Document:

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                                                                    EXHIBIT 10.9

                       AMENDED AND RESTATED RES-CARE, INC.
           2000 NON-EMPLOYEE DIRECTORS STOCK OWNERSHIP INCENTIVE PLAN
                          (amended as of June 23, 2004)

ARTICLE 1. PURPOSE.

      The purpose of this 2000 Non-Employee Directors Stock Ownership Incentive
Plan ("Plan") is to advance the interests of Res-Care, Inc., a Kentucky
corporation ("Company"), and its subsidiaries, by providing non-employee
directors of the Company with an ownership interest in the Company. The Plan is
also intended to enhance the Company's ability to attract and retain persons of
outstanding ability to serve as directors of the Company.

ARTICLE 2. DEFINITIONS AND CONSTRUCTION.

      2.1 Definitions. As used in the Plan, the terms defined parenthetically,
immediately after their use shall have the respective meanings provided by such
definitions, and the terms set forth below shall have the following meanings (in
either case, such meanings shall apply equally to both the singular and plural
forms of the terms defined):

            (a) "Award" shall mean a grant of Options under Section 5 of the
Plan.

            (b) "Award Date" shall mean the first business day of July of each
calendar year that the Plan is in effect.

            (c) "Board" shall mean the Board of Directors of the Company.

            (d) "Change of Control" means (i) an event or series of events which
have the effect of any "person" as such term is used in Section 13(d) and 14(d)
of the Exchange Act, other than any trustee or other fiduciary holding
securities of the Company under any employee benefit plan of the Company,
becoming the "beneficial owner" as defined in Rule 13d-3 under the Exchange Act,
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding capital stock; (ii)
any merger, consolidation, share exchange, recapitalization or other transaction
in which any person becomes the beneficial owner of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding capital stock; (iii) the persons who were members of the Board
immediately before a transaction shall cease to constitute a majority of the
Board of the Company or any successor to the Company; (iv) the business of the
Company is disposed of pursuant to a partial or complete liquidation, sale of
assets, or otherwise. The acquisition of securities of the Company representing
30% or more, but not more than 50%, of the combined voting power of the
Company's then outstanding capital stock by Onex Partners LP and its affiliates
shall not be a Change of Control with respect to any Options having an Award
Date after June 30, 2004.

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            (e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto, together with any regulations
promulgated thereunder.

            (f) "Committee" shall mean the committee described in Section 3.1.

            (g) "Director" shall mean a member of the Board who is not an
employee of the Company or any Subsidiary of the Company.

            (h) "Disability" shall mean a physical or mental infirmity that the
Committee determines impairs the Director's ability to perform substantially his
or her duties for a period of 180 consecutive days.

            (i) "Effective Date" shall mean the date described in Section 6.1.

            (j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.

            (k) "Fair Market Value" of the Shares shall mean, as of any Award
Date, the closing sale price of the Shares as reported on the NASDAQ National
Market, or if no such reported sale of the Shares shall have occurred on such
date, on the next preceding date on which there was a reported sale. If there
shall be any material alteration in the present system of reporting sale prices
of the Shares, or if the Shares shall no longer be listed on the NASDAQ National
Market, the Fair Market Value of the Shares as of an Award Date shall be
determined by such method as shall be determined in good faith by the Committee.

            (l) "Option" shall mean an option to purchase Shares granted
pursuant to Article 5.

            (m) "Optionee" shall mean a person to whom an option has been
granted under the Plan.

            (n) "Option Agreement" shall mean an agreement evidencing the grant
of an Option, as described in Section 5.2.

            (o) "Option Exercise Price" shall mean the purchase price per Share
subject to an Option, which shall be the Fair Market Value of the Share on the
Award Date.

            (p) "Person" shall have the meaning ascribed to such term in Section
3(a) (9) of the Exchange Act and as used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.

            (q) "Plan" shall mean this Res-Care, Inc. 2000 Non-Eemployee
Directors Stock Ownership Incentive Plan as the same may be amended from time to
time.

            (r) "Retirement" shall mean retirement by a Director in accordance
with the terms of the Company's retirement policy applicable to directors of the
Company.

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            (s) "Shares" shall mean the Company's Common Shares.

            (t) "Subsidiary" shall mean, with respect to any company, any
corporation or other Person of which a majority of its voting power, equity
securities, or equity interest is owned directly or indirectly by such company.

            (u) "Withholding Taxes" shall mean all federal, state and local
income taxes and other amounts as may be required by law to be withheld with
respect to any option exercise, if any.

      2.2 Gender and Number. Except where otherwise indicated by the context,
reference to the masculine gender shall include the feminine gender, the plural
shall include the singular and the singular shall include the plural.

      2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

ARTICLE 3. ADMINISTRATION.

      3.1 The Committee. The Plan is designed to operate automatically and not
require administration. However, to the extent administration is required, it
shall be provided by a committee (the "Committee"). The members of the Committee
shall include two or more members of the Board, and shall be appointed from time
to time by, and shall serve at the discretion of, the Board. If the Board fails
to appoint the Committee, the Board shall administer the Plan.

      3.2 Authority of the Committee. Subject to the provisions of the Plan, the
Committee shall have full authority to:

            (a) construe and interpret the Plan and any agreement or instrument
entered into under the Plan; and

            (b) establish, amend and rescind rules and regulations for the
Plan's administration.

To the extent permitted by law and Rule 16b-3 promulgated under the Exchange
Act, the Committee may delegate its authority as identified herein.

      3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Board, shall be final, conclusive and binding on all Persons,
including the Company, the Directors and their estates and beneficiaries.

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      3.4 Section 16 Compliance. It is the intention of the Company that the
Plan and the administration of the Plan comply in all respects with Section 16
of the Exchange Act and the rules and regulations promulgated thereunder. If any
Plan provision, or any aspect of the administration of the Plan, is found not to
be in compliance with Section 16 of the Exchange Act, the provision or aspect of
administration shall be null and void to the extent permitted by law and deemed
advisable by the Committee. In all events the Plan shall be construed in favor
of its meeting the requirements of Rule 16b-3 promulgated under the Exchange
Act.

ARTICLE 4. SHARES AVAILABLE UNDER THE PLAN.

      4.1 Number of Shares. Subject to adjustment as provided in Section 4.2,
the number of Shares reserved for issuance upon the exercise of options is
200,000 Shares. Any Shares issued under the Plan may consist, in whole or in
part, of authorized and unissued Shares or treasury shares. If and to the extent
options shall expire or terminate for any reason without having been exercised
in full, the Shares associated with such Awards to the extent not fully
exercised shall again become available for Awards under the Plan.

      4.2 Adjustments in Authorized Shares and Outstanding Awards. In the event
of a merger, reorganization, consolidation, recapitalization, reclassification,
split-up, spin-off, separation, liquidation, share dividend, stock split,
reverse stock split, cash dividend, property dividend, share repurchase, share
combination, share exchange, issuance of warrants, rights or debentures, or
other change in the corporate structure of the Company affecting the Shares, the
Committee may substitute or adjust the total number and class of Shares or other
stock or securities that may be issued under the Plan, and the number, class
and/or price of Shares. or other stock or securities subject to outstanding
Awards, as it determines to be appropriate and equitable to prevent dilution or
enlargement of the rights of Directors and to preserve, without exceeding, the
value of any outstanding Awards; and further provided, that the number of Shares
or other stock or securities subject to any Award shall always be a whole
number.

ARTICLE 5. AWARDS.

      5.1 Automatic Grant of Options. Subject to the terms and provisions of the
Plan, each Director on an Award Date shall automatically receive an option for
4,500 Shares that is not intended to qualify as an incentive stock option
within" the meaning of Section 422 of the Code.

      5.2 Vesting. Subject to Sections 5.4 and 5.7, each Option shall vest and
become exercisable with respect to 25% of the Shares subject thereto effective
immediately as of the Award Date and shall vest and become exercisable with
respect to an additional 25% of the Shares subject thereto effective as of each
of the first, second and third anniversaries of the Award Date; provided,
however, that the Director continues to serve as a member of the Board as of
such dates. If a Director ceases to serve as a member of the Board for any
reason, the Director shall have no rights with respect to that portion of an
option which is not then vested pursuant to the preceding sentence and the
Director shall automatically forfeit that portion of the Option that remains
unvested.

      5.3 Option Agreement. Each Award shall be evidenced by an Option Agreement
that shall specify the Option Exercise Price, the duration of the Option, the
number of Shares to which

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the option relates and such other terms and conditions not inconsistent with the
provisions of this Plan as determined by the Committee; provided, however, that
such terms shall not vary the timing of Awards, including provisions dealing
with exercisability, forfeiture or termination of such Awards or Options granted
thereunder.

      5.4 Duration of Options. Subject to Section 5.6, each Option shall expire
on the fifth (5th) anniversary of the Award Date on which it was granted.

      5.5 Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person or by mail to the Secretary of the Company at
the Company's principal executive office, specifying the number of Shares to be
purchased and accompanied by payment therefor and otherwise in accordance with
the Option Agreement pursuant to which the Option was granted. Shares purchased
pursuant to the exercise of an option shall be paid in full upon such exercise
by any one or a combination of the following: (i) in cash; (ii) in owned by the
Optionee (or jointly by the Optionee and his or her spouse) for at least six
months evidenced by negotiable certificates or by a written attestation of
ownership and consent to issuance, in satisfaction of the Option or portion
thereof being exercised, of only the net Shares (those equal in value to the
difference between the Option Exercise Price and the then Fair Market Value);
(iii) by a written election to have the Company retain that number of Shares
subject to the Option having an aggregate Fair Market Value equal to the
aggregate Option Exercise Price; or (iv) by any combination thereof. The written
notice pursuant to this Section 5.5 may also provide instructions from the
Optionee to the Company that upon receipt of the purchase price in cash from the
Optionee's broker or dealer, designated as such on the written notice, in
payment for any Shares purchased pursuant to the exercise of an Option, the
Company shall issue such Shares directly to the designated broker or dealer. Any
Shares transferred to the Company or withheld as payment of the Option Exercise
Price shall be valued at their Fair Market Value on the date preceding the date
of exercise. If requested by the Committee, the Optionee shall deliver the
Option Agreement evidencing the option to the Secretary of the Company who shall
endorse thereon a notation of such exercise and return such Option Agreement to
the Optionee. No fractional shares (or cash in lieu thereof) shall be issued
upon exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded down to the nearest number of whole Shares.

      5.6 Termination of Director Relationship. If a Director for any reason
other than Retirement, death or Disability shall cease to be a member of the
Board, the outstanding Options of such Director (or portions thereof) that are
vested and exercisable as of the date the Director so ceased to be a member of
the Board may be exercised by such Director at any time prior to the earlier of
the expiration date of the options or the date that is ninety (90) days after
the date on which such Director ceases to be a member of the Board. If a
Director shall cease to be a member of the Board by reason of Retirement, death
or Disability, the outstanding options of such Director (or portions thereof)
that are vested and exercisable as of the date the Director so ceased to be a
member of the Board may be exercised by such Director at any time prior to the
earlier of the expiration date of the Options or the date that is the first
anniversary of the Director's Retirement, death or Disability. Options may be
exercised as provided in this Section 5.6 (x) in the event of the death of a
Director, by the person or persons to whom rights pass by will or by the laws of
descent and distribution, or if appropriate, the legal representative of his
estate and (y) in the event of the

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Disability of a Director, by the Director, or if such Director is incapacitated,
by his legal representative.

      5.7 Effect of Change of Control. Notwithstanding anything contained in the
Plan or an Option Agreement to the contrary, in the event of a Change of
Control, (i) all options outstanding on the date of such Change of Control shall
become immediately and fully exercisable and (ii) an Optionee will be entitled
to receive, in lieu of the exercise of any Option or portion of an Option to the
extent not yet exercised, a cash payment in an amount equal to the difference
between the aggregate Option Exercise Price and (A) in the case of a tender
offer or exchange offer, the final offer price paid per Share, multiplied by the
number of Shares covered by the Option, or (B) in the case of any other Change
of Control, the aggregate Fair Market Value of the Shares covered by the Option.
The Company shall pay any amount it must make under this Section 5.7 within 30
days following the occurrence of the Change of Control.

ARTICLE 6. EFFECTIVE DATE, AMENDMENT, MODIFICATION, AND TERMINATION.

      6.1 Effective Date. The Plan shall be effective upon the approval by the
affirmative vote of the holders of a majority of the securities of the Company
represented in person or by proxy, and entitled to vote, at a meeting of
shareholders of the Company at which the Plan is submitted for approval.

      6.2 Termination Date. The Plan shall terminate on the earliest to occur of
(a) the date when all Shares available under the Plan shall have been acquired
pursuant to the exercise of Awards or (b) such other date as the Board may
determine in accordance with Section 6.3.

      6.3 Amendment, Modification and Termination.

            (a) Except as provided in Section 6.3(b), the Board may, at any
time, amend, modify or terminate the Plan.

            (b) Without the approval of shareholders of the Company, no
amendment, modification or termination may:

                  (i)   materially increase the benefits accruing to Directors
                  under the Plan;

                  (ii)  increase the total number of Shares that may be issued
                  under the Plan, except as provided in Section 4.2; or

                  (iii) modify the eligibility or other requirements to receive
                  an Award under the Plan.

      6. 4 Awards Previously Granted. No amendment, modification or termination
of the Plan shall in any manner adversely affect any outstanding Award without
the written consent of the Optionee.

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ARTICLE 7. NON-TRANSFERABILITY.

      Except as otherwise provided in this Article 7, no Option shall be
transferable by a Director otherwise than by will or the laws of descent and
distribution, and an Option shall be exercisable, during the Director's
lifetime, only by the Director (or, in the event of the Director's legal
incapacity or incompetency, the Director's guardian or legal representative). A
Director may transfer all or part of a Nonqualified Stock Option to (i) the
Director's spouse or lineal descendants ("Immediate Family Members"), (ii)
trusts for the exclusive benefit of the Director and/or his Immediate Family
Members, or (iii) a partnership or limited liability company in which the
Director and/or his Immediate Family Members are the only partners or members,
as applicable. Such transfer may be made by a Director only if there is no
consideration for the transfer, and subsequent transfers of any Option shall be
prohibited other than in accordance with this Article 7 and by will or the laws
of descent and distribution. Following a transfer of an Option, the Option shall
continue to be subject to the same terms and conditions as were applicable
immediately before the transfer, and the conditions to exercise of an Option
upon Termination of Director Relationship or otherwise provided in this Plan
shall be applied with respect to the original Director. However, for purposes of
exercising the Option, the term Director shall refer to the transferee. In
addition, for purposes of the death benefit provisions of Section 5.6,
references to a Director shall be deemed to refer to the transferee, the
personal representative of the transferee's estate, or after final settlement of
the transferee's estate, the successor or successors entitled thereto by law.

ARTICLE 8. NO RIGHT OF REELECTION.

      Neither the Plan nor any action taken under the Plan shall be construed as
conferring upon a Director any right to continue as a director of the Company,
to be renominated by the Board or to be reelected by the shareholders of the
Company.

ARTICLE 9. WITHHOLDING.

      Upon the exercise of an Option (a "Taxable Event"), the Optionee shall pay
the Withholding Taxes to the Company prior to the issuance, or release from
escrow, of such Shares. In satisfaction of the obligation to pay Withholding
Taxes to the Company, the Optionee may make a written election (the "Tax
Election") to have withheld a portion of the Shares then issuable to him or her
having an aggregate Fair Market Value, on the date preceding the date of such
issuance, equal to the Withholding Taxes.

ARTICLE 10. INDEMNIFICATION.

      No member of the Board or the Committee, nor any officer or employee
acting on behalf of the Board or the Committee, shall be personally liable for
any action, determination or interpretation taken or made with respect to the
Plan, except for liability arising from his or her own willful misfeasance,
gross negligence or reckless disregard of his or her duties. All members of the
Board, the Committee and each and any officer or employee of the company acting
on their behalf shall, to

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the extent permitted by law, be fully indemnified and protected by the Company
with respect to any such action, determination or interpretation.

ARTICLE 11. SUCCESSORS.

      All obligations of the Company with respect to Awards granted under the
Plan shall be binding on any successor to the Company, whether the existence of
such successor is a result of a direct or indirect purchase, merger,
consolidation or otherwise, of all or substantially all of the business and/or
assets of the Company.

ARTICLE 12. GOVERNING LAW.

      To the extent not preempted by Federal law, the Plan, and all agreements
under the Plan, shall be governed by, and construed in accordance with, the laws
of the Commonwealth of Kentucky without regard to its conflict of law rules.

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                                                                   EXHIBIT 10.14
                                 RES-CARE, INC.
                             10140 LINN STATION ROAD
                           LOUISVILLE, KENTUCKY 40223
                                 (502) 394-2100

                                January 12, 2005

William J Ballard
4117 Hillsboro Pike
Nashville, Tennessee 37215

      RE:   TERMINATION OF EMPLOYMENT AND AGREEMENT REGARDING CERTAIN CONSULTING
            SERVICES

Dear Bill:

      This letter agreement is being executed by Res-Care, Inc. (the "Company")
and you ("Ballard") to provide for the parties' agreements regarding the mutual
termination of Ballard's employment with the Company and the provision of
certain consulting services by Ballard for a period of one year thereafter. The
parties hereby agree as follows:

      1. The parties acknowledge and agree that that certain Employment
Agreement dated January 13, 2002, as amended, between the Company and Ballard
(the "Employment Agreement"), terminated by expiration of its term effective as
of December 31, 2004.

      2. Ballard's employment with the Company terminated effective midnight,
December 31, 2004. Such termination is by expiration of the Employment Agreement
and mutual consent of the parties. The terms and conditions of such termination
and Ballard's compensation and obligations in connection with the same shall be
governed by this letter agreement and the surviving provisions of the Employment
Agreement specifically referenced herein.

      3. Effective midnight, December 31, 2004, Ballard hereby resigns as an
officer and director of all of the Res-Care Companies (as defined in the
Employment Agreement). Contemporaneously herewith, Ballard shall execute the
resignation letter attached hereto as Exhibit A.

      4. Not later than January 31, 2005, Ballard shall execute and deliver to
the Chairman and/or any officer designated by the Chairman, a certificate of
Ballard's level of compliance and Ballard's knowledge of the level of compliance
by the Company and its subsidiaries with applicable laws, regulations and
Company policies regarding the provision of services to clients and billings to

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William J Ballard
January 12, 2005
Page 2

its paying agencies substantially in the form attached as Exhibit B. Ballard
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. Ballard 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. Not
later than January 15, 2006, Ballard will execute and deliver to the Chairman a
comparable certificate as described in this paragraph 4 with regard to his
knowledge of the operations of the Company and its subsidiaries during the
Consulting Term (as defined in paragraph 8).

      5. Not later than January 15, 2006, Ballard shall return to the Company
any property of the Company or its subsidiaries then in Ballard's possession or
control, including without limitation, any Confidential Information (as defined
in the Employment Agreement) 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 conducted by the Company and its subsidiaries or affiliates.
Ballard 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. Ballard shall also promptly return to the Company any
of the property of the Company described in Section 3(f) of the Employment
Agreement if requested in writing by the Company. The provisions of this
paragraph 5 shall supersede the provisions of Section 6 of the Employment
Agreement.

      6. Ballard is eligible for and may earn a bonus under the Incentive
Program applicable to Ballard for the calendar year 2004 as provided in Section
3(b) of the Employment Agreement depending upon the satisfaction of the
performance, financial and quality targets applicable to Ballard and the Company
for such period. If any such bonus is earned, such bonus shall be paid to
Ballard (subject to applicable withholding) not later than March 31, 2005. The
Company and Ballard agree that as of December 31, 2004, all of the options
granted to him by the Company, whether pursuant to Section 3(d) of the
Employment Agreement or otherwise, have vested. A copy of the Company stock
option plan that is applicable to its managerial employees and the options
previously granted to Ballard (the "Stock Plan") is attached hereto as Exhibit
C. Ballard agrees that except for any amounts payable under this paragraph or
Ballard's accrued and unused vacation or paid time off as of December 31, 2004,
Ballard shall not be entitled to any severance or other payment of any nature in
connection with the termination of his employment. The amount of Ballard's
accrued and unused vacation or paid time off shall be paid to Ballard (subject
to applicable withholding) not later than January 31, 2005.

      7. Should Ballard elect to exercise his option to continue his health care
benefits currently provided by the Company following the termination of his
employment, the continuation

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William J Ballard
January 12, 2005
Page 3

of such health care benefits, including the payment of premiums for such health
care benefits after December 31, 2004, shall be at Ballard's sole expense. The
COBRA election, as regulated by ERISA, shall begin at December 31, 2004,
Ballard's last date of official employment.

      8. For the period January 1, 2005 and December 31, 2005 (the "Consulting
Term"), Ballard shall consult with and be generally available to the Company and
its personnel at the request of the Chairman, President and Chief Executive
Officer of the Company ("Chairman"), or the Chairman's designee, as reasonably
necessary to provide consultation, assistance and information regarding (a) the
assets and operations that were formerly a part of the Company's Division for
Youth Services, (b) any obligations of any Res-Care Company under any management
agreement, consulting agreement or other agreement that was previously the
responsibility of the Company's Division for Youth Services, (c) the transition
of management of the assets and operations that were formerly a part of the
Company's Division for Youth Services to the Company's Division for Persons with
Disabilities, (d) personnel matters with regard to employees of any of the
Res-Care Companies that were formerly assigned to the Company's Division for
Youth Services, (e) governmental and other agency relations, and (f) potential
or possible acquisitions relating to and/or dispositions of any of the assets or
operations that were formerly a part of the Company's Division for Youth
Services. Ballard shall not have responsibility for any operations on behalf of
the Res-Care Companies and shall be engaged in an advisory capacity only. Any
final decision with regard to any matter in connection with the business of the
Res-Care Companies, irrespective of whether the advice of Ballard has been
solicited or received, shall rest with the Company. Ballard's services to the
Company shall be limited to those described in this paragraph 8 and no other or
further engagement has been promised or made except as mutually agreed by the
parties in writing.

      9. In consideration of Ballard's consulting services as described in
paragraph 8 of this letter agreement, and provided that Ballard complies with
his continuing obligations in Section 7 of the Employment Agreement, the Company
shall pay to Ballard the aggregate sum of $210,000 during the Consulting Term in
twenty-four (24) substantially equal semi-monthly installments of $8,750 on or
before the 15th and last day of each calendar month during the Consulting Term.
In all matters relating to the consulting services rendered by Ballard as
provided in paragraph 8 hereof, Ballard will be acting as an independent
contractor and neither Ballard nor any employee or agent of Ballard will be an
employee of any Res-Care Company within the meaning or application of any
federal, state or local income or unemployment insurance laws, or old age
benefits law, or other social security laws or worker's compensation or
industrial law, or otherwise. Ballard will be responsible for and indemnify and
hold the Company harmless from and against any and all federal, state and local
income taxes (including withholding taxes), social security taxes and/or
Medicare taxes with respect to the payments described in this paragraph 9.
Ballard will timely pay all of such taxes in compliance with applicable laws and
regulations.

      10. Ballard hereby agrees that his covenants in Section 7 of the
Employment Agreement shall survive the expiration of the Employment Agreement,
the execution of this letter agreement and the future expiration of the
Consulting Term in accordance with the terms and provisions of such Section 7.
Notwithstanding the forgoing, the provision of the consulting services in
accordance with paragraph 8 hereof shall not violate any of the covenants in
such Section 7 and all Confidential

<PAGE>

William J Ballard
January 12, 2005
Page 4

Information provided to or otherwise in the possession of Ballard relating to
such services shall be subject to his confidentiality obligations in such
Section 7.

      11. As additional consideration for the covenants and agreements of
Ballard herein, 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
Ballard, Ballard's heirs, successors, assigns, and legal representatives
(collectively, the "Ballard Indemnitees"), from all claims, liabilities, demands
and causes of action which they may have or claim to have against the Ballard
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 Ballard's obligations under this
letter agreement or affect the Company's rights hereunder.

      12. As additional consideration for the covenants and agreements of the
Company herein, Ballard, 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
Ballard 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 Ballard may have under
the Age Discrimination in Employment Act, which 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 Ballard 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,
or affect Ballard's rights hereunder. This letter agreement also does not waive
any rights or claims, if any, that Ballard may have to Ballard's vested stock
options, which options shall be governed by, and exercisable for a limited
period of time after December 31, 2004 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 Ballard may have to 401k plan or
pension benefits under the Company's retirement plans, or any right to any
earned Performance Incentive for the calendar year 2004. 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 Ballard agrees that he does waive his right, if any, to any monetary
recovery if the EEOC pursues any claim on his behalf.

      13. Ballard 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. Ballard
hereby waives any right to recover any relief as a result of any claims or
proceedings made on his behalf.

<PAGE>

William J Ballard
January 12, 2005
Page 5

      14. Ballard 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. Ballard further acknowledges that he had the opportunity to use as much of
the twenty-one (21) day period as he wished prior to signing.

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

      16. Ballard 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, Ballard 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.
Ballard understands that if he revokes this letter agreement, it shall not be
effective or enforceable.

      17. The parties agree that this letter agreement and the surviving
provisions of the Employment Agreement set forth the entire agreement between
Ballard and the Company. Ballard 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 Ballard and the
Company. Ballard acknowledges that he has not been coerced or intimidated or
threatened in any way and that he signs this letter agreement knowingly and
voluntarily.

      18. 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.

      19. 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.

      20. All notices, requests, demands and other communications required or
permitted to be given or made under this letter 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 deposit in the United States mail
postage prepaid by registered or certified mail, return receipt requested, to
Ballard at the address set forth on the first page of this letter agreement,
with a copy to him at 14615 W. Futura Drive, Sun City West, Arizona 85375, and
to the Company, addressed to the Chairman at the address set forth in paragraph
16 hereof (or at such other address as shall hereafter be designated by either
party to the other party by notice given in accordance with this paragraph). All
payments to Ballard as provided in this letter agreement shall be made to
Ballard by direct deposit to the bank account
<PAGE>

William J Ballard
January 12, 2005
Page 6

listed on Exhibit D attached hereto, unless Ballard shall otherwise direct in
writing.

      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,

                                        /s/ Ronald G. Geary

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

                                        /s/ William J Ballard
                                        William J Ballard

                                        Dated: 1/13/05

<PAGE>

                                    EXHIBIT A

To Whom It May Concern:

      I hereby resign as a director and/or officer of the corporations listed on
the attached Schedule 1 effective December 31, 2004 (or such earlier date to the
extent any resignation has been previously delivered).

                                        Signed,

                                        /s/ William J Ballard

                                        William J Ballard

<PAGE>

                                   SCHEDULE 1

                                 Res-Care, Inc.
                   The Academy for Individual Excellence, Inc.
                        Alternative Youth Services, Inc.
                    General Health Corporation, dba Arizona
                                Youth Associates
                          New Summit School Corporation
                                Youthtrack, Inc.

<PAGE>

                                    EXHIBIT B
                                 [RES-CARE LOGO]
                ANNUAL EMPLOYMENT ELIGIBILITY CERTIFICATION FORM

I, __William J Ballard______________ (print name), understand that as a
condition of continued employment with ResCare I agree to the following
statements and acknowledge the information stated by writing my initials next to
each item listed.

_______WB_______  A. During my employment, I have notified my supervisor and/or
                  Human Resources Representative of any charges and/or
                  convictions of criminal offenses that have occurred.

_______WB_______  B. I also certify that I have not been listed by any federal,
                  state or local agency as debarred, excluded or otherwise
                  ineligible for participation in any federally, state or
                  locally funded health care programs.

_______WB_______  C. I certify that I have re-read and understand the Code of
                  Conduct and agree to abide by it during the entire term of my
                  employment. I acknowledge that I have a duty to report any
                  alleged or suspected violation of the Code of Conduct. I am
                  not aware of any possible violation of the Code of Conduct. I
                  understand that any violation of the Code of Conduct or any
                  other corporate compliance policy or procedure is grounds for
                  progressive corrective action, up to and including termination
                  from employment.

_______WB_______  D. I have completed all required training related to my job
                  responsibilities, as outlined by my supervisor. I have
                  maintained any certifications and/or licenses required for my
                  position and re-certify that my educational credentials are
                  true.

_______WB_______  E. I am familiar with ResCare's Drug and Alcohol-Free
                  Workplace policy and am in compliance with that policy.

_______WB_______  F. I am aware of ResCare's policy on the Prohibition of
                  Harassment and have not violated or witnessed any violations
                  of that policy.

_______WB_______  G. I am aware of ResCare's policy on Affirmative Action/Equal
                  Employment Opportunity.

_______WB_______  H. I am familiar with ResCare's Violence in the Workplace
                  Policy and am in compliance with that policy.

_______WB_______  I. I have reported any violations that I may have witnessed
                  pertaining to any ResCare policy or any violations of
                  international, federal, or state/provincial laws with regard
                  to my employment to local/regional management or the
                  Compliance Department.

<PAGE>

      1.    PAGE 2

_______WB_______  J. I further understand that this re-certification does not
                  constitute a written contract at this time or at any time in
                  the future and that my employment is strictly at-will
                  employment.

Please describe any information that is contrary to the statements made above:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

William J Ballard
--------------------------
Employee Name (Print Only)

/s/ William J Ballard____________________________      ____________
Employee Signature                                     Date

_________________________________________________      ____________
Human Resources Representative Signature               Date

_________________________________________________      ____________
            (a)   Witness Signature (if necessary)                    Date

            (b)   Return this form to:

      The original is to be filed in the employee's personnel file.

      A copy may be provided to the employee.

         (FORM TO BE COPIED FRONT/BACK; PAGES ARE NOT TO BE SEPARATED)

<PAGE>

                                    EXHIBIT D

                     ACCOUNT INFORMATION FOR DIRECT DEPOSIT

Bank: __________________________________
      __________________________________
      __________________________________

ABA #: _________________________________

Account Name: _______________________________

Account #: _____________________________

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