Document:

Employment Agreement by and between the Company and Dennis Reilly

 Exhibit 10.2 
 EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into this
14th day of March, 2008, to be effective as of May 1, 2008 (the “Effective Date”) by and between Barrier Therapeutics, Inc., a Delaware corporation having its principal offices in Princeton, New Jersey (the “Company”), and
Dennis P. Reilly (the “Executive”). 
 WHEREAS, the Executive is presently employed by the Company in the capacity of Vice
President of Finance; 
 WHEREAS, the Executive possesses considerable experience and an intimate knowledge of the business and affairs of
the Company, its policies, methods, personnel and operations; 
 WHEREAS, the Company recognizes that the Executive’s contributions have
been substantial and meritorious and, as such, the Executive has demonstrated unique qualifications to act in an executive capacity for the Company; and 
 WHEREAS, the Company desires to employ the Executive as its Chief Financial Officer effective May 1, 2008, and the Executive desires to serve in such capacity on behalf of the Company, upon the terms and
conditions hereinafter set forth. 
 NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: 

1. Employment. 
 (a) Term.
The Executive’s employment and this Agreement shall commence on the Effective Date and shall continue thereafter until terminated pursuant to the terms of this Agreement. The period beginning on the Effective Date and ending on the date of
termination of the Executive’s employment with the Company is referred to as the “Term.” Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company, and the Executive
specifically acknowledges that the Executive is subject to discharge at any time by the Company with or without Cause (as defined in Section 11 below) and without compensation of any nature, except as provided in Section 6 below.

 (b) Duties. During the Term, the Executive shall be employed by the Company as the Chief Financial Officer of the Company and shall
continue to serve the Company faithfully and to the best of his ability. The Executive shall devote his full time, attention, skill and efforts to the performance of the duties required by or appropriate for his position with the Company. The
Executive shall report to the Chief Executive Officer of the Company, provided that the Executive shall have direct reporting to the Audit Committee of the Board of Directors of the Company (the “Audit Committee”) with respect to the
presentation of financial reports and other financial information of the Company. Subject to the oversight of the Chief Executive Officer, the Executive shall have responsibility for (i) signing checks, maintaining the Company’s books and
records, financial planning for the Company, investing and disbursement of corporate funds and (ii) such other duties and responsibilities as may be assigned to him from time to time by the Chief Executive Officer. 

 (c) Best Efforts. Except for vacation, absences due to temporary illness and absences resulting
from Disability (as hereinafter defined), the Executive shall devote the Executive’s business time, attention and energies on a full-time basis to the performance of the duties and responsibilities referred to in subsection (b) above. The
Executive shall not during the Term be engaged in any other business activity which, in the reasonable judgment of the Board of Directors of the Company (the “Board”), would conflict with the ability of the Executive to perform his duties
under this Agreement, whether or not such activity is pursued for gain, profit or other pecuniary advantage; provided however that the Company acknowledges and agrees that the Executive may from time to time have obligations and commitments to serve
on the board of directors of entities unrelated to the Company and that the Executive shall be entitled to perform such commitments and obligations, so long as the Executive (i) discloses all such obligations and commitments to the Board,
(ii) does not serve on more than 2 such board of directors at any one time, unless the Board consents, in its sole discretion, and (iii) does not violate the restrictive covenants set forth in Section 13 below by virtue of performing
such obligations and commitments. 
 2. Base Salary. During the Term, the Company shall pay to the Executive an annual base salary of
$260,000 which shall be subject to review and, at the option of the Compensation Committee of the Board (the “Compensation Committee”), subject to increase (such salary, as the same may be increased from time to time as aforesaid, being
referred to herein as the “Base Salary”). The Base Salary shall be payable in accordance with the Company’s normal payroll practices. 
 3. Benefits; Bonus; Equity Compensation. During the Term, the Executive shall be eligible to participate in all bonus, incentive, retirement and welfare benefit plans and programs made available to the
Company’s senior level executives as a group, as such bonus, incentive, retirement and welfare plans may be in effect from time to time and subject to the eligibility requirements of such plans. The Executive shall also be eligible to
participate in all equity compensation plans and programs and shall receive such grants as may be provided from time to time by the Company to its officers in the discretion of the Compensation Committee. During the Term, the Executive shall be
provided with executive fringe benefits and perquisites under the same terms as those made available to the Company’s senior level executives as a group, as such programs may be in effect from time to time. Nothing in this Agreement or
otherwise shall prevent the Company from amending or terminating any bonus, incentive, equity compensation, retirement, welfare or other employee benefit plans, programs, policies or perquisites from time to time as the Company deems appropriate.
Any bonus earned by the Executive shall be paid to him after the end of the fiscal year to which it relates, at the same time and under the same terms and conditions as other executives of the Company; provided that in no event shall the
Executive’s bonus be paid later than March 15 of the fiscal year following the fiscal year for which it was earned. 
 4.
Vacation. During the Term, the Executive shall be entitled to vacation, holiday and sick leave at levels commensurate with those provided to other senior level executives of the Company, in accordance with the Company’s vacation, holiday
and other pay-for-time-not-worked policies; provided, however, that the Executive shall be entitled to not less than four weeks paid vacation per year. 
  

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 5. Reimbursement of Expenses. During the Term, the Company shall reimburse the Executive, in
accordance with the policies and practices of the Company in effect from time to time with respect to other employees of the Company at substantially the same level of employment as the Executive, for all reasonable and necessary traveling expenses
and other disbursements incurred by him for or on behalf of the Company in connection with the performance of his duties hereunder upon presentation by the Executive to the Company of appropriate documentation therefor. 
 6. Termination Without Cause; Resignation for Good Reason. If the Executive’s employment is terminated by the Company without Cause (as
defined in Section 11 below) or if the Executive resigns for Good Reason (as defined in Section 11 below), either before or after a Change of Control (as defined in Section 11 below), the provisions of this Section 6 shall apply.

 (a) The Company may terminate the Executive’s employment with the Company at any time without Cause upon not less than 30 days’
prior written notice to the Executive; provided that, in the event that such notice is given, the Executive shall be under no obligation to render any additional services to the Company and shall be allowed to seek other employment. In addition, the
Executive may initiate a termination of employment by resigning under this Section 6 for Good Reason. The Executive shall give the Company not less than 30 days’ prior written notice of such resignation. On the date of termination or
resignation, as applicable, specified in such notice, the Executive agrees to resign all positions, including as an officer and, if applicable, as a director or member of the Board, related to the Company and its parents, subsidiaries and
affiliates. 
 (b) Unless the Executive complies with the provisions of Section 6(c) below, upon termination or resignation under
Section 6(a) above, the Executive shall be entitled to receive only the amount due to the Executive under the Company’s then current severance pay plan for employees, if any, but only to the extent not conditioned on the execution of a
release by the Executive. No other payments or benefits shall be due under this Agreement to the Executive, but the Executive shall be entitled to any amounts earned, accrued and owing, but not yet paid under Section 2 and any benefits accrued
and due in accordance with the terms of any applicable benefit plans and programs of the Company. 
 (c) Notwithstanding the provisions of
Section 6(b), upon termination or resignation, as applicable, under Section 6(a) above, if the Executive executes and does not revoke a written release, in a form acceptable to the Company, in its sole discretion, of any and all claims
against the Company and all related parties with respect to all matters arising out of the Executive’s employment by the Company, or the termination thereof (other than claims for any entitlements under the terms of this Agreement or under any
plans or programs of the Company under which the Executive has accrued and is due a benefit) (the “Release”), and so long as the Executive continues to comply with the provisions of any confidentiality, non-competition or non-solicitation
agreement with the Company to which the Executive is subject, the Executive shall be entitled to receive, in lieu of the payment described in Section 6(b) and any other payments due under any severance plan or program for employees or
executives, the following: 
 (i) A lump sum cash payment equal to 1.00 times the Executive’s annual Base Salary (at the rate in effect
immediately before the Executive’s date of termination) plus 1.00 times the Executive’s target annual cash bonus for the year in which the Executive’s date of termination occurs. The payment described in this clause (i) shall be
paid within 30 days after the Executive’s date of termination, subject to the Executive’s execution and non-revocation of the Release; 
  

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 (ii) A pro rata bonus payment for the year in which the Executive’s termination occurs equal to the
Executive’s target annual cash bonus for the year in which the Executive’s termination occurs, as determined by the Compensation Committee, multiplied by a fraction, the numerator of which is the number of days during which the Executive
was employed by the Company in the year of the Executive’s termination, and the denominator of which is 365. The payment described in this clause (ii) shall be paid within 30 days after the Executive’s date of termination, subject to
the Executive’s execution and non-revocation of the Release; 
 (iii) Medical coverage for the 12-month period following the
Executive’s termination or until the date on which the Executive is eligible for coverage under a plan maintained by a new employer or under a plan maintained by his spouse’s employer, whichever is sooner, at the level in effect at the
date of his termination (or generally comparable coverage) for himself and, where applicable, his spouse and dependents, as the same may be charged by the Company from time to time for employees generally, as if the Executive had continued in
employment during such period. The COBRA health care continuation coverage period under section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), shall run concurrently with the foregoing 12-month period; 
 (iv) All of the Executive’s outstanding stock options, restricted stock and other equity rights held by the Executive as of the Executive’s
date of termination, if any, which would have vested and become exercisable within the one (1) year period following the Executive’s date of termination shall become vested and/or exercisable, as the case may be, as of the Executive’s
date of termination, and any stock options, including any stock options that previously became exercisable and have not expired or been exercised, shall remain exercisable, notwithstanding any provision to the contrary in any other agreement
governing such options, for a period of six (6) months after the Executive’s date of termination; provided, however, that in no event will the option be exercisable beyond its original term; and 
 (v) Any other amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable
benefit plans and programs of the Company, whether or not the terms of such plan or program otherwise require an employee to be employed with the Company on the date of payment, including without limitation, any cash bonus earned or accrued but not
yet paid for the year prior to the year in which the Executive’s termination occurs (provided that the amounts described in this subparagraph (c)(v) shall not be contingent upon the Executive’s execution and non-revocation of the Release).

 (d) Notwithstanding any provision of this Section 6 to the contrary, if the Executive is a “specified employee” (within the
meaning of such term under section 409A of the Code) of a publicly held corporation at his termination date, the postponement provisions of section 409A of the Code, as described in Section 15(o) below, shall apply. 
  

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 7. Voluntary Termination. The Executive may voluntarily terminate his employment for any reason
upon 30 days’ prior written notice. In such event, after the effective date of such termination, no payments shall be due under this Agreement, except that the Executive shall be entitled to any amounts earned, accrued and owing but not yet
paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company. 
 8.
Death; Disability. If the Executive’s employment is terminated by the Company by reason of death or, subject to the requirements of applicable law, Disability (as defined in Section 11 below), upon the Executive’s date of
termination or death, no payments shall be due under this Agreement, except that the Executive (or in the event of the Executive’s death, the Executive’s executor, legal representative, administrator or designated beneficiary, as
applicable), shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company. In addition, notwithstanding
any provision to the contrary in any applicable plan, program or agreement, solely in the case of the Executive’s termination by the Company on account of his Disability, and provided the Executive executes a Release and continues to comply
with the provisions of any confidentiality, non-competition or non-solicitation agreement with the Company to which Executive is subject, all outstanding equity rights held by the Executive as of the date of the Executive’s termination will
become fully vested and/or exercisable, as the case may be, on the Executive’s date of termination. 
 9. Cause. The Company may
terminate the Executive’s employment at any time for Cause upon written notice to the Executive, in which event all payments under this Agreement shall cease, except for any amounts earned, accrued and owing but not yet paid under
Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company. 
 10. Change of
Control. 
 (a) Acceleration of Equity Rights. Notwithstanding any provision to the contrary in any applicable plan, program or
agreement (including this Agreement), upon the occurrence of a Change of Control (as defined in Section 11(b) below) during the Term, all outstanding equity rights held by the Executive as of the date of the Change of Control will become fully
vested and/or exercisable, as the case may be, on the date on which the Change of Control occurs. 
 (b) Application of Section 280G
of the Code. In the event that it shall be determined that any payment or distribution in the nature of compensation (within the meaning of section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would constitute an “excess parachute payment” within the meaning of section 280G of the Code, the aggregate present value of the
Payments under the Agreement shall be reduced (but not below zero) to the Reduced Amount (defined below), provided that the 

  

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reduction shall be made only if the Accounting Firm (described below) determines that the reduction will provide the Executive with a greater net after-tax
benefit than would no reduction. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Payments under this Agreement without causing any Payment under this Agreement to be subject
to the Excise Tax (defined below), determined in accordance with section 280G(d)(4) of the Code. The term “Excise Tax” means the excise tax imposed under section 4999 of the Code, together with any interest or penalties imposed with
respect to such excise tax. Unless the Executive shall have elected another method of reduction by written notice to the Company prior to the Change of Control, the Company shall reduce the Payments under this Agreement by first reducing Payments
that are not payable in cash and then by reducing cash Payments. Only amounts payable under this Agreement shall be reduced pursuant to this subsection (b). All determinations to be made under this subsection (b) shall be made by an independent
certified public accounting firm selected by the Company immediately prior to the Change of Control (the “Accounting Firm”), which shall provide its determinations and any supporting calculations both to the Company and the
Executive within 10 days of the Change of Control. Any such determination by the Accounting Firm shall be binding upon the Company and the Executive. All of the fees and expenses of the Accounting Firm in performing the determinations referred to in
this subsection (b) shall be borne solely by the Company. 
 11. Definitions. 
 (a) Cause. For purposes of this Agreement, “Cause” shall mean any of the grounds for termination of the Executive’s employment
listed: (i) the Executive’s violation of any material Company policy, misappropriation of funds or property of the Company or attempt to obtain any personal profit from any transaction in which the Company has an interest; (ii) the
Executive has neglected or failed to discharge any of his duties or obligations under this Agreement or failed to obey appropriate directions (to the extent lawful) from the Board or an officer of the Company to whom the Executive reports, which
neglect or failure, if curable, shall not have been cured within 10 days after receipt of written notice; (iii) material breach of any of the provisions of this Agreement (or any other document or agreement between the Company and the
Executive) by the Executive; (iv) the commission by the Executive of any act of fraud or dishonesty (financial or otherwise) with respect to the Company or any subsidiary or affiliate thereof; (v) the conviction or entry of a plea of
nolo contendere of the Executive for violating any laws constituting a felony (including the Foreign Corrupt Practices Act of 1977); or (vi) conviction or entry of a plea of nolo contendere for a crime involving moral turpitude or
fraud. 
 (b) Change of Control. As used herein, a “Change of Control” shall have the same meaning ascribed to such term
under the Company’s 2004 Equity Incentive Plan, as in effect on the date hereof and as it may be amended from time to time. 
 (c)
Disability. As used herein, “Disability” shall mean the Executive is incapacitated or disabled by accident, sickness or otherwise so as to render the Executive mentally or physically incapable of performing the essential functions
of his job with or without reasonable accommodation for 90 days in any 360 consecutive day period. 
 (d) Good Reason. As used herein,
“Good Reason” shall mean with respect to the Executive, without the Executive’s consent, (i) a material reduction of the Executive’s 

  

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compensation (base compensation plus guaranteed bonus); (ii) a material diminution by the Company in the Executive’s authority, duties or
responsibilities described in this Agreement or reasonable for someone with the Executive’s title and position with the Company; (iii) a material change in the geographic location of the Executive’s principal place of business that
results in the relocation of the Executive’s principal place of business to a location more than 40 miles from its current location; or (iv) the material breach of this Agreement by the Company, including, the failure of the Company to
obtain the agreement from any successor to assume and agree to perform the Company’s obligations under this Agreement; provided that for any of the foregoing to constitute “Good Reason,” the Executive must object in writing to the
Chief Executive Officer within 30 days following initial notification of its occurrence or proposed occurrence, and which action is not then rescinded or otherwise remedied by the Board within 30 days after delivery of such notice and the Executive
resigns from employment within 30 days after the expiration of the foregoing 30-day cure period. If the Executive’s resignation occurs after such time, the resignation shall be treated as a voluntary resignation other than for Good Reason and
the Executive will not be entitled to severance benefits under this Agreement. 
 12. Disclosure of Information; Right of Inventions.
The Executive acknowledges and confirms that the Confidential Information and Invention Assignment Agreement executed by the Executive in favor of the Company (the “Confidentiality Agreement”), the terms of which are incorporated herein by
reference, remains in full force and effect and binding upon the Executive. The Confidentiality Agreement shall survive the termination of this Agreement and the Executive’s employment by the Company for the applicable period(s) set forth
therein. 
 13. Restrictive Covenants. 
 (a) The Executive acknowledges and recognizes that during the Term, the Executive will be privy to confidential information of the Company and further acknowledges and recognizes that the Company would find it
extremely difficult to replace the Executive. Accordingly, in consideration of the promises contained herein and the consideration to be received by the Executive hereunder (including, without limitation, the severance compensation described in
Section 10, if any), without the prior written consent of the Company, the Executive shall not, at any time during the employer/employee relationship between the Company and the Executive or the one-year period after the termination of such
employer/employee relationship, (i) directly or indirectly engage in, represent in any way, or be connected with, any Competing Business (as hereinafter defined) directly competing with the business of the Company or any direct or indirect
subsidiary or affiliate thereof in the United States, whether such engagement shall be as an officer, director, owner, employee, partner, affiliate or other participant in any Competing Business, (ii) assist others in engaging in any Competing
Business in the manner described in clause (i) above, (iii) induce or solicit other employees of the Company or any direct or indirect subsidiary or affiliate thereof to terminate their employment with the Company or any such direct or
indirect subsidiary or affiliate or to engage in any Competing Business or (iv) induce any entity or person with which the Company or any direct or indirect subsidiary or any affiliate thereof has a business relationship to terminate or alter
such business relationship. As used herein, “Competing Business” shall mean any business involving the discovery, development and commercialization of products in the United States if such business or the products developed or sold by it
are competitive, directly or indirectly, at the time of the Executive’s date of termination with (A) the business of the Company or any direct or indirect 

  

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subsidiary thereof, (B) any of the products manufactured, sold or distributed by the Company or any direct or indirect subsidiary thereof or
(C) any products or business being developed or conducted by the Company or any direct or indirect subsidiary thereof. 
 (b) The
Executive understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Company or any subsidiary or affiliate thereof, but the Executive nevertheless believes that he has
received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder to justify clearly such restrictions which, in any event (given the Executive’s education, skills and
ability), the Executive does not believe would prevent him from earning a living. 
 14. Representations, Warranties and Covenants of the
Executive. 
 (a) Restrictions. The Executive represents and warrants to the Company that: 
 (i) There are no restrictions, agreements or understandings whatsoever to which the Executive is a party which would prevent or make unlawful the
Executive’s execution of this Agreement or the Executive’s employment hereunder, which is or would be inconsistent or in conflict with this Agreement or the Executive’s employment hereunder, or would prevent, limit or impair in any
way the performance by the Executive of the obligations hereunder; and 
 (ii) The Executive has disclosed to the Company all restraints,
confidentiality commitments, and other employment restrictions that he has with any other employer, person or entity. 
 (b) Obligations
to Former Employers. The Executive covenants that in connection with his provision of services to the Company, the Executive shall not breach any obligation (legal, statutory, contractual or otherwise) to any former employer or other person,
including, but not limited to, obligations relating to confidentiality and proprietary rights. 
 (c) Obligations Upon Termination.
Upon and after the Executive’s termination or cessation of employment with the Company and until such time as no obligations of the Executive to the Company hereunder exist, the Executive shall (i) provide a complete copy of this Agreement
to any person, entity or association engaged in a Competing Business with whom or which the Executive proposes to be employed, affiliated, engaged, associated or to establish any business or remunerative relationship prior to the commencement of any
such relationship and (ii) shall notify the Company of the name and address of any such person, entity or association prior to the commencement of such relationship. 
 15. Miscellaneous Provisions. 
 (a) Entire Agreement; Amendments. 
 (i) This Agreement and the other agreements referred to herein (including the Confidentiality Agreement) contain the entire agreement between the parties
hereto and supersede any and all prior agreements and understandings concerning the Executive’s employment by the Company, including the Prior Employment Agreement. 
  

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 (ii) This Agreement shall not be altered or otherwise amended, except pursuant to an instrument in
writing signed by each of the parties hereto 
 (b) Descriptive Headings. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provisions of this Agreement. 
 (c) Notices. All notices or other communications
pursuant to this Agreement shall be in writing and shall be deemed to be sufficient if delivered personally, telecopied, sent by nationally-recognized, overnight courier or mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): 
  

	 	(i)	if to the Company, to: 

 Barrier
Therapeutics, Inc. 
 600 College Road East, Suite 3200 
 Princeton, New Jersey 08540 
 Attention: General Counsel 
 Telecopier: (609) 945-1255 
 with a copy to: 
 Morgan,
Lewis & Bockius LLP 
 502 Carnegie Center 
 Princeton, New Jersey 08540 
 Attention: Steven M. Cohen, Esquire 
 Telecopier: (609) 919-6639 
 (ii) if to the Executive, to his address in the Company’s personnel records. 
 All such notices and other communications shall be deemed to have been delivered and received (A) in the case of personal delivery, on the date of
such delivery, (B) in the case of delivery by telecopy, on the date of such delivery, (C) in the case of delivery by nationally-recognized, overnight courier, on the Business Day following dispatch, and (D) in the case of mailing, on
the third Business Day following such mailing. As used herein, “Business Day” shall mean any day that is not a Saturday, Sunday or a day on which banking institutions in New Jersey are not required to be open. 
 (d) Indemnification. The Company agrees to indemnify and hold the Executive harmless to the fullest extent permitted by the laws of the State of
Delaware and under the bylaws of the Company, both as in effect at the time of the subject act or omission. In connection therewith, the Executive shall be entitled to the protection of any insurance policies which the Company elects to maintain
generally for the benefit of the Company’s directors and officers, against all costs, charges and expenses whatsoever incurred or sustained by the 

  

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Executive in connection with any action, suit or proceeding to which the Executive may be made a party by reason of his being or having been a director,
officer or employee of the Company. This provision shall survive any termination of the Executive’s employment hereunder. 
 (e)
Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Agreement may be
executed and delivered by facsimile. 
 (f) Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New Jersey applicable to contracts made and performed wholly therein without regard to rules governing conflicts of law. 
 (g) Benefits of Agreement; Assignment. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators,
legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Executive under this Agreement are of a personal nature and shall not be assignable or delegable in whole or in part by the
Executive. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, within 15 days of such succession,
expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place and the Executive acknowledges that in such event the obligations of
the Executive hereunder, including but not limited to those under Sections 12, 13 and 14, will continue to apply in favor of the successor. 
 (h) Waiver of Breach. No delay or omission by a party in exercising any right, remedy or power under this Agreement or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy or power may be
exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion. 
 (i)
Severability. In the event that any provision of this Agreement is determined to be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction, be modified or restricted to
the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be modified or restricted, then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement; provided, however,
that the binding effect and enforceability of the remaining provisions of this Agreement, to the extent the economic benefits conferred upon the parties by virtue of this Agreement remain substantially unimpaired, shall not be affected or impaired
in any manner, and any such invalidity, illegality or unenforceability with respect to such provisions shall not invalidate or render unenforceable such provision in any other jurisdiction. 
 (j) Remedies. All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by
law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy. The Executive 

  

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acknowledges that in the event of a breach of any of the Executive’s covenants contained in Sections 12, 13 or 14, the Company shall be entitled to
immediate relief enjoining such violations in any court or before any judicial body having jurisdiction over such a claim. 
 (k)
Survival. The respective rights and obligations of the parties hereunder shall survive the termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. 
 (l) Jurisdiction. Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any New Jersey State court or federal court of the United States of America sitting in the State of New Jersey, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any
related agreement or for recognition or enforcement of any judgment. Each of the parties hereto hereby irrevocably and unconditionally agrees that jurisdiction and venue in such courts would be proper, and hereby waive any objection that such courts
are an improper or inconvenient forum. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by
law. Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out
of or relating to this Agreement or any related agreement in any New Jersey state or federal court. Each of the parties hereto irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court. 
 (m) WAIVER OF JURY TRIAL. 
 (i) WAIVER. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THAT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
EMPLOYMENT RELATIONSHIP CONTEMPLATED HEREBY. 
 (ii) CERTIFICATION. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVER, (C) SUCH PARTY MAKES SUCH WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SUBSECTION (M). 
 (n) Withholding. All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any
payments under this 

  

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Agreement all federal, state and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation. The Executive
shall bear all expense of, and be solely responsible for, all federal, state and local taxes due with respect to any payment received under this Agreement. 
 (o) Section 409A. 
 (i) This Agreement shall be interpreted to avoid any penalty sanctions under
section 409A of the Code. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under section 409A of the Code, then such benefit or payment shall be provided in full (to extent not paid in
part at earlier date) at the earliest time thereafter when such sanctions will not be imposed. For purposes of section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon the
Executive’s “separation from service” (within the meaning of such term under section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, and the right to a series of installment payments
under this Agreement shall be treated as a right to a series of separate payments. In no event shall the Executive, directly or indirectly, designate the calendar year of payment, except as permitted under section 409A of the Code. 
 (ii) Notwithstanding anything herein to the contrary, if, at the time of the Executive’s termination of employment with the Company, the Company
has securities which are publicly traded on an established securities market and the Executive is a “specified employee” (as such term is defined in section 409A of the Code) and it is necessary to postpone the commencement of any payments
or benefits otherwise payable under this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under section 409A of the Code, then the Company will postpone the commencement of the payment of any such
payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Executive) that are not otherwise paid within the ‘short-term deferral exception’ under Treas. Reg. §1.409A-1(b)(4),
and the ‘separation pay exception’ under Treas. Reg. §1.409A-1(b)(9)(iii), until the first payroll date that occurs after the date that is six months following the Executive’s “separation of service” (as such term is
defined under code section 409A of the Code) with the Company. If any payments are postponed due to such requirements, such postponed amounts will be paid in a lump sum to the Executive on the first payroll date that occurs after the date that is
six months following Executive’s separation of service with the Company. If the Executive dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of section 409A of the Code shall be paid to
the personal representative of the Executive’s estate within 60 days after the date of the Executive’s death. 
 (iii) All
reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of section 409A of the Code, including, where applicable, the requirement that (A) any reimbursement shall be for
expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (B) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may not affect
the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year, (C) the reimbursement of an eligible 

  

 12 

 
expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (D) the right to
reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit. 
 [Signature Page Follows] 

  

 13 

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

			
	BARRIER THERAPEUTICS, INC.
		
	By:	 	 /s/ Alfred Altomari

	Name:	 	Alfred Altomari
	Title:	 	Chief Operating Officer
	
	EXECUTIVE
	
	 /s/ Dennis P. Reilly

	Dennis P. Reilly

  

 14Employment Agreement

 Exhibit 10.1 
 EMPLOYMENT AGREEMENT 
 This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of
the 1st day of March, 2008 (the “Effective Date”), by and between Kindred Healthcare Operating, Inc., a Delaware corporation (the “Company”), and Frank J. Battafarano (the “Executive”). 
 W I T N E S S E T H: 
 WHEREAS, the Executive is employed by the Company, a wholly-owned subsidiary of Kindred Healthcare, Inc. (“Parent”), and the parties hereto
desire to provide for the terms of Executive’s employment by the Company; and 
 WHEREAS, the Company has determined that it is in the
best interests of the Company to enter into this Agreement. 
 NOW, THEREFORE, in consideration of the premises and the respective covenants
and agreements contained herein, and intending to be legally bound hereby, the Company and Executive agree as follows: 
 1.
Employment. The Company hereby agrees to employ Executive and Executive hereby agrees to be employed by the Company on the terms and conditions herein set forth. The term of this Agreement shall be for a three-year period commencing on the
Effective Date (the “Term”), subject to earlier termination as provided in Section 6 hereof. 
 2. Duties. Executive is
engaged by the Company as Chief Operating Officer of Kindred Healthcare, Inc., reporting directly to Paul J. Diaz, President and Chief Executive Officer. 
 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 of $650,000 per year (“Base Salary”) payable in equal installments in accordance with the Company’s normal payroll procedures. Executive may receive increases in his Base Salary from time to time, as approved by the Board in
its sole discretion. 

 (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. The Executive’s full-year target under the short-term incentive plan is 75% of Base Salary (the “Target Bonus”) (but the actual
percentage awarded could be higher or lower in accordance with the terms of the relevant plan). The Executive’s full-year target under the long-term incentive plan is 45% of Base Salary (the “Target Long-Term Bonus”) (but the actual
percentage awarded could be higher or lower in accordance with the terms of the relevant plan). 
 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 following the Company’s standard waiting periods, if any.

 (b) Executive shall be entitled to participate in such bonus, stock option, or other incentive compensation plans of the Company and its
affiliates in effect from time to time for officers of the Company. 
 (c) Executive shall be entitled to earn paid time off each year up to
a maximum of 208 hours per year, 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. 
  

 2 

 (b) Cause. The Company may terminate Executive’s employment during the Term for Cause. For
purposes of this Agreement, “Cause” shall mean the Executive’s (i) conviction of or plea of nolo contendere to a crime involving moral turpitude; or (ii) willful and material breach by Executive of his duties and
responsibilities, which is committed in bad faith or without reasonable belief that such breaching conduct is in the best interests of the Company and its affiliates, but with respect to (ii) only if the Board adopts a resolution by a vote of
at least 75% of its members so finding after giving the Executive and his attorney an opportunity to be heard by the Board. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon
advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. 
 (c) Good Reason. Executive’s employment may be terminated by Executive for Good Reason. “Good Reason” shall exist upon the occurrence, without Executive’s express written consent, of any of
the following events: 
 (1) a material adverse change in Executive’s authority, duties or responsibilities (other than
any such change directly attributable to the fact that the Company is no longer publicly owned); 
 (2) the Company shall
materially reduce the Base Salary or annual bonus opportunity of Executive; 
 (3) a material reduction of Executive’s
benefits and perquisites (other than pursuant to a uniform reduction applicable to all similarly situated executives of the Company) that constitutes a material breach by the Company of this Agreement; 
 (4) 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 
 (5) a failure of the Company to obtain the assumption of this Agreement as contemplated by Section 9(c) that constitutes a material breach by the Company of this Agreement. 
  

 3 

 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 the third anniversary of the Effective Date, 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) if Executive’s employment is terminated as a result of the expiration of the Term as provided for in Section 6(d) hereof, the third anniversary of the Effective Date 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 

  

 4 

 
payments are due. In addition, subject to Section 7(e) hereof and the conditions set forth below, Executive shall be entitled to the following
additional payments: 
 (a) Death or Disability. If, during the Term, Executive’s employment shall terminate by reason of
Executive’s death or Disability, the Company shall pay to Executive (or his designated beneficiary or estate, as the case may be) an amount equal to the product of (i) the annual bonus to which the Executive would have been entitled for
the year of termination of employment had Executive’s employment with the Company not been terminated, as determined in accordance with Section 4(b) hereof, if any, multiplied by (ii) a fraction, the numerator of which is the number
of days in the period beginning on the first day of the calendar year in which such termination occurs and ending on the Date of Termination and the denominator of which is 365. Such amount 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 applicable short-term incentive plan. 
 (b) Good Reason; Other than for Cause. If the Company shall terminate Executive’s employment other than for Cause (including for this
purpose, any termination pursuant to Section 6(d) hereof, but excluding a termination of employment for Disability), or the Executive shall terminate his employment for Good Reason: 
 (1) Within 14 days of Executive’s Date of Termination, the Company shall pay to Executive, in a lump sum, an amount equal to the Base
Salary Executive would have received during the period commencing on the Date of Termination and ending on the conclusion of the Term (the “Term Remainder”) had Executive remained an employee of the Company for the duration of such period.

 (2) Within 14 days of Executive’s Date of Termination, the Company shall pay to Executive, in a lump sum, an amount
equal to the product of (i) the number of calendar years, the conclusion of which falls within the Term Remainder, and (ii) the Target Bonus. 
 (3) To the extent not yet paid, the Company shall pay to Executive any amounts earned by the Executive prior to the Date of Termination under the Company’s long-term incentive plan. Such amount shall be paid on
the same schedule and in the same manner as if the Executive had remained employed with the Company through settlement of such long-term incentive award, as determined in accordance with the terms and conditions of the Company’s long-term
incentive plan. 
 (4) In the event (i) the Executive’s Date of Termination occurs after the second anniversary of
the Effective Date and (ii) as of Executive’s Date of Termination, Executive has not earned a long-term incentive bonus in respect of the calendar year 2010 under the Company’s long-term incentive plan other than as a result of
failure to achieve the performance objectives established with 

  

 5 

 
respect to the 2010 performance period, the Company shall pay to Executive an amount equal to the Target Long-Term Bonus in respect of calendar year 2010.
Such amount shall be paid on the same schedule and in the same manner as if the Executive had remained employed with the Company through settlement of such long-term incentive award (and for these purposes, assuming such long-term incentive amount
was earned in respect of the third calendar year of the Term), as determined in accordance with the terms and conditions of the Company’s long-term incentive plan. 
 (5) In the event the Executive’s Date of Termination occurs (A) prior to or on the second anniversary of the Effective Date, for
the Term Remainder, or (B) after the second anniversary of the Effective Date, for a period of thirty-eight months, following the Date of Termination, the Executive shall be treated as if he had continued to be an Executive for all purposes
under the Parent’s Health Insurance Plan and Dental Insurance Plan; or if the Executive is prohibited from participating in such plan, the Company or Parent shall otherwise provide such benefits. Executive shall be responsible for any employee
contributions for such insurance coverage. Following this 38-month period, , the Executive shall be entitled to receive continuation coverage under Part 6 of Title I of ERISA (“COBRA Benefits”), by treating the end of this 38-month period
as the applicable qualifying event (i.e. as a termination of employment for purposes of ERISA Section 603(2)) and with the concurrent loss of coverage occurring on the same date, to the extent allowed by law. 
 (6) In the event the Executive’s Date of Termination occurs (A) prior to or on the second anniversary of the Effective Date, for
the Term Remainder, or (B) after the second anniversary of the Effective Date, for a period of thirty-eight months, following the Date of Termination, Parent shall maintain in force, at its expense, the Executive’s life insurance in effect
under the Parent’s voluntary life insurance benefit plan as of the Date of Termination. Executive shall be responsible for any employee contributions for such insurance coverage. For purposes of clarification, the portion of the premiums in
respect of such voluntary life insurance for which Executive and Parent are responsible, respectively, shall be the same as the portion for which Executive and Parent are responsible, respectively, immediately prior to the Date of Termination.

 (7) In the event the Executive’s Date of Termination occurs (A) prior to or on the second anniversary of the
Effective Date, for the Term Remainder, or (B) after the second anniversary of the Effective Date, for a period of thirty-eight months, following the Date of Termination, the Company or Parent shall provide short-term and long-term disability
insurance benefits to Executive equivalent to the coverage that the Executive would have had he remained employed under the disability insurance plans applicable to Executive on the Date of Termination. Executive shall be responsible for any
employee contributions for such insurance coverage. Should Executive become disabled during the applicable continuation period, Executive shall be entitled to receive such benefits, and for such duration, 

  

 6 

 
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 Parent are responsible, respectively, shall be the same as the portion for which Executive and Parent are responsible, respectively, immediately prior to the Date of Termination. 
 (8) To the extent not already vested pursuant to the terms of such plan, the Executive’s interests under the Parent’s retirement
savings plan shall be automatically fully (i.e., 100%) vested, without regard to otherwise applicable percentages for the vesting of employer matching contributions based upon the Executive’s years of service with the Company.

 (9) In the event the Executive’s Date of Termination occurs (A) prior to or on the second anniversary of the
Effective Date, for the Term Remainder, or (B) after the second anniversary of the Effective Date, for a period of three-years following the Date of Termination, any outstanding, unvested stock options, performance units or shares of restricted
stock held by Executive on the Date of Termination shall continue to vest as originally scheduled (the “Tail Vesting Period”) as if Executive had remained an employee of the Company through the end of such period. In addition, Executive
shall have the right to continue exercise any such options during the applicable Tail Vesting Period; provided that in no event shall the Executive be entitled to exercise any such option beyond the original expiration date of such option.

 (10) Parent shall adopt such amendments to its benefit plans referred to in this Agreement, if any, as are necessary to
effectuate the provisions of this Agreement. To the extent an applicable plan cannot be so amended due to nondiscrimination or other requirements applicable to the plan, Parent shall adopt or implement an alternative written plan or program to
accomplish this purpose. 
 (11) 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) 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.

  

 7 

 (e) General Release of Claims: Notwithstanding anything herein to the contrary, the payments in
Section 7 hereof are subject to the condition that Executive has delivered to the Company an executed copy of a general release of claims in a form satisfactory to the Company within 60 days after the Executive’s separation from service
and any payment that otherwise would be made within such 60-day period pursuant to this Section 7 shall by paid at the expiration of such 60-day period. 
 (f) Specified Employee. Notwithstanding anything herein to the contrary, (i) 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 as a result of such
separation from service 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). 
 8. Disputes.
Any dispute or controversy arising under, out of, or in connection with this Agreement shall, at the election and upon written demand of either party, be finally determined and settled by binding arbitration in the City of Louisville, Kentucky, in
accordance with the Labor Arbitration rules and procedures of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction thereof. The Company shall pay all costs of the arbitration and all
reasonable attorneys’ and accountants’ fees of the Executive in connection therewith, including any litigation to enforce any arbitration award. 
 9. Successors. 
 (a) This Agreement is personal to Executive and without the prior written consent of
the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. 
 (b) This Agreement shall inure to the benefit of and be binding upon the Company, 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. 
  

 8 

 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”); provided that any payments payable to Executive hereunder, other than those payments and benefits provided for under
Section 7(b)(3) and Section 7(b)(4) hereof, shall be offset by any payments payable under the Change in Control Severance Agreement. 
 11. Withholding. All payments to be made to Executive hereunder will be subject to all applicable required withholding of taxes. 
 12. No Mitigation. Executive shall have no duty to mitigate his damages by seeking other employment and, should Executive actually receive compensation from any such other employment, the payments required hereunder shall not be
reduced or offset by any such compensation. Further, the Company’s and Parent’s obligations to make any payments hereunder shall not be subject to or affected by any setoff, counterclaims or defenses which the Company or Parent may have
against Executive or others. 
 13. Non-Competition; Non-solicitation. 
 (a) From the Effective Date until the Date of Termination and for a period of one year after the Date of Termination (the “Restricted Period”),
Executive shall not directly or indirectly, individually or on behalf of any person other than the Company, 
 (1) own,
operate, manage or otherwise engage in a Competitive Business or enter the employ of, or render any services to, any Competitive Business (or any division thereof). For purposes of this Agreement, “Competitive Business” means any
individual, corporation, partnership, limited liability company, business or other entity, whether for profit or not-for-profit, which engages or attempts to engage, in the operation, management, or ownership of any business or other endeavor, in
any way similar or identical to the business, operations, or services that the Company or any of its affiliates currently, or at any time during the Term, operates, manages, owns or provides, or has specific plans to do so; provided, however, that
the term “Competing Business” shall exclude Executive’s ownership of up to five percent (5%) of the securities of a company publicly traded on a national securities exchange acquired in open market transactions; 
 (2) interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the Effective Date) between
the Company or any of its affiliates and customers, clients, suppliers partners, members or investors of the Company or any of its affiliates of which it is reasonable to expect that Executive is aware; or 
 (3) aid or endeavor to solicit or induce any of the Company’s or its affiliates’ employees to leave their employment with the
Company or such affiliates in order to accept employment with Executive or any other person, corporation, limited liability company, partnership, sole proprietorship or other entity; provided, however, that nothing 

  

 9 

 
in this Section 13(a)(3) shall prevent Executive from soliciting any person who responds to a general media advertisement or solicitation. 

(b) If the restrictions set forth in this section would otherwise be determined to be invalid or unenforceable by a court of competent jurisdiction,
the parties intend and agree that such court shall exercise its discretion in reforming the provisions of this Agreement to the end that the Executive will be subject to a non-competition or non-solicitation covenant, as applicable, which is
reasonable under the circumstances and enforceable by the Company. It is agreed that no adequate remedy at law exists for the parties for violation of this section and that this section may be enforced by any equitable remedy, including specific
performance and injunction, without limiting the right of the Company to proceed at law to obtain such relief as may be available to it. The running of the Restricted Period shall be tolled for any period of time during which Executive is in
violation of any covenant contained herein, for any reason whatsoever. This Section 13 shall survive this Agreement. 
 14.
Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered or sent by telephone facsimile transmission, personal or overnight couriers, or
registered mail with confirmation or receipt, addressed as follows: 
 If to Executive: 
 Frank J. Battafarano 
 680 South Fourth Street

 Louisville, KY 40202 
 If to
Company: 
 Kindred Healthcare Operating, Inc. 
 680 South Fourth Street 
 Louisville, KY 40202 
 Attn: General Counsel 
 15. Waiver of
Breach and Severability. The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by either party. In the event any provision of this
Agreement is found to be invalid or unenforceable, it may be severed from the Agreement and the remaining provisions of the Agreement shall continue to be binding and effective. 
 16. Entire Agreement; Amendment. This instrument contains the entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter hereof. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by Executive and such officer of the Company specifically designated by the Board. 
 17. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware. 
  

 10 

 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. 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. Furthermore, notwithstanding anything herein to the contrary, no payment or benefit payable under this Agreement shall be required to be paid or provided in calendar year 2008 if the payment of such payment or benefit
would constitute an impermissible acceleration under Section 409A of the Code and the transition guidance thereunder and such payment shall instead be paid on January 1, 2009, without interest. 
  

 11 

 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
		 	President and Chief Executive Officer
	
	Solely for the purpose of Section 7 and Section 9
	
	KINDRED HEALTHCARE, INC.
		
	By:	 	 /s/ Paul J. Diaz

		 	Paul J. Diaz
		 	President and Chief Executive Officer
	
	 /s/ Frank J. Battafarano

	FRANK J. BATTAFARANO

  

 12

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