Document:

EX-10.1

 EXHIBIT 10.1 

EMPLOYMENT AGREEMENT 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of the 28th day of
October, 2013 (the “Effective Date”), by and between Kindred Healthcare Operating, Inc., a Delaware corporation (the “Company”), and Richard E. Chapman (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 December 31, 2013 (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 Administrative and Information 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. 

(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. 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 one or more replacements for Executive 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 December 31, 2013, 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 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) December 31, 2013, 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) 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 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. 
 (2) 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. 

 (3) For a period of 24 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. 
 (4) 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. 
 (5) 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. 

 (6) Any outstanding unvested stock options held by Executive on the Date of
Termination shall be immediately cancelled and forfeited as of such date. Any vested stock options shall remain outstanding in accordance with the terms of any such stock option award agreement. Any 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 March 31, 2014 as if Executive had remained an employee of the Company through the end of such period. Any
outstanding restricted stock award held by Executive as of the Date of Termination that would have vested on or before June 30, 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. 

(7) Executive shall be allowed to retain the Company’s computer equipment currently located at Executive’s primary
residence. 
 (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. 

(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. 
 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-Competition. The provisions of this Section 13 and any related provisions shall survive termination of this Agreement
and/or Executive’s employment with the Company and do not supersede, but are in addition to and not in lieu of, any other agreements signed by Executive concerning non-competition, confidentiality, solicitation of employees, or trade secrets,
and are included in consideration for the Company entering into this Agreement. Executive’s right to receive and retain the benefits specified in this Agreement is conditioned upon Executive’s compliance with the terms of this
Section 13: 
 (a) Non-Compete. 

(1) From the period beginning on the Effective Date and ending on December 31, 2015 (the “Restricted Period”),
the Executive shall not, without prior written approval of the Company’s Chief Executive Officer, become an officer, employee, agent, partner, member or director of, or provide any services or advice to or for, any business enterprise in
substantial direct competition (as defined in Section 13(a)(2) below) with the Company or its direct or indirect subsidiaries. The above constraint shall not prevent the Executive from making passive investments, not to exceed five percent
(5%) of the total equity value, in any enterprise where Executive’s services or advice is not required or provided. 

(2) For purposes of this Section 13, a business enterprise with which the Executive becomes associated as an officer,
employee, agent, partner, or director shall be considered in substantial direct competition with the Company or its direct or indirect subsidiaries if such entity competes in any business in which the Company or any of its direct or indirect
subsidiaries is engaged or provides services or products of a type which is marketed, sold or provided by the Company or any of its direct or indirect subsidiaries or affiliates (including but not limited to any product or service which the Company
or any such other entity is developing) within the state or country where the Company or any such direct or indirect subsidiary or affiliate then provides or markets or plans to provide or market) any such service or product as of the Date of
Termination. 
 (3) During the Restricted Period, the Executive shall not, without prior written approval of the
Company’s Chief Executive Officer, directly or indirectly, solicit, provide to, take away, or attempt to take away or provide to any customer or solicited prospect of the Company or any of its direct or indirect subsidiaries any business of a
type which the Company or such subsidiary provides or markets or which is competitive with any business then engaged in (or product or services marketed or planned to be marketed) by the Company or any of its direct or indirect subsidiaries; or
induce or attempt to induce any such customer to reduce such customer’s business with that business entity, or divert any such customer’s business from the Company and its direct or indirect subsidiaries; or discuss that subject with any
such customer. 

 (b) Non-Solicit. During the Restricted 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 subsidiaries’ or affiliates’ employees to leave their employment with the Company
or such subsidiaries or affiliates in order to accept employment with Executive or any other person, corporation, limited liability company, partnership, sole proprietorship or other entity. 

(c) Provisions Relating To Non-Competition and Non-Solicitation. The provisions of this Section 13 shall survive
the termination of Executive’s employment and this Agreement and shall not be affected by any subsequent changes in employment terms, positions, duties, responsibilities, authority, or employment termination, permitted or contemplated by this
Agreement. To the extent that any covenant set forth in this Section 13 of this Agreement shall be determined to be invalid or unenforceable in any respect or to any extent, the covenant shall not be void or rendered invalid, but instead shall
be automatically amended for such lesser term, to such lesser extent, or in such other lesser degree, as will grant the Company the maximum protection and restrictions on the Executive’s activities permitted by applicable law in such
circumstances. The Company shall have the right to injunctive relief to restrain any breach or threatened breach of any provisions in this Section 13 in addition to and not in lieu of any rights to recover damages or cease making payments under
this Agreement. The Company shall have the right to advise any prospective or then current employer of Executive of the provisions of this Agreement without liability. The Company’s right to enforce the provisions of this Agreement shall not be
affected by the existence, or non-existence, of any other similar agreement for any other executive, or by the Company’s failure to exercise any of its rights under this Agreement or any other similar agreement or to have in effect a similar
agreement for any other employee. 
 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
E. Chapman 
 11200 Bodley Drive 

Louisville, KY 40223 
 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. 
 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 December 18, 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 E. Chapman
	RICHARD E. CHAPMAN

 EXHIBIT A 

This Separation Agreement and Release of Claims (“Agreement”) is entered into by Richard E. Chapman 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 October 28, 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 December 31, 2013
(“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. 

 (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; 
 (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. 
 (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 further agrees to cooperate fully in disclosing to the Company or its designated agents, any information which Employee obtained during the course and scope of his employment with
the Company, and to which other employees of the Company were not privy. 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. 
 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 E. Chapman 
 11200 Bodley
Drive 
 Louisville, KY 40223 

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, representations and warranties between them, whether written or oral with
respect to the subject matter hereof. No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by Employee and a designated officer of the Company. 

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 E. CHAPMAN

 EXHIBIT B 

CONSULTING AGREEMENT 

THIS CONSULTING AGREEMENT (the “Agreement”) is entered into as of the 1st day of January, 2014 (the “Effective Date”)
between Kindred Healthcare Operating, Inc., (“Kindred”) and Richard E. Chapman (“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 up to 35 hours per month 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. 

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 $49,875 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 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 December 31, 2014 (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. Notwithstanding anything in this Agreement to the contrary, the terms of Sections 4, 5, 6, 8, 10 and
12 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-Competition;
Non-Solicitation. The provisions of this Section 6 and any related provisions shall survive termination of this Agreement and do not supersede, but are in addition to and not in lieu of, any other agreements signed by Consultant concerning
non-competition, confidentiality, solicitation of employees, or trade secrets, and are included in consideration for Kindred entering into this Agreement: 

 (a) Non-Compete. 

(1) From the period beginning on the Effective Date and ending on December 31, 2015 (the “Restricted Period”),
the Consultant shall not, without prior written approval of Kindred’s Chief Executive Officer, become an officer, employee, agent, partner, member or director of, or provide any services or advice to or for, any business enterprise in
substantial direct competition (as defined in Section 6(a)(2) below) with Kindred or its direct or indirect subsidiaries. The above constraint shall not prevent the Consultant from making passive investments, not to exceed five percent
(5%) of the total equity value, in any enterprise where Consultant’s services or advice is not required or provided. 

(2) For purposes of this Section 6, a business enterprise with which the Consultant becomes associated as an officer,
employee, agent, partner, member or director shall be considered in substantial direct competition with Kindred or its direct or indirect subsidiaries if such entity competes in any business in which Kindred or any of its direct or indirect
subsidiaries is engaged or provides services or products of a type which is marketed, sold or provided by Kindred or any of its direct or indirect subsidiaries or affiliates (including but not limited to any product or service which Kindred or any
such other entity is developing) within the state or country where Kindred or any such direct or indirect subsidiary or affiliate then provides or markets or plans to provide or market) any such service or product as of the Effective Date. 

(3) During the Restricted Period, the Consultant shall not, without prior written approval of Kindred’s Chief Executive
Officer, directly or indirectly, solicit, provide to, take away, or attempt to take away or provide to any customer or solicited prospect of Kindred or any of its direct or indirect subsidiaries any business of a type which Kindred or such
subsidiary provides or markets or which is competitive with any business then engaged in (or product or services marketed or planned to be marketed) by Kindred or any of its direct or indirect subsidiaries; or induce or attempt to induce any such
customer to reduce such customer’s business with that business entity, or divert any such customer’s business from Kindred and its direct or indirect subsidiaries; or discuss that subject with any such customer. 

(b) Non-Solicit. During the Restricted Period, Consultant shall not directly or indirectly, individually or on behalf of any person
other than Kindred, aid or endeavor to solicit or induce any of Kindred’s or its subsidiaries’ or affiliates’ employees to leave their employment with Kindred or such subsidiaries or affiliates in order to accept employment with
Consultant or any other person, corporation, limited liability company, partnership, sole proprietorship or other entity. 
 (c)
Provisions Relating To Non-Competition and Non-Solicitation. The provisions of this Section 6 shall survive the termination of this Agreement and shall not be affected by any subsequent changes in status, positions, duties,
responsibilities, or authority permitted or contemplated by this Agreement. To the extent that any covenant set forth in this Section 6 of this Agreement shall be determined to be invalid or unenforceable in any respect or to any extent, the
covenant shall not be void or rendered invalid, but instead shall be automatically amended for such lesser term, to such lesser extent, or in such other lesser degree, as will grant Kindred the maximum protection and restrictions on the
Consultant’s activities permitted by applicable law in such circumstances. Kindred shall have the right to injunctive relief to restrain any breach or threatened breach of any provisions in this Section 6 in addition to and not in lieu of
any rights to recover damages or cease making payments under this Agreement. Kindred shall have the right to advise any prospective or then current employer of Consultant 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 for any other executive, 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 for any other employee. 

 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 (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.
Indemnification. The parties agree to indemnify and hold each other, and their respective affiliates, officers, directors, employees, agents and assigns harmless from and against any damage, deficiency, loss, action, judgment, claim, penalty,
tax, cost or expense (including reasonable attorneys’ fees to the extent permitted by law) arising out of or resulting from any breach of this Agreement by the other party. 

 13. 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 facsimile, addressed as follows: 

 

			
	If to Kindred:	 	Kindred Healthcare Operating, Inc.
		 	680 South Fourth Avenue
		 	Louisville, Kentucky 40202
		 	Attn: General Counsel
		
	If to Consultant:	 	Richard E. Chapman
		 	11200 Bodley Drive
		 	Louisville, KY 40223

 14. 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. 
 15. 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. 
 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 E. CHAPMAN

 EXHIBIT A 

Consulting Services 
  

	•	 	Provide institutional knowledge and consultation regarding information technology and human resource strategies 

  

	•	 	Provide institutional knowledge and assist in the transition process for Kindred’s new chief information officer and chief people officer 

 

	•	 	Provide consultation regarding the information technology strategy for the integrated care market projectsEX-4.32

 Exhibit 4.32 

THIS NOTE IS A GLOBAL SECURITY REFERRED TO IN THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. THIS NOTE IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR NOTES IN DEFINITIVE CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. 
 UNLESS THIS NOTE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
  

			
	No. 1	  	Principal Amount: $450,000,000
	 CUSIP No. 48666K AT6
 ISIN No.
US48666KAT60
	  	 (or such other principal amount as

is set forth on Schedule A hereto)

 KB Home 

7.000% Senior Notes due 2021 

KB Home, a Delaware corporation (hereinafter called the “Company”, which term includes any successor
corporation under the Indenture referred to below), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of FOUR HUNDRED FIFTY MILLION DOLLARS ($450,000,000) or such other principal amount as is
set forth on Schedule A hereto on December 15, 2021, and to pay interest thereon from October 29, 2013, or from the most recent date to which interest has been paid or duly provided for, semiannually in arrears on June 15 and
December 15 of each year (each, an “Interest Payment Date”), commencing June 15, 2014, and at Maturity, at the rate of 7.000% per annum, until the principal hereof is paid or duly made available for payment. Interest
on this Note shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the June 1 or December 1 (whether or not a Business Day), as the
case may be, immediately preceding such Interest Payment Date. Any such interest which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Person who was the Holder
hereof on the relevant Regular Record Date by virtue of having been such Holder, and may be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice whereof 

 
shall be given to the Holder of this Note not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture. 

Payment of the principal of and premium, if any, and interest on this Note will be made at the Office or Agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided,
however, that, at the option of the Company, interest may be paid by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by transfer to an account maintained by the payee with a
bank located in the United States; and provided, further, that if this Note is a global Note registered in the name of a Depository or its nominee, then, anything in the Indenture or the Notes to the contrary notwithstanding, payments
of the principal of and premium, if any, and interest on this Note shall be made by wire transfer. 
 This Note is one of a
duly authorized issue of Securities of the Company (herein called the “Notes”) issued and to be issued in one or more series under an Indenture dated as of January 28, 2004 (the “Original Indenture”), as
amended and supplemented by the First Supplemental Indenture dated as of January 28, 2004 (the “First Supplemental Indenture”), the Second Supplemental Indenture dated as of June 30, 2004 (the “Second Supplemental
Indenture”), the Third Supplemental Indenture dated as of May 1, 2006 (the “Third Supplemental Indenture”), the Fourth Supplemental Indenture dated as of November 9, 2006 (the “Fourth Supplemental
Indenture”), the Fifth Supplemental Indenture dated as of August 17, 2007 (the “Fifth Supplemental Indenture”), the Sixth Supplemental Indenture dated as of January 30, 2012 (the “Sixth Supplemental
Indenture”), the Seventh Supplemental Indenture dated as of January 11, 2013 (the “Seventh Supplemental Indenture”) and the Eighth Supplemental Indenture dated as of March 12, 2013 (the “Eighth
Supplemental Indenture”; the Original Indenture, as amended and supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth
Supplemental Indenture, the Sixth Supplemental Indenture, the Seventh Supplemental Indenture, the Eighth Supplemental Indenture and all other indentures supplemental thereto, is herein called the “Indenture”), each among the
Company, the Guarantors and U.S. Bank National Association (successor in interest to SunTrust Bank), as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes, and the terms upon
which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated on the face hereof, initially limited (subject to exceptions provided in the Indenture and subject to the right of the Company to reopen such
series for issuance of additional Securities of such series upon the terms and subject to the conditions specified in the Indenture) in aggregate principal amount to $450,000,000. 

Payments of principal of and premium, if any, and interest on the Notes are fully, irrevocably and unconditionally guaranteed,
jointly and severally, by the Guarantors on the terms and subject to the limitations set forth in the Indenture. A Guarantor may be released from its obligations under the Indenture and those obligations may be reinstated, all on the terms and
subject to the conditions set forth in the Indenture. 
 The Notes may be redeemed, in whole at any time or from time to
time in part, at the Company’s option on any date (each, a “Redemption Date”). Prior to September 15, 2021, the Redemption Price for the Notes to be redeemed will be equal to the greater of: (a) 100% of the principal
amount of the Notes to be redeemed, and (b) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (exclusive of interest accrued to the applicable Redemption Date)

  
 2 

 
discounted to such Redemption Date on a semiannual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate plus 50 basis points, plus, in the case of both clause
(a) and (b) above, accrued and unpaid interest on the principal amount of the Notes being redeemed to, but excluding, such Redemption Date. On or after September 15, 2021 and until Maturity, the Redemption Price for the Notes to be
redeemed will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest on the principal amount of the Notes being redeemed to, but excluding, such Redemption Date. Notwithstanding the foregoing,
installments of interest on Notes whose Stated Maturity is on or prior to the relevant Redemption Date will be payable to the Holders of such Notes (or one or more Predecessor Securities) registered as such at the close of business on the relevant
Regular Record Date according to their terms and the provisions of the Indenture. 
 As used in this Note, the following
terms have the meanings set forth below: 
 “Treasury Rate” means, with respect to any Redemption Date for
the Notes: 
  

	 	(a)	 the yield, under the heading that represents the average for the immediately preceding week, appearing in the most recently published statistical
release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to
constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Final Maturity Date for the Notes, yields for
the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month); or

  

	 	(b)	 if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the
rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury
Price for such Redemption Date. 

 The Treasury Rate shall be calculated on the third Business Day preceding the
applicable Redemption Date. As used in the immediately preceding sentence and in the definition of “Reference Treasury Dealer Quotations” below, the term “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are authorized or obligated by law, regulation or executive order to close. 

“Comparable Treasury Issue” means, with respect to any Redemption Date for the Notes, the United States
Treasury security selected by the Independent Investment Bankers as having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes to be redeemed. 

“Independent Investment Bankers” means, with respect to any Redemption Date for the Notes, (a) Citigroup
Global Markets Inc. and its successors, (b) Credit Suisse Securities (USA) LLC and its successors, (c) Deutsche Bank Securities Inc. and its successors and (d) Merrill Lynch, Pierce, Fenner & Smith Incorporated and its
successors or, if either such firm or any successor to such firm, as the case may be, is unwilling or unable to select the Comparable Treasury Issue, the other firm exclusively or, if neither such firm or any successor to such firms, as the case may
be, is willing or able to select the 

  
 3 

 
Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee after consultation with the Company. 

“Comparable Treasury Price” means, with respect to any Redemption Date for the Notes: 

 

	 	(a)	 the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or 

  

	 	(b)	 if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. 

“Reference Treasury Dealer” means each of (a) Citigroup Global Markets Inc. and its successors,
(b) Credit Suisse Securities (USA) LLC and its successors, (c) Deutsche Bank Securities Inc. and its successors, (d) Merrill Lynch, Pierce, Fenner & Smith Incorporated and its successors (provided that for each of (a)-(d),
however, if such firm or any such successor, as the case may be, shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Trustee, after consultation with the Company, will
substitute therefor another Primary Treasury Dealer), and (d) one other Primary Treasury Dealer selected by the Trustee after consultation with the Company. 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any
Redemption Date for the Notes, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date. 

“Final Maturity Date” means December 15, 2021. 

Notice of any redemption by the Company will be mailed at least 30 days but not more than 60 days before any Redemption Date
to each Holder of Notes to be redeemed. If less than all the Notes are to be redeemed at the option of the Company, the Trustee will select, in such manner as it deems fair and appropriate, the Notes (or portions thereof) to be redeemed. Unless the
Company defaults in payment of the Redemption Price (including, without limitation, interest, if any, accrued to the applicable Redemption Date), on and after the applicable Redemption Date interest will cease to accrue on the Notes or portions
thereof called for redemption on such Redemption Date. 
 If a Change of Control Triggering Event occurs, unless the Company
has exercised its option to redeem the Notes by notifying the Holders of Notes to that effect as described above, the Company will be required to make an offer (a “Change of Control Offer”) to each Holder of Notes to repurchase all
or any part (equal to $2,000 or any integral multiples of $1,000 in excess thereof) of that Holder’s Notes on the terms set forth herein. In a Change of Control Offer, the Company will be required to offer payment in cash equal to 101% of the
aggregate principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased up to, but not including, the date of repurchase (a “Change of Control Payment”). Within 30 days following any
Change of Control Triggering Event or, at the Company’s option, prior to any Change of Control, but after public announcement of the transaction that constitutes or may constitute the Change of Control, notice will be given to Holders of the
Notes describing the transaction that constitutes or may constitute the Change of Control Triggering Event and offering to repurchase the Notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days
from the date that notice is given or, if the notice is given prior to the Change of Control, no earlier than 30 days and no later than 60 days from the date on which the Change of Control Triggering Event occurs, other than in each case as may be
required by law (a “Change of Control Payment Date”). The notice will, if mailed prior to the date of consummation of the Change of 

  
 4 

 
Control, state that the Change of Control Offer is conditioned on the Change of Control Triggering Event occurring on or prior to the applicable Change of Control Payment Date. 

On each Change of Control Payment Date, the Company will, to the extent lawful, accept for payment all Notes or portions of
Notes properly tendered and not withdrawn pursuant to the terms of the Change of Control Offer; deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and
deliver or cause to be delivered to the Trustee the Notes properly tendered and accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being repurchased. The Company will not be
required to make a Change of Control Offer upon the occurrence of a Change of Control Triggering Event if a third party makes such an offer in the manner, at the times and price and otherwise substantially in compliance with the requirements for an
offer made by the Company and the third party promptly purchases all Notes properly tendered and not withdrawn under its offer. In addition, the Company will not repurchase any Notes if there has occurred and is continuing on the Change of Control
Payment Date an Event of Default under the Indenture, other than a default in the payment of the Change of Control Payment upon a Change of Control Triggering Event. 

To the extent that the provisions of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or any other securities laws and regulations that are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event conflict with the Change of Control Offer provisions of the Notes,
the Company may comply with those securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control Offer provisions of the Notes by virtue of any such conflict. 

For purposes of the Change of Control Offer provisions of the Notes, the following terms will be applicable: 

“Change of Control” means the occurrence of any of the following: 

(1)        the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the Company’s assets and the assets of its subsidiaries, taken as a whole, to any person, other than to the
Company or one of its subsidiaries; 
 (2)        the consummation
of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
more than 50% of the Company’s outstanding Voting Stock or other Voting Stock into which the Company’s Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; 

(3)        the Company’s consolidation with, or the
Company’s merger with or into, any person, or any person consolidates with, or merges with or into, the Company, in either case, pursuant to a transaction in which any of the Company’s outstanding Voting Stock or the Voting Stock of such
other person is converted into or exchanged for cash, securities or other property, other than pursuant to a transaction in which shares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are
converted into or exchanged for, a majority of the Voting Stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction, measured by voting power rather than number
of shares; 

  
 5 

 (4)        the first day
on which a majority of the members of the Company’s board of directors are not Continuing Directors; or 

(5)        the adoption by the Company’s board of directors of a
plan relating to the Company’s liquidation or dissolution. 
 Notwithstanding the foregoing, a transaction (or series of related
transactions) will not be deemed to involve a Change of Control under clauses (1) or (2) above if the Company becomes a direct or indirect wholly-owned subsidiary of a holding company and (a) the direct or indirect holders of a
majority of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of a majority of the Company’s Voting Stock immediately prior to that transaction or (b) the shares of
the Company’s Voting Stock outstanding immediately prior to such transaction are converted into or exchanged for a majority of the Voting Stock of such holding company immediately after giving effect to such transaction. 

The term “person” is used in this definition as that term is used in Section 13(d)(3) of the Exchange Act. 

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event.

 “Continuing Director” means, as of any date of determination, any member of the Company’s board of
directors who (1) was a member of the Company’s board of directors on the date the Notes were issued, (2) was nominated for election to the Company’s board of directors with the approval of a committee of the board of directors
consisting of a majority of independent Continuing Directors or (3) was nominated for election, elected or appointed to the Company’s board of directors with the approval of a majority of the Continuing Directors who were members of the
Company’s board of directors at the time of such nomination, election or appointment (either by a specific vote or by approval of a proxy statement in which such member was named as a nominee for election as a director, without objection by
such member to such nomination). 
 “Investment Grade Rating” means a rating equal to or higher than
“Baa3” (or the equivalent) by Moody’s and “BBB-” (or the equivalent) by S&P, or, if applicable, the equivalent investment grade credit rating by any Substitute Rating Agency or Substitute Rating Agencies. 

“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto. 

“Rating Agencies” means (1) each of Moody’s and S&P and (2) if any of Moody’s or
S&P ceases to rate the applicable Notes or fails to make a rating of the applicable Notes publicly available for reasons outside of the Company’s control, a Substitute Rating Agency in lieu thereof. 

“Rating Event” means the rating on the Notes is lowered independently by each of the Rating Agencies and the
Notes are rated below an Investment Grade Rating by each of the Rating Agencies, in each case on any day during the period (which period will be extended so long as either of the Rating Agencies has publicly announced that, as a result of the Change
of Control, the rating of the Notes is under consideration for a possible downgrade) commencing 60 days prior to the first public announcement of the occurrence of a Change of Control or of the Company’s intention to effect a Change of Control
and ending 60 days following consummation of such Change of Control. 
 “S&P” means Standard &
Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto. 

  
 6 

 “Substitute Rating Agency” means a “nationally recognized
statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company (as certified by a resolution of the Company’s Board of Directors) as a replacement agency for Moody’s or
S&P, or both of them, as the case may be. 
 “Voting Stock” means, with respect to any specified
“person” (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date, the capital stock of that person that is at the time entitled to vote generally in the election of the board of directors of that person. 

If an Event of Default with respect to the Notes shall occur and be continuing, the principal of and accrued and unpaid interest on the Notes
may be declared due and payable in the manner and with the effect provided in the Indenture. 
 The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Guarantors and the rights of the Holders of the Securities of each series issued under the Indenture at any time
by the Company, the Guarantors and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of each series affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of any series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company and the
Guarantors with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Notes issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Note, at the time, place and rate, and in the coin or currency, herein and in the Indenture prescribed. 

As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered
on the Security Register upon surrender of this Note for registration of transfer at the Office or Agency of the Company maintained for the purpose in any place where the principal of and interest on this Note are payable, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by the Holder hereof or by his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 

The Notes are issuable only in fully registered form without coupons in the denominations of $2,000 and integral multiples of
$1,000 in excess thereof. As provided in the Indenture and subject to certain limitations set forth therein, the Notes are exchangeable for a like aggregate principal amount of Notes of authorized denominations as requested by the Holders
surrendering the same. 
 No service charge shall be made for any such registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith, other than in certain cases provided in the Indenture. 

Prior to due presentment of this Note for registration of transfer, the Company, the Guarantors, the Trustee and any agent of
the Company, any Guarantor or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note shall be 

  
 7 

 
overdue, and none of the Company, the Guarantors or the Trustee nor any such agent shall be affected by notice to the contrary. 

The Indenture contains provisions whereby (i) the Company and the Guarantors may be discharged from their obligations
with respect to the Notes (subject to certain exceptions) or (ii) the Company may be released from its obligations under specified covenants and agreements in the Indenture, in each case if the Company irrevocably deposits with the Trustee
money and/or Government Obligations sufficient to pay and discharge the entire indebtedness on all Notes, and satisfies certain other conditions, all as more fully provided in the Indenture. In addition, the Indenture shall cease to be of further
effect (subject to certain exceptions) with respect to the Notes when (1) either (A) all Notes previously authenticated and delivered have been delivered (subject to certain exceptions) to the Trustee for cancellation, or (B) all
Notes (i) have become due and payable or (ii) will become due and payable at their Stated Maturity within one year or (iii) are to be called for redemption within one year and, in the case of (i), (ii) or (iii) above, the
Company has irrevocably deposited with the Trustee money in an amount sufficient to pay and discharge the entire indebtedness on all such Notes not theretofore delivered to the Trustee for cancellation in respect of principal, premium, if any, and
interest to the date of such deposit (if such Notes have become due and payable) or to the Stated Maturity or Redemption Date thereof, as the case may be, and (2) the Company satisfies certain other conditions, all as more fully provided in the
Indenture. 
 This Note shall be governed by and construed in accordance with the laws of the State of New York. 

All terms used in this Note which are defined in the Indenture and not defined herein shall have the meanings assigned to them
in the Indenture. 
 Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee under
the Indenture by the manual signature of one of its authorized signatories, this Note shall not be entitled to any benefits under the Indenture (including, without limitation, the Guarantees) or be valid or obligatory for any purpose. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

  
 8 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
by the manual or facsimile signatures of its duly authorized officers. 
 Dated: October 29, 2013 

   KB HOME 
  

 

															
	  By:      	 	 /s/ Thad Johnson
	 		 	By:   	 	 /s/ William A. (Tony) Richelieu
	 	
		 	Name:  	 	Thad Johnson	 		 		 	Name:  	 	  William A. (Tony) Richelieu	 	
		 	Title:	 	Vice President and Treasurer	 		 		 	Title:	 	  Vice President and Corporate Secretary

  
   TRUSTEE’S CERTIFICATE OF 

  AUTHENTICATION 
   This is one of the
Securities of the series 
   designated therein referred to in the within- 

  mentioned Indenture. 
   U.S. BANK NATIONAL
ASSOCIATION, as 
   Trustee 
  

					
	  By:	 	 /s/ Muriel Shaw
	 	
		 	Authorized Signatory	 	

 ABBREVIATIONS 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they
were written out in full according to applicable laws or regulations: 
  

			
		 	TEN COM--as tenants in common
		 	TEN ENT--as tenants by the entireties
		 	JT TEN--as joint tenants with right of survivorship and not as tenants in common
		 	UNIF GIFT MIN ACT--
                          Custodian            
              
		 	
                          
 (Cust)                               
(Minor)

					
			
		 	under the Uniform Gift to Minors Act    	  	
			
		 	  
	  	
		 	                (State)	  	

 Additional abbreviations may also be used though not in the above list. 

 
  

FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE 

 

							
		 	 	 		  	
		 	 	 		  	
		 	 	 		  	

  
  

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE 
  

 
 the within security and all rights thereunder, hereby
irrevocably constituting and appointing 
  

			
	 	 	Attorney

 to transfer said security on the books of the Company with full power of substitution in the premises. 

 

											
	Dated:	 	  
	 		 	Signed:	 	  
	 	

 Notice: The signature to this assignment must correspond with the name as it 

appears upon the face of the within security in every particular, without alteration or enlargement 

or any change whatever. 

 SCHEDULE A 
  

The initial principal amount of this global Note is Four Hundred Fifty Million Dollars ($450,000,000). The following increases or decreases in
the principal amount of this global Note have been made: 
  

									
	Date made	  	 Amount of

increase in
 principal amount

of this global Note
	  	 Amount of

decrease in
 principal amount

of this global Note
	  	 Principal amount

of this global Note
following such
decrease or

increase
	  	
Signature of
authorized
 signatory of

Trustee

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