Document:

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                                                                    EXHIBIT 10.1
                                 RES-CARE, INC.
                             10140 LINN STATION ROAD
                           LOUISVILLE, KENTUCKY 40223
                                 (502) 394-2100

                                  March 8, 2002

Jeffrey M. Cross
2810 Belknap Beach Road
Prospect, Kentucky 40059

         RE:      EMPLOYMENT AGREEMENT DATED FEBRUARY 6, 2001

Dear Jeff:

         Reference is hereby made to that certain Employment Agreement dated
February 6, 2001 between Res-Care, Inc. (the "Company") and you ("Cross"), as
amended by that certain letter agreement dated December 31, 2001 (collectively,
the "Employment Agreement"). Capitalized terms not specifically defined herein
shall have the meanings given to them in the Employment Agreement. The parties
hereto desire to provide for the mutual termination of the Employment Agreement
and Cross' employment with the Company. This letter agreement shall set forth
the parties' agreements with regard to such matters. The parties hereby agree as
follows:

         1. The Employment Agreement and Cross' employment with the Company
shall terminate effective as of March 31, 2002. Such termination is by mutual
consent of the parties. The terms and conditions of such termination and Cross'
compensation and obligations in connection with the same shall be governed by
this letter agreement. Section 5 of the Employment Agreement shall not be
applicable to such termination and no provision of the Employment Agreement
shall survive its termination, notwithstanding the provisions of Section 16 of
the Employment Agreement to the contrary.

         2. Effective March 31, 2002, Cross hereby resigns as an officer,
director, Leadership Team member, management committee member and/or manager of
all of the Res-Care Companies (as defined in paragraph 11(a) hereof).
Contemporaneously herewith, Cross shall execute the resignation letter attached
hereto as Exhibit A. Between March 9, 2002 and March 31, 2002, the Employee
shall be generally available to the Company and its personnel at the Company's
reasonable request to provide assistance and information regarding the
operations of the Company's Division for Persons with Disabilities prior to the
date hereof and regarding the transition of

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Jeffrey M. Cross
March 8, 2002
Page 2

management of the Company's Division for Persons with Disabilities. Except as
requested by an officer of the Company, after March 8, 2002, the Employee will
not enter the offices of the Company or otherwise represent or take any actions
on behalf of any of the Res-Care Companies. Not later than April 2, 2002, Cross
shall execute and deliver to the Chairman and/or any officer designated by the
Chairman a certificate of Cross' level of compliance and Cross' knowledge of the
Company's level of compliance with applicable laws, regulations and Company
policies regarding the provision of services to clients and billings to its
paying agencies. Cross further specifically acknowledges that he is aware that
it is the Company's policy that all employees immediately report to their
supervisor, other management personnel, or the appropriate state and federal
authorities, any activity which is, was, or may be in violation of state or
federal laws or the Company's policies and procedures. Cross hereby represents
that sufficient opportunities were made available to him to make such report(s),
and that he has never knowingly witnessed or been a party to any activity in
violation of federal or state laws while employed at the Company. Further, he
agrees that he has observed no violations of Company policies or procedures
except to the extent that he may have already reported the same to the Company
in writing.

         3. Not later than March 31, 2002, Cross shall return to the Company any
property of the Company or its subsidiaries then in Cross' possession or
control, including without limitation, any Confidential Information (as defined
in paragraph 11(d)(ii) 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 paragraph 11(d)(iii) hereof) of the Company.
Cross 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. Notwithstanding the preceding provisions of this
paragraph 3 to the contrary, the Company acknowledges that the tangible personal
property described in Exhibit B attached hereto shall be retained by Cross and
the Company assigns and transfers to Cross any rights it has in such property.
Cross represents that none of such property contains any Confidential
Information, except for any Confidential Information that will be deleted as
provided in the next sentence. Cross agrees that prior to March 31, 2002, he
will cooperate with the Company's Information Technology Department to delete
any Confidential Information from the electronic devices included in the list
set forth on Exhibit B.

         4. Cross acknowledges and agrees that no Operational Incentive has been
earned by him for any calendar quarter during the Term. Cross agrees that all of
the options granted pursuant to Section 3(d) of the Employment Agreement, other
than the options that vested on March 8, 2001 and the options that will vest on
March 8, 2002, are not vested and shall expire and lapse as of March 31, 2002.
Cross agrees that he shall not exercise any of such options and shall not sell
any shares of common stock of the Company until the third trading day after the
press release described in

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Jeffrey M. Cross
March 8, 2002
Page 3

paragraph 7 hereof is issued. Cross agrees that except for any amounts payable
hereunder or Cross' accrued and unused vacation or paid time off as of March 31,
2002, Cross shall be entitled to no severance or other payment of any nature in
connection with the termination of his employment. The amount of Cross' accrued
and unused vacation or paid time off shall be paid to Cross (subject to
applicable withholding) not later than April 15, 2002.

         5. Prior to March 31, 2002, the Chairman will execute and deliver to
Cross a reference letter in the form attached as Exhibit C. In addition, prior
to such date, the Chairman will provide to Cross a list of prospective
employment opportunities for Cross known to the Chairman.

         6. To the extent that the Company has not previously paid such amount,
the Company shall reimburse Cross for his tuition for his participation in the
Masters of Business Administration Program at Vanderbilt University for the
current semester and his reasonable travel expenses in connection with his
attendance at such program in Nashville, Tennessee for the remaining four (4)
weekend sessions to be completed by April 30, 2002. No reimbursements will be
made for any sessions of such program or Cross' participation in such program
after April 30, 2002. Such reimbursement shall be in amounts consistent with the
prior reimbursements under Section 3(e)(iii) of the Employment Agreement. Not
later than March 8, 2002, Cross shall submit to the Chairman any requests for
reimbursement by the Company of expenses of Cross allowable under Section 3(f)
of the Employment Agreement.

         7. Cross acknowledges that the Company is obligated to issue a press
release announcing the termination of Cross' employment and the Employment
Agreement on or around March 29, 2002. Not later than five (5) days prior to the
proposed issuance of such press release, the Chairman shall provide Cross with a
draft of the same and shall permit Cross to provide his input into such press
release and shall negotiate in good faith any requested changes by Cross. The
final version of such press release that shall be issued shall be subject to the
Company's approval. The Company agrees that Cross may send a brief letter, in
the form of Exhibit D attached hereto, to the Vice Presidents of the Company's
Division for Persons with Disabilities expressing appreciation for their support
and acknowledging his departure.

         8. Should Cross elect to exercise his option to continue his health
care benefits currently provided by the Company following the termination of his
employment, the Company will reimburse Cross for his payment to the Company of
the monthly premiums (and any administrative charge paid by Cross to the
Company) for such coverage for the period April 1, 2002 through December 31,
2002. Such reimbursement shall be made within five (5) after submission of a
written request for reimbursement by Cross to the Chairman. The continuation of
such health care benefits after December 31, 2002 shall be at Cross' sole
expense. The COBRA election, as regulated by ERISA, shall begin at March 31,
2002, Cross' last date of official employment.

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Jeffrey M. Cross
March 8, 2002
Page 4

         9. On the date of the expiration of the Revocation Period (as defined
in paragraph 17 hereof), Cross shall execute and deliver to the Company a
promissory note in the form attached hereto as Exhibit E (the "Substitute Note")
and the loan agreement in the form attached hereto as Exhibit F (the "Substitute
Loan Agreement"). The Substitute Note shall be in the principal amount equal to
the then aggregate principal balance of any accrued and unpaid interest on the
Existing Note and the Additional Note and shall be a replacement for the
Existing Note and the Additional Note. Contemporaneously with the delivery by
Cross of the Substitute Note and the Substitute Loan Agreement, the Existing
Note and the Additional Note shall be cancelled and the Existing Loan Agreement
and the Additional Loan Agreement shall be terminated.

         10. Provided Cross complies with his obligations in paragraph 11
hereof, on April 15, 2002 and on the fifteenth (15th) day of each of the next
nine (9) calendar months thereafter, the Company shall pay to Cross the sum of
$18,000 by Company check. The Substitute Note shall provide that provided Cross
complies with his obligations in paragraph 11 hereof, on the fifteenth (15th)
day of each calendar month, commencing on February 15, 2003, and ending on
September 15, 2003, the outstanding principal balance of the Substitute Note
shall be reduced by one-eighth of its principal balance and the aggregate amount
of interest accrued but unpaid on such amount of principal reduction shall be
reduced and forgiven by the Company. The Substitute Note shall provide that in
the event of Cross' death, the entire remaining principal balance and all
accrued and unpaid interest on the Substitute Note shall be forgiven by the
Company and deemed paid. All of the amounts paid and principal and interest
forgiven as described in this paragraph 10 shall be considered consideration for
Cross' covenants in paragraph 11 hereof. Prepayment of the Substitute Note shall
not affect or alter Cross' obligations under paragraph 11 hereof.

         11. Cross hereby agrees that the following covenants shall be
applicable to him commencing April 1, 2002:

                  (a) Cross acknowledges that (i) his services under the
         Employment Agreement were of a special, unique and extraordinary
         character and that his position with the Company placed him in a
         position of confidence and trust with the operations of the Company,
         its subsidiaries and affiliates (collectively, the "Res-Care
         Companies") and allowed him access to Confidential Information, (ii)
         the Company provided Employee with a unique opportunity as the
         President of the Company's Division for Persons with Disabilities,
         (iii) the nature and periods of the restrictions imposed by the
         covenants contained in this paragraph 11 are fair, reasonable and
         necessary to protect and preserve for the Company the benefits of
         Cross' employment under the Employment Agreement, (iv) the Res-Care
         Companies would sustain great and irreparable loss and damage if Cross
         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
         subparagraph (d)(i) of this paragraph 11), and (vi) the Territory is
         reasonably sized because the current Business of the

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Jeffrey M. Cross
March 8, 2002
Page 5

         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.

                  (b) Having acknowledged the foregoing, Cross covenants that
         without limitation as to time, (i) 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 subparagraph (d)(iv) of this
         paragraph 11), any Confidential Information, and (ii) 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) Having acknowledged the statements in paragraph 11(a)
         hereof, Cross covenants and agrees with the Res-Care Companies that he
         will not, directly or indirectly, from April 1, 2002 through September
         30, 2003, 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 Cross' employment under the
         Employment Agreement; 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. Cross further agrees
         that during such period, he will not undertake any planning for or
         organization of any business activity that would be competitive with
         the Business.

                  (d) For purposes of this letter agreement:

                           (i) The "Territory" shall mean the forty-eight (48)
                  contiguous states of the United States, the United States
                  Virgin Islands, Puerto Rico and all of the Provinces of
                  Canada.

                           (ii) "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

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Jeffrey M. Cross
March 8, 2002
Page 6

                  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, 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.

                           (iii) The "Business" of the Res-Care Companies shall
                  mean the business of providing youth treatment or services,
                  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, training services,

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Jeffrey M. Cross
March 8, 2002
Page 7

                  or providing management and/or consulting services to third
                  parties relating to the foregoing.

                           (iv) 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) Cross acknowledges that his breach of any covenant
         contained in this paragraph 11 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, Cross 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 Cross of any covenant contained in this
         paragraph 11. If any provision of this paragraph 11 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) If Cross, in the future, seeks or is offered employment by
         any other Person, he shall provide a copy of this paragraph 11 to the
         prospective employer prior to accepting employment with that
         prospective employer.

         12. The Company, for itself and all of the other Res-Care Companies,
and for their successors, affiliates, employees, officers, directors and
assigns, hereby fully and completely release, acquit and forever discharge
Cross, Cross' heirs, successors, assigns, and legal representatives
(collectively, the "Cross Indemnitees"), from all claims, liabilities, demands
and causes of action which they may have or claim to have against the Cross
Indemnitees, known or unknown; however, this release does not waive any claims
based upon fraud, gross misrepresentation or illegal conduct and does not waive
any rights or claims which may arise after the date that this letter agreement
is signed by the parties and does not release Cross' obligations under this
letter agreement, the Substitute Note or the Substitute Loan Agreement or affect
the Company's rights under such documents.

         13. Cross, for himself and his heirs, successors, assigns, and legal
representatives, hereby fully and completely releases, acquits and forever
discharges the Company and all of the other Res-Care Companies, as well as the
employees, officers and directors of any of them (collectively, the "Company
Parties") from all claims, liabilities, demands and causes of action which Cross
may have or claim to have against the Company Parties. This includes but is not
limited to a release of any rights or claims that Cross may have under the Age
Discrimination in Employment Act, which

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Jeffrey M. Cross
March 8, 2002
Page 8

prohibits age discrimination in employment; Title VII of the Civil Rights Act of
1964, which prohibits discrimination in employment based on race, color,
national origin, religion or sex; the Equal Pay Act, which prohibits paying
males and females unequal pay for equal work; the Americans with Disabilities
Act, and any other federal, state or local laws or regulations. This also
includes a release by Cross of any contract, tort or wrongful discharge claims.
This release covers claims that are both known and unknown. This release does
not waive any rights or claims which might arise after the date that this letter
agreement is signed by the parties and does not release the obligations of the
Company under this letter agreement, the Substitute Note or the Substitute Loan
Agreement, or affect Cross' rights under such documents, as modified herein.
This letter agreement also does not waive any rights or claims, if any, that
Cross may have to Cross' vested stock options (other than the options which have
not vested as of March 31, 2002), which options shall be governed by, and
exercisable for a limited period of time after March 31, 2002 in accordance
with, the terms of the Stock Plan and any Award Agreement (as defined in the
Stock Plan) applicable thereto, or any rights or claims, if any, that Cross may
have to 401k plan or pension benefits under the Company's retirement plans. This
letter agreement does not waive the right to file a charge with or participate
in any investigation conducted by the Equal Employment Opportunity Commission
(the "EEOC") but Cross agrees that he does waive his right, if any, to any
monetary recovery if the EEOC pursues any claim on his behalf.

         14. Cross agrees never to make any claim or institute any suit,
complaint, proceeding, grievance or action of any sort in any court,
administrative agency or tribunal arising from his employment with the Company
or any other occurrence prior to his signing this letter agreement. Cross hereby
waives any right to recover any relief as a result of any claims or proceedings
made on his behalf.

         15. Cross acknowledges that he has been given a period of at least
twenty-one (21) days to review and consider this letter agreement before signing
it. Cross further acknowledges that he had the opportunity to use as much of the
twenty-one (21) day period as he wished prior to signing.

         16. Cross acknowledges that he has been advised by the Company that
this letter agreement is a binding legal document. Cross acknowledges that the
Company advised him to consult with an attorney, which he has done, before
signing this letter agreement.

         17. Cross understands that he may revoke this letter agreement within
seven (7) days after he signed it (the "Revocation Period") and that this letter
agreement is not effective until this revocation period has passed. To revoke
this letter agreement, Cross must deliver a written notice of revocation to
Ronald G. Geary, Chairman, President and Chief Executive Officer, Res-Care, Inc.
at 10140 Linn Station Road, Louisville, Kentucky 40223, by no later than the
close of business on the seventh day after he signed this letter agreement.
Cross understands that if he revokes this letter agreement, it shall not be
effective or enforceable.

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Jeffrey M. Cross
March 8, 2002
Page 9

         18. The parties agree that this letter agreement, together with the
Substitute Note and the Substitute Loan Agreement, set forth the entire
agreement between Cross and the Company. Cross acknowledges that the Company has
not made any promises to him other than in this letter agreement, and that no
amendment may be made to this letter agreement unless in writing and signed by
Cross and the Company. Cross acknowledges that he has not been coerced or
intimidated or threatened in any way and that he signs this letter agreement
knowingly and voluntarily.

         19. The invalidity or unenforceability of any particular provision of
this letter agreement shall not affect the other provisions hereof and this
letter agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.

         20. This letter 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 letter agreement and that venue shall be proper
only in Jefferson County, Kentucky, the location of the principal office of the
Company and current residence of Cross.

         If the foregoing accurately reflects your understanding of the
agreement of the parties, please sign both originals of this letter agreement
and return an original to the undersigned.

                                        Sincerely,

                                        Ronald G. Geary
                                        Chairman, President and Chief Executive
                                        Officer

I ACKNOWLEDGE AND REPRESENT TO THE COMPANY THAT I HAVE CAREFULLY READ THIS
LETTER AGREEMENT. I UNDERSTAND IT AND HAVE NO QUESTIONS ABOUT WHAT IT MEANS. I
HAVE NOT BEEN FORCED OR INTIMIDATED IN ANY WAY TO SIGN IT, AND I AM KNOWINGLY
AND VOLUNTARILY ENTERING INTO IT.

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Jeffrey M. Cross
March 8, 2002
Page 10

I ACKNOWLEDGE THAT I HAVE CONSULTED WITH AN ATTORNEY BEFORE SIGNING THIS
AGREEMENT.

                                -----------------------------------------------
                                Jeffrey M. Cross

                                Dated:
                                      -----------------------------------------<PAGE>

                                                                    Exhibit 10.2
                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT ("Employment Agreement") is dated this 13th
day of January, 2002, between RES-CARE, INC., a Kentucky corporation (the
"Company"), and WILLIAM J BALLARD (the "Employee").

         RECITALS:

         WHEREAS, the Company desires to reorganize its Division for Youth
Services with the result that such Division will include the Company's wholly
owned subsidiary Youthtrack, Inc. and the Company's Alternative Youth Services
Operations and the Company will create a new Division for Training Services that
will include the Company's Job Corps Operations and other training services
operations;

         WHEREAS, the Employee has extensive experience in the management of
operations providing youth services and treatment, both adjudicated and
nonadjudicated;

         WHEREAS, the Company desires to offer to Employee the opportunity to
serve as the President of the newly reorganized Division for Youth Services and
the Employee desires to accept such position; and

         WHEREAS, the Company and the Employee desire to execute this Employment
Agreement to set forth the terms and conditions of Employee's employment by the
Company and agreeing to be bound by the terms hereof.

         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 14, 2002 (the
"Commencement Date"), and ending on December 31, 2004, 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
sixty (60) 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."

         2. DUTIES.

<PAGE>

                  (a) EMPLOYMENT AS PRESIDENT OF DIVISION FOR YOUTH SERVICES.
         During the Term, the Employee shall serve as the President of the
         Division of Youth Services of the Company. The Employee shall, subject
         to the supervision and control of the Chairman, President and Chief
         Executive Officer of the Company ("Chairman") and the Board of
         Directors of the Company (the "Board"), perform such duties and
         exercise such powers over and with regard to the management of the
         Company's Division for Youth Services as may be prescribed from time to
         time by the Chairman, including, without limitation, serving as a
         member of the ResCare Resource Center Leadership Team and serving as an
         officer or director of one or more subsidiaries or affiliates of the
         Company, if elected to such positions, without any further salary or
         other compensation. As reorganized, the Company's Division for Youth
         Services will include the Company's wholly owned subsidiary Youthtrack,
         Inc. and the Company's Alternative Youth Services Operations.

                  (b) TIME AND EFFORT. The Employee shall devote his best
         efforts 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; (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; and (iii)
         continue to serve as a director of Setech, Inc., and with the prior
         approval of the Chairman, may serve on one other outside board of
         directors. The Employee agrees that none of such activities will
         detract from his ability to perform his duties hereunder and none of
         the activities of any of such entities will involve the provision of
         services competitive with those offered by any of the Res-Care
         Companies (as defined in Section 7(a) hereof).

                  (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 Chairman 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 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.

                                       2
<PAGE>

         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
         $200,000. 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, 2003, by the greater of (x) five percent
         (5%) or (y) 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 PROGRAM. During the Term, the Employee shall be
         eligible for incentive compensation in accordance with a written
         incentive program mutually established by the Chairman and the Employee
         on an annual basis (the "Incentive Program"). The Incentive Program
         shall provide that sixty-five percent (65%) of the maximum incentive
         that may be earned by the Employee shall be based on goals mutually
         established by the Chairman and the Employee relating to the
         performance (financial, compliance and otherwise) of the Division for
         Youth Services and thirty-five percent (35%) of the maximum incentive
         that may be earned by the Employee shall be based on the financial
         performance of the Company and its subsidiaries as a whole. All
         incentive payments under the Incentive Program shall be determined
         annually, and shall be calculated by reference to the incentive
         percentage earned by the Employee multiplied by the Base Salary
         actually paid to the Employee for the calendar year for which the
         incentive is determined. The maximum percentage of the Employee's Base
         Salary that the Employee may earn under the Incentive Program shall be
         forty percent (40%) of the Base Salary actually paid to the Employee
         for the calendar year for which the incentive is determined. Any annual
         incentive earned by the Employee for any calendar year shall be paid by
         the Company to the Employee not later than sixty (60) days after the
         end of such calendar year. Any amounts earned by the Employee under the
         Incentive Program shall be hereinafter referred to as the "Performance
         Incentive."

                  (c) 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 vacation, sick and other 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. The Company
         reserves the right to amend, modify or terminate in their entirety any
         of such programs and plans. The

                                       3
<PAGE>

         Company shall reimburse the Employee for the amount paid by him for
         health insurance premiums for Cobra coverage under his former
         employer's health insurance plan for the period from the Commencement
         Date and the date Employee is eligible for coverage under the Company's
         health insurance plan. The Employee shall submit requests for such
         reimbursement monthly.

                  (d) STOCK OPTION GRANT. As an inducement for the execution of
         this Employment Agreement by the Employee, on the Commencement Date,
         the Employee shall be granted options to purchase 50,000 shares of
         Company common stock. Such stock options shall be granted pursuant to
         and, to the extent not expressly inconsistent herewith, governed by the
         Company stock option plan that is applicable to its managerial
         employees (the "Stock Plan"). Twenty-five percent (25%) of such stock
         options shall vest and be exercisable on the Commencement Date.
         Provided the Employee shall continue to be employed hereunder,
         twenty-five percent (25%) of such stock options shall vest and be
         exercisable on December 31, 2002, December 31, 2003 and December 31,
         2004 (with such number of shares to be adjusted in accordance with the
         terms of the Stock Plan for stock splits, stock dividends,
         recapitalizations and the like). Any stock options that shall not be
         vested at the effective date of termination of the Employee's
         employment hereunder shall expire and any vested options shall expire
         in accordance with the terms of the Stock Plan. Such options shall have
         an exercise price based upon the closing sale price of Company common
         stock as reported on the Nasdaq National Market on the Commencement
         Date (or if the Commencement Date is not a trading date for the Company
         common stock, on the immediately preceding trading date).

                  (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 Chairman.

                  (f) OFFICE AT RESIDENCE. The Company acknowledges that certain
         of the services of Employee that do not require meetings at offices of
         the Company or travel may be rendered by Employee from an office
         located at his residence (the "Home Office"). At the request of the
         Employee, the Company will furnish to Employee for his use at the Home
         Office during the Term a personal computer and printer and reimburse
         Employee for the reasonable cost of the installation of the same, and
         reimburse Employee for the monthly cost of a dedicated telephone line
         to such Home Office. All of the assets so furnished to Employee shall
         remain the Company's property. The Company shall not be required to
         furnish to Employee an administrative assistant at such Home Office,
         but shall provide Employee the assistance of an administrative
         assistant from a pool of administrative assistants and shall provide
         the use of an office when the Employee is at the ResCare Resource
         Center. Employee's travel schedule shall be established in the
         discretion of the Chairman.

                                       4
<PAGE>

                  (g) 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 exercise of any option and the reduction and forgiveness of any
         portion of the Loan), 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 immediately terminate the
         Employee's employment hereunder for Cause by delivering to the Employee
         a Notice of Termination so indicating. For purposes of this Employment
         Agreement, the Company shall 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.

                                       5
<PAGE>

                  (d) WITHOUT CAUSE. The Company shall have the right to
         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 Chairman, 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 to the Employee. 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 written notice delivered
         by the Employee to the Company as provided in Section 4(e) above, 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 is 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, shall receive any earned but unpaid Performance Incentive
         for any calendar year ending prior to the date of his death.

                  (b) DISABILITY. If the Employee's employment is 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

                                       6
<PAGE>

         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
         Performance Incentive 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 is 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 Performance Incentive
         (other than any earned but unpaid Performance Incentive for any prior
         calendar year), and Employee 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 one
         (1) year thereafter and shall also be entitled to receive any earned
         but unpaid Performance Incentive 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, 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 Performance Incentive for any calendar year ending
         prior to the Date of Termination.

                  (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 Performance Incentive (other than any earned but unpaid
         Performance Incentive for any calendar year ending prior to the Date of
         Termination), and Employee 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.

                                       7
<PAGE>

         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 of the property described in Section 3(f)
hereof and 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 the Company's President
         of the Division for Youth Services, (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.

                  (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

                                       8
<PAGE>

         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 eighteen (18) 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.

                  (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), (d) and (e) 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 and all of the Provinces of
                  Canada.

                           (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;

                                       9
<PAGE>

                                    (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, 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 youth treatment or services,
                  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, training services, or providing
                  management and/or consulting services to third parties
                  relating to 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

                                       10
<PAGE>

         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 them and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties, including but
not limited to the Prior Agreement. No supplement, modification, or amendment of
this Employment Agreement shall be binding unless executed in writing by all
parties hereto (other than by reason of the prospective modification of the
Incentive Program by the Company or 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 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:
                  --------------

                  ResCare, Inc.
                  10140 Linn Station Road
                  Louisville, Kentucky 40223
                  Attn:    Ronald G. Geary,
                           Chairman, President and Chief Executive Officer

                                       11
<PAGE>

                  To the Employee:
                  ---------------

                  William J Ballard
                  206 Concord Park West
                  Nashville, Tennessee 37205

         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.

         16. NO CONFLICT; INDEMNIFICATION. Employee represents, warrants and
covenants to the Company that the execution of this Employment Agreement and the
performance by Employee of services for the Company as contemplated herein will
not violate any agreement or covenant to which the Employee is a party or is
bound, including but not limited to his any agreement with Children's
Comprehensive Services, Inc. The representations, warranties and covenants in
this Section 16 are a material condition to the execution of this Employment
Agreement and the obligations of the Company herein. During the Term, Employee
will perform his services hereunder in a manner that does not violate any such
agreement, including any confidentiality covenants contained therein. Employee
agrees to indemnify and hold harmless the Res-Care Companies from any breach of
the representations, warranties and covenants in this Section 16.

                                       12
<PAGE>

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

         IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the day and year set forth above.

                           RES-CARE, INC.

                           By:
                              ------------------------------------------------
                                    Ronald G. Geary
                                    Chairman, President and Chief Executive
                                    Officer

                           ---------------------------------------------------
                           William J Ballard

                                       13

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