Exhibit 10.10


 


EMPLOYMENT
AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT (“Employment Agreement”) is executed as
of the Execution Date (as defined in Section 1 below) but made effective
as of January 1, 2008, between RES-CARE, INC.,
a Kentucky corporation (the “Company”), and PATRICK G.
KELLEY (the “Employee”).


 


RECITALS:


 


WHEREAS, the
Company has a need for an individual to serve as the President of the Company’s
Community Services Group;


 


WHEREAS, the
Employee has substantial experience in management of operations providing
services to at risk and disabled individuals, including management experience
as a former employee of the Company; and


 


WHEREAS, the
Company and the Employee have reached agreement on the terms and conditions
under which Employee will perform services for the Company.


 


AGREEMENT:


 


                NOW,
THEREFORE, in consideration of the premises and the mutual agreements set forth
herein, the parties agree as follows:


 


1.             Employment
and Term.  The Company
hereby employs the Employee, and the Employee accepts such employment, upon the
terms and conditions herein set forth for an initial term commencing effective January 1,
2008 (the “Commencement Date”), and ending on December 31, 2011, subject
to earlier termination only in accordance with the express provisions of this
Employment Agreement (“Initial Term”). 
At the option of the Company and with the consent of the Employee, this
Employment Agreement may be extended for successive periods of one (1) year
each (the “Additional Term(s)”) on the same terms and conditions.  The Company’s option to extend this
Employment Agreement for any Additional Term shall be exercisable by written
notice to Employee no later than thirty (30) days prior to the end of the
Initial Term or any then effective Additional Term.  The Initial Term and any effective Additional
Terms shall be collectively referred to as the “Term.”  For purposes of this Employment Agreement,
the term “Execution Date” shall mean the later of (i) the date this
Employment Agreement is signed by the Employee and (ii) the date this
Employment Agreement is signed on behalf of the Company.


 

















 


2.             Duties.


 


(a)           Employment as
President of Community Services Group. 
During the Term, the Employee shall serve as the President of the
Company’s Community Services Group. 
During the Term, subject to the supervision and control of the President
and Chief Executive Officer of the Company (the “President”), or his designee,
the Employee shall have the responsibility for management and oversight of the
Community Services Group and all of the operations of the Company and its
subsidiaries within the Community Services Group, including without limitation (i) the
provision of quality care for the clients provided services by the operations
within the Community Services Group, (ii) the provision of quality
management services to entities or operations managed by the Community Services
Group, (iii) the compliance by such operations with all laws, regulations
and rules applicable to such operations, and (iv) the financial
performance of such operations and the Community Services Group as a
whole.  The Employee shall perform such
additional duties as may be prescribed from time to time by the President or
his designee, including, without limitation, serving as an officer or director
of the Company and/or one or more subsidiaries or affiliates of the Company, if
elected to such positions, without any additional salary or other
compensation.  The Employee shall serve
as a member of the Resource Center’s Leadership Team and shall, as of the Commencement
Date, be a “named executive officer” for purposes of the Company’s public
filings under the securities laws.  As
such, Employee acknowledges and accepts responsibility, with the other “named
executive officers” of the Company and other officers and employees of the
Company, to ensure the Company’s public filings adequately satisfy all
disclosure requirements.  In addition,
Employee acknowledges that Employee’s biography, qualifications and
compensation will be disclosed in such public filings.


 


(b)           Time and Effort.  The Employee shall devote his best efforts on
a full-time basis and all of his business time, energies and talents
exclusively to the business of the Company and to no other business during the
Term of this Employment Agreement; provided, however, that subject to the
restrictions in Section 7 hereof, the Employee may (i) invest his
personal assets in such form or manner as will not require his services in the
operation of the affairs of the entities in which such investments are made and
(ii) subject to satisfactory performance of the duties described in Section 2(a) hereof,
devote such time as may be reasonably required for him to continue to maintain
his current level of participation in various civic and charitable activities.


 


(c)           Employee
Certification of Eligibility.  Not
less frequently than annually and upon the termination of the Employee’s
employment hereunder for any reason other than Employee’s death, the Employee
shall execute and deliver to the President and/or any other authorized officer
designated by the Company a certificate (ResCare Annual Employment
Re-Certification Eligibility Form) confirming, to the best of the Employee’s
knowledge, that the Employee remains eligible for employment with the
Company.  This same certificate will
certify that the Employee has complied with applicable laws, regulations and
Company policies regarding the provision of services to clients and billings to
its paying agencies, Company policies on training, Drug and Alcohol-Free


 


2

















 


Program,
Prohibition of Harassment, Affirmative Action Equal Employment Opportunity and
Violence in the Workplace.  This
statement shall state that the Employee is not aware of any such violation by
other employees, independent contractors, vendors, or other individuals
performing services for the Company and its subsidiaries that they did not
report as appropriate.


 


3.             Compensation
and Benefits.


 


(a)           Base Salary.  The Company shall pay to the Employee during
the Term an annual salary (the “Base Salary”), which initially shall be
$350,000.  The Base Salary shall be due
and payable in substantially equal bi-weekly installments or in such other
installments as may be necessary to comport with the Company’s normal pay
periods for all employees.


 


Provided that this
Employment Agreement or Employee’s employment hereunder shall not have been
terminated for any reason, the Base Salary shall be increased, effective as of
the first day of each January, commencing January 1, 2009 by the greater
of (i) five percent (5%) and (ii) the percentage by which the
Consumer Price Index for all Urban Consumers (CPI-U), All-Items, 1982-1984=100,
as published by the Bureau of Labor Statistics (the “CPI”) established for the
month of December immediately preceding the date on which the adjustment
is to be made exceeds the CPI published for the month of December of the
immediately preceding year.  If the
Bureau of Labor Statistics suspends or terminates its publication of the CPI,
the parties agree that a reasonably comparable price index shall be substituted
for the CPI.


 


(b)           Incentive Plan.  During the Term, the Employee shall be
eligible for incentive compensation in accordance with the following incentive
plan (the “Incentive Plan”).  Shortly after
the beginning of each calendar year, the Company’s Board of Directors will
establish a target of the Company Net Income (as defined below) for such
calendar year (the “Annual Net Income Target”). 
In no event shall Employee earn any amount under the Incentive Plan for
any calendar year during the Term unless the actual Company Net Income for such
calendar year equals or exceeds ninety percent (90%) of the Annual Net Income
Target for such calendar year.  The
threshold referred to in the immediately preceding sentence shall hereinafter
be referred to as the “Annual Net Income Threshold.”  For all purposes of this Employment
Agreement, “Company Net Income” shall mean the net income of the Company and
its subsidiaries on a consolidated basis, determined in accordance with
generally accepted accounting principles consistently applied, as adjusted to
exclude (x) any extraordinary non-cash or nonrecurring non-cash charges or
losses incurred by the Company and its subsidiaries other than in the ordinary
course of business, including but not limited to losses or expenses resulting
from redemptions or repayments of indebtedness, or modifications or amendments
of the Company’s credit facility, in each case net of related tax benefit, and (y) other
appropriate items as determined by the Board of Directors or the Executive
Compensation Committee of the Board of Directors (the “Compensation Committee”).  The amount payable under the Incentive Plan
to Employee for each full calendar year during the Term shall equal the Base
Salary actually paid to the Employee for such


 


3

















 


calendar year multiplied by the sum of the Department Performance
Percentage and the Company Performance Percentage (as determined below) for
such calendar year.  Not later than March 15
of each calendar year, the maximum percentages for each of the Department
Performance Percentage (the “Department Maximum Performance Percentage”) and
the Company Performance Percentage (the “Company Maximum Performance Percentage”)
shall be established by the Compensation Committee for such calendar year
within a range of forty percent (40%) and sixty percent (60%); provided that
the sum of such percentages shall equal one hundred percent (100%) each
calendar year.  If the Compensation
Committee shall not timely establish either or both of the Department Maximum
Performance Percentage or the Company Maximum Performance Percentage for the
calendar year 2008, each of such percentages shall be fifty percent (50%).  If the Compensation Committee shall not
timely establish either or both of the Department Maximum Performance
Percentage or the Company Maximum Performance Percentage for any future
calendar year during the Term, the respective percentages that were applicable
for the prior calendar year shall apply for such calendar year.  The sum of the Department Performance
Percentage and the Company Performance Percentage for each calendar year shall
be referred to herein as the “Incentive Percentage.”  For each calendar year the maximum Incentive
Percentage shall be one hundred percent (100%).


 


(i)            The Department
Performance Percentage for each calendar year during the Term shall be equal to
the sum of a specified number of percentages that are each determined based
upon the Company functions for which Employee is responsible satisfying certain
performance criteria in categories established by the Compensation Committee on
an annual basis.  For each calendar year,
the relative weight of the performance criteria as well as the performance
criteria may change for each calendar year and shall be established by the
Compensation Committee at the same time as its establishment of the Company
Maximum Performance Percentage.  The
manner in which the percentage for each such category shall be determined for
each calendar year shall be established by the Compensation Committee at the
same time as its establishment of the Company Maximum Performance
Percentage.  Notwithstanding anything in
this Employment Agreement to the contrary, the Department Performance
Percentage shall be zero unless the actual Company Net Income for the
respective calendar year equals or exceeds the Annual Net Income Threshold for
such calendar year.


 


(ii)           The Company Performance
Percentage shall be determined for each calendar year during the Term based
upon the Company and its subsidiaries having met or exceeded the Annual Net
Income Threshold for such calendar year. 
Notwithstanding anything in this Employment Agreement to the contrary,
the Company Performance Percentage shall be zero unless the actual Company Net
Income for the respective calendar year equals or exceeds the Annual Net Income
Threshold for such calendar year.  The
Company Performance Percentage for each calendar year shall be equal to the
Company Maximum Performance Percentage for such calendar year multiplied by the
Net Income Factor (as determined below). 
The excess of the Annual Net Income Target over the Annual Net Income
Threshold shall be referred to as the “Incentive Range.”  The Net 


 


4

















 


Income Factor for each
calendar year shall be equal to:  (A) the
amount by which the actual Company Net Income for the calendar year exceeds the
Annual Net Income Threshold for such calendar year (but not more than the
Incentive Range for such calendar year), divided by (B) the Incentive
Range for such calendar year.


 


After any target or
percentage described in this paragraph (b) has been established by the
Company’s Board of Directors or Compensation Committee, as applicable, for any
calendar year, such target or percentage shall not be increased or decreased
for such calendar year for purposes of this paragraph (b) or for purposes
of paragraph (c) of this Section 4. 
Any annual incentive earned by the Employee under the Incentive Plan for
any calendar year during the Term shall be paid by the Company in cash to the
Employee not later than the later of (x) seventy-four (74) days after the
end of the applicable calendar year or (y) the date of delivery to the
Company of the audited financial statements of the Company and its subsidiaries
for such calendar year.  Any amounts
earned by the Employee under the Incentive Plan shall be hereinafter referred
to as the “Incentive Bonus.”


 


(c)           Restricted Stock
Awards.


 


(i)            The restricted shares
of common stock of the Company awarded under this paragraph (c) (collectively,
the “Restricted Shares”) shall be awarded pursuant to and, to the extent not
expressly inconsistent herewith, governed by the Company stock option and
incentive compensation plan as in effect as the effective date of the
respective award (the “Stock Plan”).  All
grants described in this paragraph (c) shall be conditioned upon the
approval of the shareholders of the Company at the annual shareholders’ meeting
in 2008 of (A) an increase in the maximum number of shares that may be
issued pursuant to awards under the Stock Plan, or (B) a new or amended
plan authorizing grants of restricted shares of the Company.  The number of Restricted Shares shall be
adjusted in accordance with the terms of the Stock Plan for stock splits, stock
dividends, recapitalizations and the like. 
Until and only to the extent the Restricted Shares shall vest as
provided herein, all stock certificates evidencing the Restricted Shares owned
by Employee shall be held by the Company for the benefit of Employee.  As and to the extent any Restricted Shares
shall vest as provided herein, the Company will promptly deliver certificates
representing such vested shares to Employee.


 


(ii)           Provided Employee shall
continue to be employed hereunder, effective on July 15, 2008, the Company
shall award to Employee 5,000 restricted shares of common stock of the
Company.  The restricted shares awarded
as provided in the preceding sentence shall be referred to as the “Fixed
Restricted Shares.”  The Fixed Restricted
Shares shall be subject to vesting as provided below.  Provided Employee shall continue to be
employed hereunder, one-fourth (1/4) of the Fixed Restricted Shares shall vest
on June 1, 2009, an additional one-fourth (1/4) of the Fixed Restricted
Shares shall vest on June 1, 2010, an 


 


5

















 


additional one-fourth (1/4) of the Fixed Restricted
Shares shall vest on June 1, 2011, and the final one-fourth (1/4) of the Fixed
Restricted Shares shall vest on June 1, 2012.


 


(iii)          Provided Employee shall
continue to be employed hereunder, and further provided that the applicable
Annual Performance Award Test (as defined below) has been satisfied, on the
Performance Award Date (as defined below) each year during the Term, commencing
in 2009, the Company shall award to Employee that number of shares of common
stock of the Company as is equal to $100,000 divided by the Performance Award
Price (as defined below), with any fractional share resulting therefrom being
rounded up to one whole share if 0.5 or more and eliminated if less than
0.5.  For each year, the “Performance
Award Date” shall be that date the Company files its Annual Report on Form 10-K
with the Securities and Exchange Commission for the immediately preceding
calendar year.  Satisfaction of the “Annual
Performance Award Test” shall be determined as of each Performance Award Date
and measured based upon the Company Net Income for the immediately preceding
calendar year.  The Annual Performance
Award Test shall be satisfied for a calendar year if (A) the Annual Net
Income Target for the calendar year being measured is at least ten percent
(10%) higher than the actual Company Net Income for the immediately preceding
calendar year, and (B) the actual Company Net Income for the calendar year
being measured equals or exceeds ninety-five percent (95%) of the Annual Net
Income Target for the calendar year being measured.  The “Performance Award Price” shall be equal
to the closing sale price of Company common stock as reported on the Nasdaq
National Market on the respective Performance Award Date (or if the respective
Performance Award Date is not a trading date for the Company common stock, on
the immediately preceding trading date). 
Any Restricted Shares awarded pursuant to this subparagraph (iii) shall
be immediately vested in full on the respective date such shares are awarded.


 


(iv)          Notwithstanding any
provision in this paragraph (c) to the contrary, all of the Restricted Shares
that have not been previously vested shall immediately vest if Employee shall
continue to be employed hereunder and (A) Employee shall die, (B) Employee
shall be subject to a “permanent disability” as described in Section 4(b) hereof,
or (C) a Change of Control (as defined below) has occurred with respect to
the Company.  A “Change of Control” for
purposes of this subparagraph (iv) shall have the same meaning as that
term is given in the Stock Plan.


 


(d)           Participation in
Benefit Plans.  During the Term,
Employee shall be entitled to participate in all employee benefit plans and
programs (including but not limited to paid time off policies, retirement and
profit sharing plans, health insurance, etc.) provided by the Company under
which the Employee is eligible in accordance with the terms of such plans and
programs, subject to applicable waiting and vesting periods.  The Company reserves the right to amend,
modify or terminate in their entirety any of such programs and plans.


 


6

















 


(e)           Out-of-Pocket
Expenses.  The Company shall promptly
pay the ordinary, necessary and reasonable expenses incurred by the Employee in
the performance of the Employee’s duties hereunder (or if such expenses are
paid directly by the Employee shall promptly reimburse him for such payment),
consistent with the reimbursement policies adopted by the Company from time to
time and subject to the prior written approval by the President.


 


(f)            Withholding of
Taxes; Income Tax Treatment.  If,
upon the payment of any compensation or benefit to the Employee under this
Employment Agreement (including, without limitation, in connection with the
award of any Restricted Shares or payment of any bonus or benefit), the Company
determines in its discretion that it is required to withhold or provide for the
payment in any manner of taxes, including but not limited to, federal income or
social security taxes, state income taxes or local income taxes, the Employee
agrees that the Company may satisfy such requirement by:


 


(i)            withholding an amount
necessary to satisfy such withholding requirement from the Employee’s
compensation or benefit; or


 


(ii)           conditioning the
payment or transfer of such compensation or benefit upon the Employee’s payment
to the Company of an amount sufficient to satisfy such withholding requirement.


 


The Employee
agrees that he will treat all of the amounts payable pursuant to this
Employment Agreement as compensation for income tax purposes.


 


4.             Termination.  The Employee’s employment hereunder may be
terminated under this Employment Agreement as follows, subject to the Employee’s
rights pursuant to Section 5 hereof:


 


(a)           Death.  The Employee’s employment hereunder shall
terminate upon his death.


 


(b)           Disability.  The Employee’s employment shall terminate
hereunder at the earlier of (i) immediately upon the Company’s
determination (conveyed by a Notice of Termination (as defined in paragraph (f) of
this Section 4)) that the Employee is permanently disabled, and (ii) the
Employee’s absence from his duties hereunder for 180 days.  “Permanent disability” for purposes of this
Employment Agreement shall mean the onset of a physical or mental disability
which prevents the Employee from performing the essential functions of the
Employee’s duties hereunder, which is expected to continue for 180 days or
more, subject to any reasonable accommodation required by state and/or federal
disability anti-discrimination laws, including, but not limited to, the
Americans With Disabilities Act of 1990, as amended.


 


(c)           Cause.  The Company may terminate the Employee’s
employment hereunder for Cause.  For
purposes of this Employment Agreement, the Company shall 


 


7

















 


have “Cause” to
terminate the Employee’s employment because of the Employee’s personal
dishonesty, intentional misconduct, breach of fiduciary duty involving personal
profit, conviction of, or plea of nolo  contendere to, any law, rule or
regulation (other than traffic violations or similar offenses) or breach of any
provision of this Employment Agreement.


 


(d)           Without Cause.  The Company may terminate the Employee’s
employment under this Employment Agreement at any time without Cause (as
defined in paragraph (c) of this Section 4) by delivery of a Notice
of Termination specifying a date of termination at least thirty (30) days
following delivery of such notice.


 


(e)           Voluntary
Termination.  By not less than thirty
(30) days prior written notice to the President, Employee may voluntarily
terminate his employment hereunder.


 


(f)            Notice of
Termination.  Any termination of the
Employee’s employment by the Company during the Term pursuant to paragraphs
(b), (c) or (d) of this Section 4 shall be communicated by a
Notice of Termination from the Company to the Employee.  Any termination of the Employee’s employment
by the Employee during the Term pursuant to paragraph (e) of this Section 4
shall be communicated by a Notice of Termination from Employee to the
Company.  For purposes of this Employment
Agreement, a “Notice of Termination” shall mean a written notice which shall
indicate the specific termination provision in this Employment Agreement relied
upon and in the case of any termination for Cause shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Employee’s employment.


 


(g)           Date of Termination.  The “Date of Termination” shall, for purposes
of this Employment Agreement, mean:  (i) if
the Employee’s employment is terminated by his death, the date of his death; (ii) if
the Employee’s employment is terminated on account of disability pursuant to Section 4(b) above,
thirty (30) days after Notice of Termination is given (provided that the
Employee shall not, during such 30-day period, have returned to the performance
of his duties on a full-time basis), (iii) if the Employee’s employment is
terminated by the Company for Cause pursuant to Section 4(c) above,
the date specified in the Notice of Termination, (iv) if the Employee’s
employment is terminated by the Company without Cause, pursuant to Section 4(d) above,
the date specified in the Notice of Termination, (v) if the Employee’s
employment is terminated voluntarily pursuant to Section 4(e) above,
the date specified in the Notice of Termination, and (vi) if the Employee’s
employment is terminated by reason of an election by either party not to extend
the Term, the last day of the then effective Term.


 


                5.             Compensation
upon Termination or During Disability.


 


(a)           Death.  If the Employee’s employment shall be
terminated by reason of his death during the Term, the Employee shall continue
to receive installments of his then current 
Base Salary until the date of his death and shall receive any earned but
unpaid Incentive Bonus for any calendar year ending prior to the date of his
death.


 


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(b)           Disability.  If the Employee’s employment shall be
terminated by reason of his disability during the Term, the Employee shall
continue to receive installments of his then current Base Salary while actively
at work and until the earlier of (i) the date of termination in accordance
with Section 4(b) of this Employment Agreement or (ii) the date
that short or long-term disability payments to the Employee commence under any
plan or program then provided and funded by the Company.  If the Employee’s installments of Base Salary
cease by reason of clause (ii) of the preceding sentence but the benefits
payable under any such disability plan or program do not provide 100%
replacement of the Employee’s installments of Base Salary during such period,
the Employee shall be paid at regular payroll intervals until the provisions of
clause (i) of the preceding sentence becomes effective, an amount equal to
the difference between the periodic installments of his then current Base
Salary that would have otherwise been payable and the disability benefit paid
from such disability plan or program.  In
the event of any such termination, the Employee shall also receive any earned
but unpaid Incentive Bonus for any calendar year prior to the Date of
Termination.  Upon termination due to
death prior to a termination as specified in the preceding provisions of this
paragraph (b), the payment provisions of this paragraph (b) shall no
longer apply and Section 5(a) above shall apply.


 


(c)           Cause.  If the Employee’s employment shall be
terminated for Cause, the Employee shall continue to receive installments of
his then current Base Salary only through the Date of Termination and the
Employee shall not be entitled to receive any Incentive Bonus (other than any
earned but unpaid Incentive Bonus for any prior calendar year), and shall not
be eligible for any severance payment of any nature.


 


(d)           Without Cause.  If the Employee’s employment is terminated
without Cause, the Employee shall continue to receive installments of his then
current Base Salary until the Date of Termination and for twelve (12) months
thereafter and the Employee shall also be entitled to receive any earned but
unpaid Incentive Bonus for any calendar year ending prior to the Date of
Termination.


 


(e)           Expiration of Term.  If the Employee’s employment shall be
terminated by reason of expiration of the Term by reason of Employee’s election
not to extend the Term, the Employee shall continue to receive installments of
his then current Base Salary until the Date of Termination and shall also be
entitled to receive any earned but unpaid Incentive Bonus for the last calendar
year of the Term. If the Employee’s employment shall be terminated by reason of
expiration of the Term by reason of the Company’s election not to extend the
Term, the Employee shall continue to receive installments of his then current
Base Salary until the Date of Termination and for twelve (12) months thereafter
and shall also be entitled to receive any earned but unpaid Incentive Bonus for
last calendar year of the Term.


 


(f)            Voluntary
Termination.  If the Employee’s
employment shall be terminated pursuant to Section 4(e) hereof, the
Employee shall continue to receive installments of his then current Base Salary
until the Date of Termination and the Employee shall not be entitled to receive
any then unpaid Incentive Bonus (other than 


 


9

















 


any earned but
unpaid Incentive Bonus for any calendar year ending prior to the date Employee
gives Notice of Termination), and shall not be entitled to any severance
payment of any nature.


 


(g)           No Further
Obligations after Payment.  After all
payments, if any, have been made to the Employee pursuant to the applicable
provisions of paragraphs (a) through (f) of this Section 5, the
Company shall have no further obligations to the Employee under this Employment
Agreement other than the provision of any employee benefit plan required to be
continued under applicable law or by its terms.


 


6.             Duties
Upon Termination.  Upon
the termination of Employee’s employment hereunder for any reason whatsoever
(including but not limited to the failure of the parties hereto to agree to the
extension of this Employment Agreement pursuant to Section 1 hereof),
Employee shall promptly (a) comply with his obligation to deliver an
executed exit interview document as provided in accordance with Company policy,
and (b) return to the Company any property of the Company or its subsidiaries
then in Employee’s possession or control, including without limitation, any
Confidential Information (as defined in Section 7(d)(iii) hereof) and
whether or not constituting Confidential Information, any technical data,
performance information and reports, sales or marketing plans, documents or
other records, and any manuals, drawings, tape recordings, computer programs,
discs, and any other physical representations of any other information relating
to the Company, its subsidiaries or affiliates or to the Business (as defined
in Section 7(d)(iv) hereof) of the Company.  Employee hereby acknowledges that any and all
of such documents, items, physical representations and information are and
shall remain at all times the exclusive property of the Company.


 


7.             Restrictive
Covenants.


 


(a)           Acknowledgments.  Employee acknowledges that (i) his
services hereunder are of a special, unique and extraordinary character and
that his position with the Company places him in a position of confidence and
trust with the operations of the Company, its subsidiaries and affiliates
(collectively, the “Res-Care Companies”) and allows him access to Confidential
Information, (ii) the Company has provided Employee with a unique
opportunity as President of the Company’s Community Services Group, (iii) the
nature and periods of the restrictions imposed by the covenants contained in
this Section 7 are fair, reasonable and necessary to protect and preserve
for the Company the benefits of Employee’s employment hereunder, (iv) the
Res-Care Companies would sustain great and irreparable loss and damage if
Employee were to breach any of such covenants, (v) the Res-Care Companies
conduct and are aggressively pursuing the conduct of their business actively in
and throughout the entire Territory (as defined in paragraph (d)(ii) of
this Section 7), and (vi) the Territory is reasonably sized because
the current Business of the Res-Care Companies is conducted throughout such
geographical area, the Res-Care Companies are aggressively pursuing expansion
and new operations throughout such geographic area and the Res-Care Companies
require the entire Territory for profitable operations.


 


10
















 


(b)           Confidentiality and
Non-disparagement Covenants. Having acknowledged the foregoing, Employee
covenants that without limitation as to time, (i) commencing on the
Commencement Date, he will not directly or indirectly disclose or use or
otherwise exploit for his own benefit, or the benefit of any other Person (as
defined in paragraph (d)(v) of this Section 7), except as may be
necessary in the performance of his duties hereunder, any Confidential
Information, and (ii) commencing on the Date of Termination, he will not
disparage or comment negatively about any of the Res-Care Companies, or their
respective officers, directors, employees, policies or practices, and he will
not discourage anyone from doing business with any of the Res-Care Companies
and will not encourage anyone to withdraw their employment with any of the
Res-Care Companies.


 


(c)           Covenants.  Having acknowledged the statements in Section 7(a) hereof,
Employee covenants and agrees with the Res-Care Companies that he will not,
directly or indirectly, from the Commencement Date until the Date of
Termination, and for a period of twelve (12) months thereafter, directly or
indirectly (i) offer employment to, hire, solicit, divert or appropriate
to himself or any other Person, any business or services (similar in nature to
the Business) of any Person who was an employee or an agent of any of the
Res-Care Companies at any time during the last twelve (12) months of Employee’s
employment hereunder; or (ii) own, manage, operate, join, control, assist,
participate in or be connected with, directly or indirectly, as an officer,
director, shareholder, partner, proprietor, employee, agent, consultant,
independent contractor or otherwise, any Person which is, at the time, directly
or indirectly, engaged in the Business of the Res-Care Companies within the
Territory.  The Employee further agrees
that from the Commencement Date until the Date of Termination, he will not
undertake any planning for or organization of any business activity that would
be competitive with the Business. 
Notwithstanding the foregoing, Employee agrees that if this Employment
Agreement shall be terminated by reason of expiration of the Term (irrespective
of which party elected not to extend the Term), the covenants in this paragraph
(c) shall survive the expiration thereof until twelve (12) months after
the last day of employment of Employee by any Res-Care Company.


 


(d)           Definitions.  For purposes of this Employment Agreement:


 


(i)            For purposes of this Section 7,
“termination of Employee’s employment” shall include any termination pursuant
to paragraphs (b), (c) and (d) of Section 4 hereof, the
termination of such Employee’s employment by reason of the failure of the
parties hereto to agree to the extension of this Agreement pursuant to Section 1
hereof or the voluntary termination of Employee’s employment hereunder.


 


(ii)           The “Territory” shall mean the
forty-eight (48) contiguous states of the United States, the United States
Virgin Islands, Puerto Rico, all of the Provinces of Canada, all the countries
of the European Union, Switzerland and Norway.


 


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(iii)          “Confidential Information” shall mean
any business information relating to the Res-Care Companies or to the Business
(whether or not constituting a trade secret), which has been or is treated by
any of the Res-Care Companies as proprietary and confidential and which is not
generally known or ascertainable through proper means.  Without limiting the generality of the
foregoing, so long as such information is not generally known or ascertainable
by proper means and is treated by the Res-Care Companies as proprietary and
confidential, Confidential Information shall include the following information
regarding any of the Res-Care Companies:


 


(1)                                  any
patent, patent application, copyright, trademark, trade name, service mark,
service name, “know-how” or trade secrets;


 


(2)                                  customer
lists and information relating to (i) any client of any of the Res-Care
Companies or (ii) any client of the operations of any other Person for
which operations any of the Res-Care Companies provides management services;


 


(3)                                  supplier
lists, pricing policies, consulting contracts and competitive bid information;


 


(4)                                  records,
compliance and/or operational methods and Company policies and procedures,
including manuals and forms;


 


(5)                                  marketing
data, plans and strategies;


 


(6)                                  business
acquisition, development, expansion or capital investment plan or activities;


 


(7)                                  software
and any other confidential technical programs;


 


(8)                                  personnel
information, employee payroll and benefits data;


 


(9)                                  accounts
receivable and accounts payable;


 


(10)                            other
financial information, including financial statements, budgets, projections,
earnings and any unpublished financial information; and


 


(11)                            correspondence
and communications with outside parties.


 


(iv)          The “Business” of the Res-Care
Companies shall mean the business of providing training or job placement
services as provided in the Company’s Employment and Training Services Group,
youth treatment or 


 


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services, home
care or periodic services to the elderly, services to persons with mental
retardation and other developmental disabilities, including but not limited to
persons who have been dually diagnosed, services to persons with acquired brain
injuries, or providing management and/or consulting services to third parties
relating to any of the foregoing.


 


(v)           The term “Person” shall mean an
individual, a partnership, an association, a corporation, a trust, an
unincorporated organization, or any other business entity or enterprise.


 


(e)           Injunctive Relief, Invalidity of
any Provision.  Employee acknowledges
that his breach of any covenant contained in this Section 7 will result in
irreparable injury to the Res-Care Companies and that the remedy at law of such
parties for such a breach will be inadequate. 
Accordingly, Employee agrees and consents that each of the Res-Care
Companies in addition to all other remedies available to them at law and in
equity, shall be entitled to seek both preliminary and permanent injunctions to
prevent and/or halt a breach or threatened breach by Employee of any covenant
contained in this Section 7.  If any
provision of this Section 7 is invalid in part or in whole, it shall be
deemed to have been amended, whether as to time, area covered, or otherwise, as
and to the extent required for its validity under applicable law and, as so
amended, shall be enforceable.  The
parties further agree to execute all documents necessary to evidence such
amendment.


 


(f)            Advice to Future Employers.  If Employee, in the future, seeks or is
offered employment by any other Person, he shall provide a copy of this Section 7
to the prospective employer prior to accepting employment with that prospective
employer.


 


8.             Entire
Agreement; Modification; Waiver. 
This Employment Agreement constitutes the entire agreement between the
parties pertaining to the subject matter contained in it and supersedes all
prior and contemporaneous agreements, representations, and understandings of
the parties.  No supplement,
modification, or amendment of this Employment Agreement shall be binding unless
executed in writing by all parties hereto (other than as provided in the next
to last sentence of Section 7(e) hereof).  No waiver of any of the provisions of this
Employment Agreement will be deemed, or will constitute, a waiver of any other
provision, whether or not similar, nor will any waiver constitute a continuing
waiver.  No waiver will be binding unless
executed in writing by the party making the waiver.


 


9.             Successors
and Assigns; Assignment. 
This Employment Agreement shall be binding on, and inure to the benefit
of, the parties hereto and their respective heirs, executors, legal
representatives, successors and assigns; provided, however, that
this Employment Agreement is intended to be personal to the Employee and the
rights and obligations of the Employee hereunder may not be assigned or
transferred by him.


 


10.           Notices.  All notices, requests, demands and other
communications required or permitted to be given or made under this Employment
Agreement, or any other agreement executed in connection therewith, shall be in
writing and shall be deemed to have been given on 


 


13

















 


the date of
delivery personally or upon deposit in the United States mail postage prepaid
by registered or certified mail, return receipt requested, to the appropriate
party or parties at the following addresses (or at such other address as shall
hereafter be designated by any party to the other parties by notice given in
accordance with this Section):


 


To the Company:


 


Res-Care, Inc.


9901 Linn Station
Road


Louisville,
Kentucky 40223


Attn:       Ralph G. Gronefeld, Jr.,


President and
Chief Executive Officer


 


To the Employee:


 


Patrick G. Kelley


103 Oak Hill Court


Mount Washington,
Kentucky 40047


 


11.           Execution in Counterparts.  This Employment Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.


 


12.           Further Assurances.  The parties each hereby agree to execute and
deliver all of the agreements, documents and instruments required to be
executed and delivered by them in this Employment Agreement and to execute and
deliver such additional instruments and documents and to take such additional
actions as may reasonably be required from time to time in order to effectuate
the transactions contemplated by this Employment Agreement.


 


13.           Severability of Provisions.  The invalidity or unenforceability of any
particular provision of this Employment Agreement shall not affect the other
provisions hereof and this Employment Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted.


 


14.           Governing Law;
Jurisdiction; Venue.  This
Employment Agreement is executed and delivered in, and shall be governed by,
enforced and interpreted in accordance with the laws of, the Commonwealth of
Kentucky.  The parties hereto agree that
the federal or state courts located in Kentucky shall have the exclusive
jurisdiction with regard to any litigation relating to this Employment
Agreement and that venue shall be proper only in Jefferson County, Kentucky,
the location of the principal office of the Company.


 


15.           Tense; Captions.  In construing this Employment Agreement,
whenever appropriate, the singular tense shall also be deemed to mean the
plural, and vice versa, and the captions contained in this Employment Agreement
shall be ignored.


 


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16.           Survival.  The provisions of Sections 5, 6 and 7
hereof shall survive the termination, for any reason, of this Employment
Agreement, in accordance with their terms.


 


[Remainder
of page intentionally blank – signatures begin on next page.]


 


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IN WITNESS WHEREOF, the parties hereto have executed
this Employment Agreement on the dates set forth below.


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  RES-CARE, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  January 20, 2008

  	
   

  	
   

  	
  By:

  	
  /s/ Ralph G. Gronefeld, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
       Ralph G.
  Gronefeld, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
       President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  December 21, 2007

  	
   

  	
   

  	
    /s/ Patrick G. Kelley

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
      Patrick G. Kelley

  	
   

  



 


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