Document:

<PAGE>
                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

                           AMENDMENT NO. 1 AND CONSENT

                            Dated as of June 11, 2004

                                       to

                                CREDIT AGREEMENT

                          Dated as of December 31, 2003

      THIS AMENDMENT NO. 1 AND CONSENT ("Amendment") is made as of June 11, 2004
by and among Res-Care, Inc., a Kentucky corporation (the "Borrower"), the
financial institutions listed on the signature pages hereof (the "Lenders") and
Bank One, NA (Main Office Chicago), as Administrative Agent (the "Agent"), under
that certain Credit Agreement dated as of December 31, 2003 by and among the
Borrower, the Lenders and the Agent (the "Credit Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
given to them in the Credit Agreement.

      WHEREAS, the Borrower has requested that the Lenders and the Agent consent
to certain transactions and agree to certain amendments to the Credit Agreement;

      WHEREAS, the Lenders party hereto and the Agent have agreed to so consent
and agree to such amendments on the terms and conditions set forth herein;

      NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrowers, the Lenders party hereto and the Agent have agreed to enter into this
Amendment.

      1. Consents. The Borrower has informed the Agent and the Lenders that (a)
the Borrower has entered into an agreement with Onex Partners LP and its
affiliates (the "Equity Investor") pursuant to which (i) the Equity Investor has
agreed to invest (the "Onex Equity Investment") $50,500,000 in consideration for
certain Series A convertible preferred stock of the Borrower (the "Preferred
Stock"), (ii) the Equity Investor will acquire 3,700,000 shares of common stock
of the Borrower from certain directors of the Borrowers and their affiliates and
(iii) the Equity Investor will initially designate three of the nine directors
of the Borrower and the Borrower's current board of directors will appoint the
fourth director to fill one of the vacancies created by certain retiring
directors (the foregoing proposed changes to the Borrower's board of directors
being referred to herein as the "Proposed Board Changes") and (b) a subsidiary
of the Borrower intends to acquire 100% of the outstanding capital stock of
Habilitation Opportunities of Ohio, Inc. pursuant to an Acquisition with a
Purchase Price not to exceed $6,250,000 (the "Specified Acquisition"). Effective
as of June 11, 2004 (the "Effective Date") but subject to the satisfaction of
the conditions precedent set forth in Section 3 below, the Lenders party hereto
(1) consent to the Onex Equity Investment and the Specified Acquisition and (2)
acknowledge and agree that (aa) the changes in the Borrower's board of directors
as contemplated by the Proposed Board Changes shall not constitute a Change of
Control, (bb) the Onex Equity Investment shall not constitute a Financing and
therefore the requirement for the mandatory prepayment which would otherwise be
applicable under Section 2.2(c) of the Credit Agreement is hereby waived, (cc)
any conversion of the Preferred Stock into common stock of the Borrower shall
not constitute a Financing, and (dd) the Specified Acquisition shall be
considered a Permitted Acquisition in addition to the Acquisitions otherwise
permitted under the Credit Agreement, and the Specified Acquisition shall be
excluded in determining the limitation of Section 6.13.9(v) of the Credit
Agreement (as amended herein).
<PAGE>
            2. Amendments to Credit Agreement. Effective as of the Effective
Date but subject to the satisfaction of the conditions precedent set forth in
Section 3 below, the Credit Agreement is amended as follows:

            (a) Section 1.1 is amended to insert the following definition in
alphabetical order:

                        ""Leverage Ratio" is defined in Section 6.21 hereof."

            (b) The definition of "Asset Sale" appearing in Section 1.1 is
amended to delete the reference to "$50,000" appearing therein and insert
"$500,000" in lieu thereof.

            (c) The definition of "CapEx Base Amount" appearing in Section 1.1
is amended and restated in its entirety to read as follows:

                        ""CapEx Base Amount" means (i) $19,000,000 during the
                  Borrower's 2004 fiscal year, (ii) $22,000,000 during the
                  Borrower's 2005 fiscal year, (iii) $24,000,000 during the
                  Borrower's 2006 fiscal year and (iv) $25,000,000 during each
                  fiscal year thereafter."

            (d) The definition of "Consolidated Current Maturities" appearing in
Section 1.1 is amended and restated in its entirety to read as follows:

                        ""Consolidated Current Maturities" means, with reference
                  to any period, all payments of principal and interest due
                  within twelve (12) calendar months on and after the last day
                  of such period with respect to all Consolidated Indebtedness
                  (other than (i) Indebtedness under the Convertible
                  Subordinated Notes and (ii) the Revolving Loans) of the
                  Borrower and its Subsidiaries."

            (e) The definition of "Consolidated EBITDA" appearing in Section 1.1
is amended to insert the following sentence at the end thereof:

                        "Notwithstanding anything herein, in any financial
                  statements of the Borrower or in Agreement Accounting
                  Principles to the contrary, for purposes of calculating
                  Consolidated EBITDA, any Permitted Acquisition with a Purchase
                  Price in excess of $2,000,000 and consummated during the
                  period for which such Consolidated EBITDA was calculated shall
                  be deemed to have occurred on the first day of the relevant
                  period for which such Consolidated EBITDA was calculated on a
                  pro forma basis reasonably acceptable to the Administrative
                  Agent, but without giving effect to any projected cost savings
                  or synergies resulting from such Permitted Acquisition."

                                       2
<PAGE>
            (f) The definition of "Continuing Director" appearing in Section 1.1
is amended and restated in its entirety to read as follows:

                  ""Continuing Director" means, with respect to any Person as of
            any date of determination, any member of the board of directors of
            such Person who (i) was a member of such board of directors on the
            Closing Date, (ii) was nominated for election or elected to such
            board of directors with the approval of the holders of the
            Borrower's Series A convertible preferred stock, or (iii) was
            nominated for election or elected to such board of directors with
            the approval of the required majority of the Continuing Directors
            who were members of such board at the time of such nomination or
            election; provided that any individual who is so elected or
            nominated in connection with a merger, consolidation, acquisition or
            similar transaction shall not be a Continuing Director unless such
            individual was a Continuing Director prior thereto or such
            individual was elected in connection with a Permitted Acquisition or
            any other acquisition consented to hereunder."

            (g) The definition of "Rentals Maximum Amount" appearing in Section
1.1 is amended and restated in its entirety to read as follows:

                  ""Rentals Maximum Amount" means (i) $50,000,000 during the
            Borrower's 2004 fiscal year, (ii) $52,500,000 during the Borrower's
            2005 fiscal year, (iii) $55,000,000 during the Borrower's 2006
            fiscal year and (iv) $57,500,000 during each fiscal year thereafter;
            provided that the Rentals Maximum Amount shall be increased as
            follows: if any Permitted Acquisition with a Purchase Price in
            excess of $2,000,000 has occurred during the period for which such
            Rentals Maximum Amount was calculated, such Permitted Acquisition
            shall be deemed to have occurred on the first day of the relevant
            period for which such Rentals Maximum Amount was calculated (on a
            pro forma basis reasonably acceptable to the Administrative Agent)
            and such Rentals Maximum Amount for such period and all future
            periods shall be increased by the incremental amount of such
            projected Rentals."

            (h) The definition of "Swing Line Commitment" appearing in Section
1.1 is amended to delete the reference to "$5,000,000" appearing therein and
insert "$10,000,000" in lieu thereof.

            (i) Section 2.20.1 is amended to delete the reference to
"$65,000,000" appearing therein and insert "$75,000,000" in lieu thereof.

            (j) Section 6.10(ii)(B) is amended and restated in its entirety to
read as follows:

                  "(B) the Borrower may redeem its capital stock, and redeem the
            Indebtedness evidenced by the then outstanding principal balance
            under the Senior Unsecured Notes, in an aggregate amount for all
            such redemptions of stock and Indebtedness not to exceed
            $20,000,000; provided that the aggregate amount for all such
            redemptions of such stock shall not exceed $5,000,000."

                                       3
<PAGE>
            (k) Section 6.13.9(v) is amended and restated in its entirety to
read as follows:

                  "(v) the Purchase Price for each such Acquisition together
            with the Purchase Price of all other Permitted Acquisitions shall
            not exceed the sum of (i) $50,000,000 plus (ii) on and after the
            consummation of Acquisitions with a Purchase Price up to (but not in
            excess of) $50,000,000, an amount equal to $7,500,000 during any
            fiscal year of the Borrower (it being understood and agreed that
            compliance with this Section shall be calculated in a manner such
            that the Purchase Price for Acquisitions shall be allocated first to
            the foregoing $50,000,000 limit and, after satisfaction thereof, to
            the annual $7,500,000 limit);"

            (l) Section 6.13.9(vi) is amended to delete the reference to
"Section 6.1.1" appearing therein and insert "Sections 6.1.1 or 6.1.2" in lieu
thereof

            (m) Section 6.14.11 is amended to delete the reference to
"$5,000,000" appearing therein and insert "$7,500,000" in lieu thereof.

            3. Conditions of Effectiveness. The effectiveness of this Amendment
is subject to the conditions precedent that the Agent shall have received (a)
counterparts of this Amendment duly executed by the Borrower, the Required
Lenders and the Agent and the Consent and Reaffirmation attached hereto duly
executed by the Guarantors, (b) evidence satisfactory to the Agent of the
consummation of the Onex Equity Investment by no later than July 7, 2004, (c)
for the ratable account of each Lender signatory hereto by such time as is
requested by the Agent, an amendment fee in an amount equal to 0.05% of the sum
of such Lender's (i) Revolving Loan Commitment plus (ii) principal amount of
Term Loans outstanding on the Effective Date, (d) payment and/or reimbursement
of all of the fees and expenses (including reasonable attorneys' fees and
expenses) due or payable to the Agent in connection with this Amendment and (e)
such other instruments and documents as are reasonably requested by the Agent.

            4. Representations and Warranties of the Borrower. The Borrower
hereby represents and warrants as follows:

            (a) This Amendment and the Credit Agreement as amended hereby
constitute legal, valid and binding obligations of the Borrower and are
enforceable against the Borrower in accordance with their terms.

            (b) As of the date hereof and giving effect to the terms of this
Amendment, (i) there exists no Default or Unmatured Default and (ii) the
representations and warranties contained in Article V of the Credit Agreement,
as amended hereby, are true and correct, except for representations and
warranties made with reference solely to an earlier date.

            5. Reference to and Effect on the Credit Agreement.

                                       4
<PAGE>
            (a) Upon the effectiveness hereof, each reference to the Credit
Agreement in the Credit Agreement or any other Loan Document shall mean and be a
reference to the Credit Agreement as amended hereby.

            (b) Except as specifically amended above, the Credit Agreement and
all other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect and are hereby
ratified and confirmed.

            (c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Agent or the
Lenders, nor constitute a waiver of any provision of the Credit Agreement or any
other documents, instruments and agreements executed and/or delivered in
connection therewith.

            6. Governing Law. This Amendment shall be governed by and construed
in accordance with the internal laws of the Commonwealth of Kentucky, but giving
effect to federal laws applicable to national banks.

            7. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

            8. Counterparts. This Amendment may be executed by one or more of
the parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

                            [Signature Pages Follow]

                                       5
<PAGE>
            IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.

                                 RES-CARE, INC.,
                                     as the Borrower

                                 By:____________________________________________
                                 Name:
                                 Title:

                                 BANK ONE, NA (MAIN OFFICE CHICAGO),
                                  as Administrative Agent, as Swing Line Lender,
                                  as LC Issuer and as a Lender

                                 By:____________________________________________
                                 Name:
                                 Title:

                                 MERRILL LYNCH CAPITAL,
                                  as Syndication Agent and as a Lender

                                 By:____________________________________________
                                 Name:
                                 Title:

                                 NATIONAL CITY BANK OF KENTUCKY,
                                  as Syndication Agent and as a Lender

                                 By:____________________________________________
                                 Name:
                                 Title:

                                 GENERAL ELECTRIC CAPITAL CORPORATION,
                                  as Documentation Agent and as a Lender

                                 By:____________________________________________
                                 Name:
                                 Title:

                  Signature Page to Amendment No.1 and Consent
                                 Res-Care, Inc.
                 Credit Agreement dated as of December 31, 2003
<PAGE>
                                  U.S. BANK NATIONAL ASSOCIATION,
                                      as a Lender

                                  By:___________________________________________
                                  Name:
                                  Title:

                                  FIFTH THIRD BANK, KENTUCKY, INC.,
                                      as a Lender

                                  By:___________________________________________
                                  Name:
                                  Title:

                                  BRANCH BANKING AND TRUST COMPANY,
                                      as a Lender

                                  By:___________________________________________
                                  Name:
                                  Title:

                                  OLD NATIONAL BANK,
                                      as a Lender

                                  By:___________________________________________
                                  Name:
                                  Title:

                  Signature Page to Amendment No.1 and Consent
                                 Res-Care, Inc.
                 Credit Agreement dated as of December 31, 2003
<PAGE>
                            CONSENT AND REAFFIRMATION

            Each of the undersigned hereby acknowledges receipt of a copy of the
foregoing Amendment No. 1 to the Credit Agreement dated as of December 31, 2003
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") by and among Res-Care, Inc. (the
"Borrower"), the financial institutions from time to time party thereto (the
"Lenders") and Bank One, NA (Main Office Chicago), in its individual capacity as
a Lender and in its capacity as contractual representative (the "Agent"), which
Amendment No. 1 is dated as of June 11, 2004 (the "Amendment"). Capitalized
terms used in this Consent and Reaffirmation and not defined herein shall have
the meanings given to them in the Credit Agreement. Without in any way
establishing a course of dealing by the Agent or any Lender, each of the
undersigned consents to the Amendment and reaffirms the terms and conditions of
the Guaranty Agreement, the Pledge and Security Agreement and any other Loan
Document executed by it and acknowledges and agrees that such agreement and each
and every such Loan Document executed by the undersigned in connection with the
Credit Agreement remains in full force and effect and is hereby reaffirmed,
ratified and confirmed. All references to the Credit Agreement contained in the
above-referenced documents shall be a reference to the Credit Agreement as so
modified by the Amendment and as the same may from time to time hereafter be
amended, modified or restated.

Dated: June 11, 2004

                                     ALTERNATIVE CHOICES, INC.
                                     BALD EAGLE ENTERPRISES, INC.
                                     CAPITAL TX INVESTMENTS, INC.
                                     CATX PROPERTIES, INC.
                                     CNC/ACCESS, INC.
                                     COMMUNITY ADVANTAGE, INC.
                                     COMMUNITY ALTERNATIVES ILLINOIS, INC.
                                     COMMUNITY ALTERNATIVES INDIANA, INC.
                                     COMMUNITY ALTERNATIVES KENTUCKY, INC.
                                     COMMUNITY ALTERNATIVES MISSOURI, INC.
                                     COMMUNITY ALTERNATIVES NEBRASKA, INC.
                                     COMMUNITY ALTERNATIVES TEXAS PARTNER, INC.
                                     COMMUNITY ALTERNATIVES VIRGINIA, INC.
                                     EDUCARE COMMUNITY LIVING-
                                     TEXAS LIVING CENTERS, INC.
                                     J. & J. CARE CENTERS, INC.

                  Signature Page to Amendment No.1 and Consent
                                 Res-Care, Inc.
                 Credit Agreement dated as of December 31, 2003
<PAGE>
                                     NORMAL LIFE, INC.
                                     PEOPLESERVE, INC.
                                     RAISE GEAUGA, INC.
                                     RES-CARE ALABAMA, INC.
                                     RES-CARE CALIFORNIA, INC. d/b/a
                                     RCCA SERVICES
                                     RES-CARE ILLINOIS, INC.
                                     RES-CARE KANSAS, INC.
                                     RES-CARE NEW JERSEY, INC.
                                     RES-CARE NEW MEXICO, INC.
                                     RES-CARE OHIO, INC.
                                     RES-CARE OKLAHOMA, INC.
                                     RES-CARE OTHER OPTIONS, INC.
                                     RES-CARE PREMIER, INC.
                                     RES-CARE TRAINING TECHNOLOGIES, INC.
                                     RES-CARE WASHINGTON, INC.
                                     ROCKCREEK, INC.
                                     RSCR CALIFORNIA, INC.
                                     RSCR INLAND, INC.
                                     RSCR WEST VIRGINIA, INC.
                                     SOUTHERN HOME CARE SERVICES, INC.
                                     TANGRAM REHABILITATION NETWORK, INC.
                                     TEXAS HOME MANAGEMENT, INC.
                                     THM HOMES, INC.
                                     BRINKLEY GROUP HOMES, INC.
                                     BAKER MANAGEMENT, INC.
                                     BOLIVAR DEVELOPMENTAL TRAINING CENTER, INC.
                                     BOLIVAR ESTATES, INC.
                                     EBENEZER ESTATES, INC.
                                     FORT MASON ESTATES, INC.
                                     HILLSIDE ESTATES, INC.
                                     HYDESBURG ESTATES, INC.
                                     INDIVIDUALIZED SUPPORTED LIVING, INC.
                                     MEADOW LANE ESTATES, INC.
                                     MISSOURI PROGRESSIVE SERVICES, INC.
                                     OAK WOOD SUITES OF BOLIVAR, INC.
                                     OAKVIEW ESTATES OF BOLIVAR, INC.
                                     PEBBLE CREEK ESTATES, INC.
                                     RIVER BLUFF ESTATES, INC.

                  Signature Page to Amendment No.1 and Consent
                                 Res-Care, Inc.
                 Credit Agreement dated as of December 31, 2003
<PAGE>
                              SHA-REE ESTATES, INC.
                              SKYVIEW ESTATES, INC.
                              UPWARD BOUND, INC.
                              WILLARD ESTATES, INC.
                              CAREERS IN PROGRESS, INC.
                              EDUCARE COMMUNITY LIVING-NORMAL LIFE, INC.
                              NORMAL LIFE OF CALIFORNIA, INC.
                              NORMAL LIFE OF CENTRAL INDIANA, INC.
                              NORMAL LIFE FAMILY SERVICES, INC.
                              NORMAL LIFE OF GEORGIA, INC.
                              NORMAL LIFE OF LAFAYETTE, INC.
                              NORMAL LIFE OF LAKE CHARLES, INC.
                              NORMAL LIFE OF LOUISIANA, INC.
                              NORMAL LIFE OF SOUTHERN INDIANA, INC.
                              RES-CARE FLORIDA, INC.
                              EDUCARE COMMUNITY LIVING CORPORATION-AMERICA
                              PSI HOLDINGS, INC.
                              VOCA CORPORATION OF AMERICA
                              VOCA RESIDENTAL SERVICES, INC.
                              B.W.J. OPPORTUNITY CENTERS, INC.
                              THE CITADEL GROUP, INC.
                              EDUCARE COMMUNITY LIVING CORPORATION-GULF COAST
                              EDUCARE COMMUNITY LIVING CORPORATION-MISSOURI
                              EDUCARE COMMUNITY LIVING CORPORATION-NEVADA
                              EDUCARE COMMUNITY LIVING CORPORATION-NEW MEXICO
                              EDUCARECOMMUNITY LIVING CORPORATION-NORTH CAROLINA
                              EDUCARE COMMUNITY LIVING CORPORATION-TEXAS
                              VOCA CORP.
                              VOCA CORPORATION OF FLORIDA
                              VOCA CORPORATION OF INDIANA
                              VOCA CORPORATION OF MARYLAND
                              VOCA CORPORATION OF NEW JERSEY

                  Signature Page to Amendment No.1 and Consent
                                 Res-Care, Inc.
                 Credit Agreement dated as of December 31, 2003
<PAGE>
                                    VOCA CORPORATION OF NORTH CAROLINA
                                    VOCA CORPORATION OF OHIO
                                    VOCA CORPORATION OF WASHINGTON, D.C.
                                    VOCA CORPORATION OF WEST VIRGINIA, INC.

                                    By: ________________________________________
                                           L. Bryan Shaul
                                    Title: Assistant Treasurer

                                    THE ACADEMY FOR INDIVIDUAL EXCELLENCE, INC.
                                    ALTERNATIVE YOUTH SERVICES, INC.
                                    GENERAL HEALTH CORPORATION
                                    NEW SUMMIT SCHOOL CORPORATION
                                    YOUTHTRACK, INC.
                                    ARBOR e&t, llC
                                    EMPLOY-ABILITY UNLIMITED, INC.

                                    By: ________________________________________
                                           L. Bryan Shaul
                                    Title: Treasurer

                                    EDUCARE COMMUNITY LIVING LIMITED PARTNERSHIP
                                    By:    Community Alternatives Texas
                                           Partner, Inc.
                                    Its:   General Partner

                                    By: ________________________________________
                                           L. Bryan Shaul
                                    Title: Assistant Treasurer

                  Signature Page to Amendment No.1 and Consent
                                 Res-Care, Inc.
                 Credit Agreement dated as of December 31, 2003
<PAGE>
                                    NORMAL LIFE OF INDIANA
                                    By:    Normal Life of Central Indiana, Inc.
                                           one of its General Partners

                                    By: ________________________________________
                                           L. Bryan Shaul
                                    Title: Assistant Treasurer

                                    and

                                    By:    Normal Life of Southern Indiana, Inc.
                                           the other General Partner

                                    By: ________________________________________
                                           L. Bryan Shaul
                                    Title: Assistant Treasurer

                                    VOCA OF INDIANA, LLC, a limited
                                    liability company

                                    By: ________________________________________
                                           L. Bryan Shaul
                                    Title: Assistant Treasurer

                                    CREATIVE NETWORKS, LLC

                                    By: ________________________________________
                                           L. Bryan Shaul
                                    Title: Manager

                  Signature Page to Amendment No.1 and Consent
                                 Res-Care, Inc.
                 Credit Agreement dated as of December 31, 2003<PAGE>
                                                                    EXHIBIT 10.3

                          MANAGEMENT SERVICES AGREEMENT

      THIS MANAGEMENT SERVICES AGREEMENT (the "Agreement"), is made as of this
23rd day of June, 2004, by and between ONEX PARTNERS MANAGER LP a Delaware
limited partnership ("Onex") and RES-CARE, INC., a Kentucky corporation (the
"Company").

                            - PRELIMINARY STATEMENT -

      Onex Partners, LP, a Delaware limited liability company ("Onex Partners")
and an affiliate of Onex, along with various other affiliates, own 48,905 shares
of Series A Preferred Stock of the Company (the "Preferred Stock"), acquired
pursuant to the terms and conditions of the Preferred Stock Purchase Agreement
dated March 10, 2004;

      As a condition to the acquisition of the Preferred Stock, the Company and
Onex Partners agreed to enter into a Management Services Agreement wherein the
Company would contract with Onex Partners, or one of its designated affiliates,
to provide mutually agreed-upon business management services to the Company;

      Onex, an affiliate of Onex Partners, has access to substantial experience
in strategic and business planning, financial services, business arrangements,
business negotiations and various other business management and administration
matters;

      The Company desires to avail itself of the resources, advice, assistance
and personnel of and available to Onex; and

      Onex is willing to provide such services to the Company and the Company is
willing to engage Onex on the terms and conditions set forth in this Agreement.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

                                  - AGREEMENT -

                                   ARTICLE 1

                                    SERVICES

      SECTION 1.1 ENGAGEMENT OF ONEX. The Company hereby engages Onex to provide
the services delineated in Section 1.2 below (the "Services") and Onex agrees to
provide such Services, in accordance with the terms and conditions set forth
herein. The Company expressly authorizes Onex and grants Onex all necessary
authority and power to render the Services to the Company on the terms and
conditions set forth herein.

      SECTION 1.2 SERVICES. During the Term (as defined herein) Onex shall
assist the Company's Board of Directors and its management in such business and
financial matters of the Company and its affiliates as may be reasonably
requested by the Board of Directors or its management. Without limiting the
generality of the foregoing, the services to be rendered by Onex include: (i)
assisting with the development and implementation of corporate strategic plans
and acquisition and divestiture strategies; (ii) reviewing and providing advice
on corporate investments; (iii) providing management, tax, risk management and
financial advisory services; (iv) assisting in advising on subsequent debt and
equity financings (the "Services"); and (v) such other services as the Board of
Directors or management of the Company may reasonably request. From time to time
thereafter, the Board of Directors of the Company may request Onex and/or its
affiliates to provide additional services in addition to those contemplated
herein. However, the Company and Onex both acknowledge and agree that the
services referred to above do not include investment banking or financial advice
in connection with business acquisitions.

<PAGE>

      SECTION 1.3 SOURCING OF SERVICES. For purposes of this Agreement, Onex may
provide services under this Agreement by supplying Onex personnel or, at its
sole discretion, personnel from one or more of its affiliates. Under no
circumstance shall Onex be obligated to provide the Company or its subsidiaries
the services of external advisors, consultants and/or professionals. However,
Onex may seek the services of independent third parties, with such services
being paid for by the Company, so long as the Company approves of such services
in advance.

                                   ARTICLE 2

                                      TERM

      SECTION 2.1 TERM. Subject to the terms herein, the term of this Agreement
shall commence on July 1, 2004 (the "Effective Date") and shall continue for an
initial five-year term (the "Term"). Thereafter, the Agreement shall be renewed
automatically for successive one-year periods.

      SECTION 2.2 TERMINATION OF THIS AGREEMENT. This Agreement shall terminate
at such time when Onex Partners, or any of its affiliates, individually or in
the aggregate, no longer hold, either legally or beneficially, at least 26,452
shares of the Preferred Stock.

      SECTION 2.3 CONSEQUENCES OF TERMINATION. Upon termination of this
Agreement, all power and authority granted Onex by the Company shall cease and
terminate immediately. Within 30 days of any termination of this Agreement, the
Company shall remit to Onex any accrued but unpaid Service Fee (as defined
herein) and reimbursable expenses.

                                       2
<PAGE>

                                   ARTICLE 3

                                  COMPENSATION

      SECTION 3.1 COMPENSATION.

            (a) COMPENSATION. For and in consideration of the agreement of Onex
to provide the Services when requested by the Company's Board of Directors or
management, the Company shall pay Onex $350,000 per year (the "Service Fee").

            (b) PAYMENT. The Company shall pay to Onex the Service Fee, in
advance, on a quarterly basis, on the first business day of January, April, July
and October of each year commencing July 1, 2004. Quarterly payments shall be
made not later than 5 business days after the beginning of the quarter in which
the Services will be performed. All payments to be made by the Company to Onex
shall be immediately available funds, unless the parties agree otherwise. In the
event the Company fails to pay the Service Fee to Onex, it shall be required to
pay Onex interest on all such unpaid amounts at an annual interest rate from
time to time announced by Bank One as its "Prime Rate" of interest used by it as
a reference rate for commercial loans in United States dollars adjusted on a
daily basis for changes in that rate. The Service Fee (and any interest due
thereon) shall accrue on a daily basis from and after July 1, 2004, and each
quarterly payment shall be in respect of the three-month period then ended or
such shorter period within such three months during which the Agreement was in
effect. Any amounts due to Onex under this Agreement may, at Onex's sole
discretion and direction, be payable to one or more affiliates of Onex.

            (c) ANNUAL ACCOUNTING. During the first fiscal quarter of each year,
Onex shall invoice or provide a written accounting, in either case describing in
reasonable detail the Services provided during the preceding fiscal year
pursuant to this Agreement.

      SECTION 3.2 EXPENSES. All reasonable ordinary and necessary expenses,
including but not limited to travel, fees for external consultants, advisors and
professionals approved by the Company as provided herein and other direct
out-of-pocket expenses incurred by Onex or its affiliates in the performance of
the Services shall be paid or reimbursed by the Company. The Company shall,
within 30 days after the receipt of an invoice from Onex, reimburse Onex in
full.

                                   ARTICLE 4

                                  MISCELLANEOUS

      SECTION 4.1 RELATIONSHIP OF PARTIES. The parties acknowledge and agree
that each is a separate business entity, that each has its own management, and
separate policies and procedures, and that (except as otherwise set forth
herein) nothing contained herein shall constitute the delegation of authority
and power to Onex to manage and/or control the Company's business. The parties
further acknowledge and agree that the relationship established between the two
is that of independent contractors and is not a joint venture or partnership and
that the Services to be performed are intended to be merely auxiliary to and
supportive of the Company's business. Neither Onex nor its employees shall be
considered employees of the Company. Onex shall have no right to enter into any
contract or undertaking in the name of or for the account of the Company, nor to
assume or create any obligation of any kind, express or implied, on behalf of
the Company, without the prior written consent of the Company.

                                       3
<PAGE>

      SECTION 4.2 INDEMNIFICATION. The Company agrees to indemnify, defend and
hold harmless, Onex, its affiliates, directors, officers and/or employees from
and against any and all loss, liability, suits, claims, costs, damages and
expenses (including reasonable attorney fees) arising from their performance
hereunder, except where Onex's actions or omissions rise to the level of gross
negligence or willful misconduct.

      SECTION 4.3 NOTICE. Any notice, request, consent or communication
(collectively "Notice") sent under this Agreement shall be effective only if it
is in writing and (a) personally delivered, (b) sent by certified or registered
mail, return receipt requested, postage prepaid, (c) sent by a nationally
recognized overnight delivery service, with delivery confirmed, or (d) telexed
or telecopied with receipt confirmed, addressed as follows:

      If to Onex:

                      Onex Partners Manager LP
                      712 5th Avenue, 40th Floor
                      New York, New York 10019
                      Attention: Robert M. Le Blanc, Managing Director,
                                 Onex Partners Manager GP Inc.
                      Fax: (212) 582-0909

      If to the Company:

                      Res-Care, Inc.
                      10140 Linn Station Road
                      Louisville, Kentucky 40223
                      Attention: Ronald G. Geary, President
                      Fax: (502) 394-2164

or such other persons or addresses as shall be furnished in writing by any party
to the other party. A Notice shall be deemed to have been given as of the date
(i) when personally delivered, (ii) five (5) days after the date when deposited
with the United States mail properly addressed, (iii) when receipt of a Notice
sent by an overnight delivery service is confirmed by such overnight delivery
service, or (iv) when receipt of the telex or telecopy is confirmed, as the case
may be, unless the sending party has actual knowledge that a Notice was not
received by the intended recipient.

      SECTION 4.4 WAIVER. The failure of either of the parties to insist, in any
one or more instances, upon performance of any of the terms or conditions of
this Agreement, shall not be construed as a waiver or relinquishment of any
rights granted hereunder or the future performance of any such term, covenant or
condition.

                                       4
<PAGE>

      SECTION 4.5 COMPLETE UNDERSTANDING. This Agreement constitutes the
complete understanding among the parties. No alteration or modification of any
of this Agreement's provisions shall be valid unless made in writing and signed
by all the parties to this Agreement.

      SECTION 4.6 APPLICABLE LAW. The laws of the Commonwealth of Kentucky shall
govern all aspects of this Agreement, irrespective of the fact that one or more
of the parties now is or may become a resident of a different state, or that the
one or more of the parties now or hereafter locates its principal office outside
the Commonwealth of Kentucky. The parties acknowledge that the courts of the
Commonwealth of Kentucky shall have exclusive jurisdiction over this Agreement
and specifically waive any claims which they may have that involve jurisdiction
or venue, including but not limited to forum non conveniens. Service of process
for any claim which arises under this Agreement shall be valid if made in
accordance with the notice provisions set forth in Section 4.3 of this
Agreement. If service of process is made as aforesaid, the party served agrees
that such service shall constitute valid service, and specifically waives any
objections the party served may have under any state or Federal law or rule
concerning service of process. Service of process in accordance with this
Section 4.6 shall be in addition to and not to the exclusion of any other
service of process method legally available.

      SECTION 4.7 DESCRIPTIVE HEADINGS. All section headings, titles and
subtitles are inserted in this Agreement for the convenience of reference only,
and are to be ignored in any construction of this Agreement's provisions.

      SECTION 4.8 SEVERABILITY. If a court of competent jurisdiction rules that
any one or more of this Agreement's provisions are invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any of this Agreement's other provisions, and this Agreement
shall be construed as if it had never contained such invalid, illegal or
unenforceable provision.

      SECTION 4.9 SUCCESSORS AND ASSIGNS AND THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.

      SECTION 4.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts for all purposes shall constitute an
original.

      SECTION 4.11 ASSIGNMENT. Except as otherwise set forth herein, neither the
Company nor Onex may assign its rights or obligations under this Agreement
without the written consent of the other party. The Company acknowledges and
agrees that Onex may assign this Agreement to any of its affiliates where at
least 50% of the voting securities are owned directly or indirectly by Onex
Partners and any such affiliate may assign the same to Onex or any other such
affiliate of Onex, without the consent of the Company.

                           [SIGNATURE PAGES TO FOLLOW]

                                       5
<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the Effective Date.

                                     ONEX PARTNERS MANAGER LP
                                     a Delaware limited partnership

                                     By:  Onex Partners Manager GP Inc.,
                                          its General Partner

                                     Name: /s/ Robert M. Le Blanc
                                           -------------------------------------
                                     Its:  Managing Director

                                     Name: /s/ Eric J. Rosen
                                           -------------------------------------
                                     Its:  Managing Director
                                           -------------------------------------

                                     RES-CARE, INC.
                                     a Kentucky corporation

                                     By: /s/ Ronald G. Geary
                                         ---------------------------------------
                                     Name: Ronald G. Geary
                                           -------------------------------------
                                     Its:   President
                                           -------------------------------------

                                       6

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