the
Company pursuant to this Section 9, and the Company agrees, upon prior written
notice by Employee and approval of the need for legal services by the Company
(which approval shall not be unreasonably withheld), to pay reasonable
attorney’s fees incurred by Employee as a result of the compliance obligations
of Employee under this Section 9. Employee further agrees to cooperate fully in
disclosing to the Company or its designated agents, any information requested of
him which Employee obtained during the course and scope of his employment with
the Company, and to which other employees of the Company were not privy. In the
event the Employee fails to abide by this Section 9, Employee understands that
the Company shall have the right to pursue reimbursement or setoff of all monies
and benefits paid or to be paid under the Employment Agreement.

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

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11. Other Severance Benefits. Except as specifically provided in this Agreement,
Employee hereby agrees that in consideration for the payments to be received
under the Employment Agreement, Employee waives any and all rights to any
payments or benefits under any plans, programs, contracts or arrangements of the
Company that provide for severance payments or benefits upon a termination of
employment, including, without limitation, the Company’s short-term incentive
plan, the Company’s long-term incentive plan, and any Change in Control
Severance Agreement between Employee and the Company. Employee and the Company
acknowledge that Employee is not waiving any rights to amounts owed Employee
under the Company’s Deferred Compensation Plan.

12. Withholding. All payments to be made to Employee under the Employment
Agreement will be subject to all applicable required withholding of taxes.

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

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

If to Employee:

Richard A. Lechleiter

601 Club Lane

Louisville, KY 40207

If to Company:

Kindred Healthcare Operating, Inc.

680 South Fourth Street

Louisville, KY 40202

Attn: Legal Department

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

16. 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.

17. Entire Agreement; Amendment. This Agreement and the Employment Agreement
contains the entire agreement of the parties with respect to the subject matter
hereof and supersedes all prior agreements, promises, covenants, arrangements,
communications,

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representations and warranties between them, whether written or oral with
respect to the subject matter hereof including, without limitation, the Change
in Control Severance Agreement between Employee and the Company. No provisions
of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing signed by Employee and
a designated officer of the Company.

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 one or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

 

KINDRED HEALTHCARE OPERATING, INC. By:     Title:     EMPLOYEE   RICHARD A.
LECHLEITER

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EXHIBIT B

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (the “Agreement”) is entered into as of the 15th day
of January, 2014 between Kindred Healthcare Operating, Inc., (“Kindred”) and
Richard A. Lechleiter (“Consultant”).

WHEREAS, Kindred desires that Consultant provide certain services as requested
by Kindred and Consultant has agreed to provide such services pursuant to the
terms of this Agreement.

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

1. Consulting Services. Subject to the terms and conditions hereinafter set
forth, Kindred and Consultant hereby agree that Consultant will provide services
to Kindred as follows during the Term (as defined):

A. Services to be Provided. During the Term, Consultant agrees to work between
ten to fifteen (10-15) hours per week providing consulting services as those
services are generally set forth on Exhibit A and performing such other tasks
reasonably requested of Consultant by Kindred (the “Consulting Services”). The
Consultant shall perform the Consulting Services diligently, with his best
efforts and to the standards generally recognized in the industry.

B. Extent of Services. Consultant shall provide the Consulting Services to
Kindred during the Term on the dates and times reasonably requested by Kindred
(subject to reasonable time off as requested by Consultant in advance). Kindred
shall provide Consultant with reasonable notice prior to requesting his
services. Consultant shall not take any action or hold himself out as
representing Kindred on any matter until directed to do so by Kindred. Except as
otherwise provided herein, Consultant shall be free to provide services,
including similar consulting services, to other individuals, companies or
entities.

C. Location for Providing Services. Consultant shall provide the Consulting
Services requested by Kindred at either the principal office of Kindred or such
other places agreed to between Kindred and the Consultant.

D. Ownership of Work Product. Any information, reports, ideas, data or work
product produced or developed by Consultant or with third parties in the course
of providing the Consulting Services hereunder will be the exclusive property of
Kindred.

2. Consulting Fees. For the Consulting Services to be rendered by Consultant
hereunder and in further consideration for Consultant’s other promises and
covenants herein, Kindred shall pay Consultant a consulting fee of $20,833 per
month (the “Consulting Fee”) on the first day of each month during the Term.
Kindred also shall promptly reimburse Consultant for all reasonable,
pre-approved expenses incurred by Consultant in performing the services
requested by Kindred, including all travel expenses, provided that Consultant
properly accounts therefor in accordance with Kindred’s established policies.
Kindred also will provide Consultant with a laptop computer and access to

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Kindred’s information technology systems as necessary for Consultant to perform
the services under this Agreement. During the Term, Consultant shall be treated
as an independent contractor and Kindred shall not withhold amounts for taxes
from the Consulting Fee, but shall issue a Form 1099 with respect to the
Consulting Fees paid hereunder.

3. Term of Agreement. This Agreement shall become effective upon execution by
both parties and shall expire on January 15, 2015 (the “Term”). Kindred may
terminate this Agreement upon written notice to Consultant in the event of:
(a) the death or disability of Consultant, (b) a material breach of any of the
terms of this Agreement by Consultant, subject to prior written notice to
Consultant from the Company and a reasonable opportunity for Consultant to cure
the breach, (c) the commission by Consultant of any act of fraud or
embezzlement, (d) any material violation of Kindred’s policies known to
Consultant, or (e) the conviction of Consultant for any financial crime or any
felony. On or after July 15, 2014, Consultant may terminate this Agreement upon
60 days advance written notice to Kindred. Notwithstanding anything in this
Agreement to the contrary, the terms of Sections 4, 5, 6, 8, and 10 shall
survive the termination of this Agreement.

4. Consulting Fees Upon Termination. If this Agreement is terminated by Kindred
pursuant to Section 3, Kindred shall pay Consultant (or if Consultant is
deceased, Consultant’s designated beneficiary or absent such designation, to
Consultant’s estate) the Consulting Fees earned through the date of termination.

5. Confidential Information. Consultant agrees that from and after the date
hereof, Consultant shall maintain at all times the confidentiality of any and
all confidential and proprietary information of Kindred and its affiliates
including, but not limited to, documents, financial and statistical data,
internal reports and correspondence, files, records, proposals, business
methods, names of customers and vendors, marketing plans, documents, data
procedures, software (including source codes, processes, applications and
formulae related thereto), research and development data, and any related
documentation known by Consultant or created or used by Consultant in the course
of providing the services requested hereunder (collectively, the “Proprietary
Materials”). Any information of Kindred or its affiliates, whether written or
not, shall be considered confidential and proprietary by the parties whether or
not designated as such. Such Proprietary Materials shall at all times remain the
property of Kindred and shall be deemed to have been furnished to Consultant in
confidence and solely in connection with Consultant’s obligations under this
Agreement. Consultant agrees not to share or use any of the Proprietary
Materials for any purpose other than as permitted or required for the
performance by Consultant of Consultant’s obligations hereunder. Further,
without written permission, Consultant shall not share or use any Proprietary
Materials with any other client or party, it being understood that to do so
would violate this confidentiality provision. Upon expiration or termination for
any reason of this Agreement, and upon request, Consultant shall immediately
deliver to Kindred all Proprietary Materials, including copies, shall make no
further use of such Proprietary Materials, and shall make reasonable efforts to
ensure that no further use thereof is made by Consultant’s agents or affiliates.

6. Non-Solicit. From the date of this Agreement until January 15, 2016 (the
“Non-Solicitation Period”), Consultant shall not directly or indirectly,
individually or on behalf of any Person (as defined below) other than Kindred,
aid or endeavor to solicit or induce any of Kindred’s or its affiliates’
employees to leave their employment with Kindred or such affiliates in order to
accept employment with Consultant or any other Person; provided, however, that
the foregoing shall not restrict Consultant or any other Person from conducting
general solicitations or advertisements not directed specifically at

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employees of Kindred or its affiliates, or from employing any employee who
responds to any such general solicitation or advertisement or who otherwise
initiates a request for employment (the “Non-Solicitation Covenant”). For
purposes of this Agreement, the term “Person” shall mean any individual,
partnership, corporation, limited liability company, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof. In the event that Consultant violates the Non-Solicitation
Covenant, Kindred shall have the right to recoup the entire amount of any
Consulting Fees, if any, already paid to Consultant pursuant to this Agreement.
If the restrictions set forth in this Section 6 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 Consultant will be subject to a
non-solicitation covenant which is reasonable under the circumstances and
enforceable by Kindred. It is agreed that no adequate remedy at law exists for
the parties for violation of this Section 6 and that this Section 6 may be
enforced by any equitable remedy, including specific performance and injunction,
without limiting the right of Kindred to proceed at law to obtain such relief as
may be available to it including, but not limited to, the right to recoup
Consulting Fees. The running of the Non-solicitation Period shall be tolled for
any period of time during which Consultant is in violation of any covenant
contained herein, for any reason whatsoever. Kindred shall have the right to
advise any of Consultant’s prospective or then-current employers of the
provisions of this Agreement without liability. Kindred’s right to enforce the
provisions of this Agreement shall not be affected by the existence, or
non-existence, of any other similar agreement, or by Kindred’s failure to
exercise any of its rights under this Agreement or any other similar agreement
or to have in effect a similar agreement. This Section 6 shall survive this
Agreement.

7. Entire Agreement. This Agreement constitutes the entire agreement between
Consultant and Kindred with respect to the subject matter hereof and no prior or
collateral promises or conditions, whether written or oral, in connection with
or with respect to the subject matter not incorporated herein shall be binding
upon the parties. No modification, extension, renewal, recision, or waiver of
any of the provisions contained herein or any future representation, promise or
condition in connection with the subject matter hereof, shall be binding upon
any of the parties unless made in writing and fully executed by all the parties.

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. Kindred shall pay all
costs of the arbitration and all reasonable attorneys’ and accountants’ fees of
Consultant incurred in connection therewith, including any litigation to enforce
any arbitration award.

9. Waiver. The failure of any of the parties to enforce any provision of this
Agreement cannot be construed to be a waiver of such provision or of the right
thereafter to enforce the same, and no waiver of any breach shall be construed
as an agreement to waive any subsequent breach of the same or any other
provision.

10. Assignment. Consultant may not assign Consultant’s interest in or delegate
the performance of Consultant’s obligations under this Agreement to any other
person without obtaining the prior written consent of Kindred. This Agreement
shall inure to the benefit of and be binding upon Kindred, its parent company
and their successors and assigns. Kindred shall require any successor

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(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of Kindred, to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that Kindred would be required to perform it if no such succession had
taken place. As used in this Agreement, “Kindred” shall mean Kindred 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.

11. Legal Relationship. Consultant agrees that, regarding all matters relating
to this Agreement, Consultant shall be an independent contractor and not an
agent or employee of Kindred and shall not hold himself out as a legal
representative, agent, joint venturer, partner, or employee of Kindred for any
purpose whatsoever. Consultant has no right or authority to assume or create any
obligations of any kind or to make any representations or warranties, whether
express or implied, on behalf of Kindred or to bind Kindred in any respect
whatsoever (and shall not hold himself out as having such authority).

12. Notices. All notices and other communications hereunder shall be in writing
and shall be delivered by hand, by prepaid first class registered mail or
certified mail, return receipt requested, by courier, by telex, by overnight
delivery service or by facsimiled, addressed as follows:

 

   If to Kindred:   

Kindred Healthcare Operating, Inc.

680 South Fourth Avenue

Louisville, Kentucky 40202

Attn: General Counsel

   If to Consultant:   

Richard A. Lechleiter

601 Club Lane

Louisville, KY 40207

13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky. The parties hereto
consent to the exclusive jurisdiction of the Jefferson County, Kentucky Circuit
Court or the United States District Court, Western District of Kentucky at
Louisville, and hereby waive any objection to the jurisdiction of, or venue of
any action instituted in, such court.

14. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and when taken together shall
constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first above written.

 

KINDRED HEALTHCARE OPERATING, INC. By:  

 

Title:  

 

CONSULTANT

 

RICHARD A. LECHLEITER

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EXHIBIT A

Consulting Services

- Accounting matters including monthly and quarterly accounting close

- Assistance with accounting issues involving acquisitions and divestitures

- Assistance with accounting issues associated with the Company’s strategic plan

- Assistance with the Company’s annual budget and related items

- Assistance with investor relations matters