subsidiaries through the acquisition of equity interests in or the assets of existing enterprises, joint venture arrangements, management agreements or consulting agreements; (ii) negotiate for and oversee the disposition of assets, businesses and/or operations of the Company and its subsidiaries; and (iii) perform such other duties and exercise such powers over and with regard to the business of the Company, its subsidiaries, affiliates and their operations as may be prescribed from time to time by the President, including, without limitation, serving as an officer and/or director of one or more subsidiaries or affiliates of the Company, if elected to such positions, without any further salary or other compensation.

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

                (c)           Employee Certification of Eligibility.  Not less frequently than annually and upon the termination of the Employee’s employment hereunder for any reason other than Employee’s death, the Employee shall execute and deliver to the President and/or any other authorized officer designated by the Company a certificate (ResCare Annual Employment Re-Certification Eligibility Form) confirming, to the best of the Employee’s knowledge, that the Employee remains eligible for employment with the Company.  This same certificate will certify that the Employee has complied with applicable laws, regulations and Company policies regarding the provision of services to clients and billings to its paying agencies, Company policies on training, Drug and Alcohol-Free Program, Prohibition of Harassment, Affirmative Action Equal Employment Opportunity and Violence in the Workplace.  This statement shall state that the Employee is not aware of any such violation by other employees, independent contractors, vendors, or other individuals performing services for the Company and its subsidiaries that they did not report as appropriate.

                3.             Compensation and Benefits.

                (a)           Base Salary.  The Company shall pay to the Employee during the Term an annual salary (the “Base Salary”), which initially shall be $190,000.  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.  The Base Salary may be adjusted from time to time for changes in the Employee’s responsibilities.

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                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, 2008, by the greater of (i) five percent (5%), and (ii) the percentage by which the Consumer Price Index for all Urban Consumers (CPI-U), All-Items, 1982-1984=100, as published by the Bureau of Labor Statistics (the “CPI”) established for the month of December immediately preceding the date on which the adjustment is to be made exceeds the CPI published for the month of December of the immediately preceding year.  If the Bureau of Labor Statistics suspends or terminates its publication of the CPI, the parties agree that a reasonably comparable price index shall be substituted for the CPI.

                (b)           Incentive Plan.  During the Term, the Employee shall be eligible for incentive compensation in accordance with a written incentive program mutually established by the President and the Employee on a calendar year basis (the “Incentive Plan”).  The Incentive Plan 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 President and the Employee 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.  In no event shall Employee earn any incentive for any calendar year unless the net income of the Company and its subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles consistently applied (“Net Income”), for the respective calendar year equals or exceeds ninety percent (90%) of the Net Income target for the respective calendar year as established by the Board of Directors at the beginning of such calendar year.  All incentive payments under the Incentive Plan 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 period for which the incentive is determined.  The maximum percentage of the Employee’s Base Salary that the Employee may earn under the Incentive Plan shall be forty percent (40%) of the Base Salary actually paid to the Employee for the period for which the incentive is determined (with the actual percentage to be determined within such range based upon a scale of performance mutually agreed to by the President and the Employee on an annual basis).  Any annual incentive earned by the Employee for any period shall be paid by the Company to the Employee not later than seventy-four (74) days after the end of the applicable calendar year.  Any amounts earned by the Employee under the Incentive Plan shall be hereinafter referred to as the “Incentive Bonus.”  The Company may elect to pay all or a portion of the Incentive Bonus earned by Employee for any period in cash and/or options to purchase shares of Company common stock.  In the event the Company elects to pay all or a portion of any Incentive Bonus so earned by Employee in options to purchase shares of Company common stock, such options shall be issued on the date that the Incentive Bonus so earned is payable, at an exercise price based on the closing sale price of Company common stock as reported on the Nasdaq National Market on such date (or if such date is not a trading date for the Company common stock, on the immediately preceding trading date).  All of such options shall vest and be exercisable on the date consistent with other grants under the Incentive Plan to similarly situated employees of the Company.

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                (c)           Restricted Stock Award.

                (i)            The restricted shares of common stock of the Company awarded under this paragraph (c) (collectively, the “Restricted Shares”) shall be awarded pursuant to and, to the extent not expressly inconsistent herewith, governed by the Company stock option and incentive compensation plan as in effect as the effective date of the respective award (the “Stock Plan”).  The number of Restricted Shares shall be adjusted in accordance with the terms of the Stock Plan for stock splits, stock dividends, recapitalizations and the like.  Until and only to the extent the Restricted Shares shall vest as provided herein, all stock certificates evidencing the Restricted Shares owned by Employee shall be held by the Company for the benefit of Employee.  As and to the extent any Restricted Shares shall vest as provided herein, the Company will promptly deliver certificates representing such vested shares to Employee.

                (ii)           Effective on the Execution Date, the Company shall award to Employee 5,000 restricted shares of common stock of the Company. The restricted shares awarded as provided in the preceding sentence shall be referred to as the “Restricted Shares.”    The Restricted Shares shall be subject to vesting as provided below.  Provided Employee shall continue to be employed hereunder, one-fourth (1/4) of the Restricted Shares shall vest on June 1, 2007, an additional one-fourth (1/4) of the Restricted Shares shall vest on June 1, 2008, an additional one-fourth (1/4) of the Restricted Shares shall vest on June 1, 2009, and the final one-fourth (1/4) of the Restricted Shares shall vest on June 1, 2010.

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

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

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                (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 Employee for such payment), consistent with the reimbursement policies adopted by the Company from time to time and subject to the prior written approval by the President.

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

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

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

The Employee agrees that Employee 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 Employee’s 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 Employee’s duties hereunder for 180 days.  “Permanent disability” for purposes of this Employment Agreement shall mean the onset of a physical or mental disability which prevents the Employee from performing the essential functions of the Employee’s duties hereunder, which is expected to continue for 180 days or more, subject to any reasonable accommodation required by state and/or federal disability anti-discrimination laws, including, but not limited to, the Americans With Disabilities Act of 1990, as amended.

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

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

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

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

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

                (g)           Date of Termination.  The “Date of Termination” shall, for purposes of this Employment Agreement, mean:  (i) if the Employee’s employment is terminated by Employee’s death, the date of Employee’s 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 Employee’s duties on a full-time basis), (iii) if the Employee’s employment is terminated by the Company for Cause pursuant to Section 4(c) above, the date specified in the Notice of Termination, (iv) if the Employee’s employment is terminated by the Company without Cause, pursuant to Section 4(d) above, the date specified in the Notice of Termination, (v) if the Employee’s employment is terminated voluntarily pursuant to Section 4(e) above, the date specified in the Notice of Termination, and (vi) if the Employee’s employment is terminated by reason of an election by either party not to extend the Term, the la