10-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K/A

(Mark One)
x	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2002
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for transition period from            to

Commission File Number: 0-20372

RES-CARE, INC.
(Exact name of Registrant as specified in its charter)

KENTUCKY (State or other jurisdiction of incorporation or organization)	61-0875371 (IRS Employer Identification No.)
10140 Linn Station Road Louisville, Kentucky (Address of principal executive offices)	40223 (Zip Code)

Registrant’s telephone number, including area code: (502) 394-2100

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, no par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ  No o.

Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ  No o.

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2002 was approximately $115,209,000. For purposes of the foregoing calculation only, all directors and executive officers of the Registrant have been deemed affiliates.

DOCUMENTS INCORPORATED BY REFERENCE
None

TABLE OF CONTENTS

PART III
	Item 8.  Financial Statements and Supplementary Data
	Item 10. Directors and Executive Officers of ResCare
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
SIGNATURES
	Item 15 Exhibits, Financial Statement Schedules, and Reports on Form 8-K
EX-10.1 Amend. to Amended/Restated 91 Incen Stock
EX-10.2 Amended & Restated Employee Agreement
EX-10.3 Amend. to Employee Agreement
EX-10.4 Amend. to Employee Agreement
EX-10.5 Employee Agreement Amendments
EX-10.6 Employee Agreements
EX-23.1 Consent of KPMG

PART III

     The Annual Report on Form 10-K of Res-Care, Inc. (ResCare or the Registrant), filed with the Commission on March 26, 2003, incorporated Part III of Form 10-K by reference from the Registrant’s Proxy Statement for its 2003 Annual Meeting of Shareholders. The Proxy Statement will not be filed within 120 days of ResCare’s year-end and, therefore, the information required by Part III of Form 10-K for the year ended December 31, 2002 is included in this amendment.

     In addition, we are amending Item 8 and Item 15 to refile the opinion and the consent of our independent auditor and to include additional exhibits. The auditor’s signature was omitted from the opinion and the consent originally filed with our Form 10-K due to a clerical error.

Item 8.  Financial Statements and Supplementary Data

     Item 8 is amended to include the signed opinion of KPMG LLP, our independent auditors which is attached. The auditors signature was omitted from the opinion originally filed with our Form 10-K due to a clerical error.

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders
Res-Care, Inc.:

We have audited the consolidated financial statements of Res-Care, Inc. and subsidiaries as listed in the accompanying index on page F-1. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index on page F-1. These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Res-Care, Inc. and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, effective January 1, 2002, Res-Care, Inc. adopted the provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”.

/s/ KPMG LLP

Louisville, Kentucky
March 4, 2003

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Item 10.  Directors and Executive Officers of ResCare

Directors of ResCare

			Director or
Name	Age		Officer Since		Principal Occupation
James R. Fornear		72		1974	Retired
Spiro B. Mitsos		72		1974	Retired
E. Halsey Sandford		70		1984	Retired
Seymour L. Bryson		65		1989	Associate Chancellor (Diversity), Southern Illinois University at Carbondale
Ronald G. Geary		55		1990	Chairman of the Board, President and Chief Executive Officer of Res-Care
Olivia F. Kirtley		52		1998	Certified Public Accountant
Vincent D. Pettinelli		59		1999	Retired
Michael J. Foster		49		2001	Vice President of RFE Management Corporation
Steven S. Reed		41		2003	Attorney

     The business experience during the past five years of each of the directors is described below:

     JAMES R. FORNEAR, the founder of ResCare, served as Chairman of the Board of ResCare from 1984 until 1998. Mr. Fornear was the President of ResCare from 1974 to 1990 and Chief Executive Officer of ResCare from 1989 to 1993.

     RONALD G. GEARY, an attorney and certified public accountant, has served as a director and President of ResCare since 1990 and as Chief Executive Officer since 1993. He was elected Chairman of the Board in June 1998 when Mr. Fornear retired. Before he was named Chief Executive Officer, Mr. Geary was Chief Operating Officer of ResCare from 1990 to 1993. Mr. Geary is a director of Ventas, Inc., a real estate investment trust, and has been a director of Alterra Healthcare Corporation, an operator of assisted living communities since May 2001.

     E. HALSEY SANDFORD has been a director of ResCare since 1984 and served as Senior Executive from 1997 until March 2001 when he retired. From 1992 to 1997, Mr. Sandford served as Executive Vice President responsible for development for ResCare’s Division for Persons with Disabilities.

     SPIRO B. MITSOS, Ph.D., a retired psychologist, has been a director of ResCare since 1974. He has been Secretary of ResCare since 1984 and he served as Treasurer of ResCare from 1984 until 1998. Dr. Mitsos was employed by ResCare to provide psychological consultation services to facilities operated by ResCare from 1984 until he retired in 2000. Dr. Mitsos has served as an adjunct faculty member at Southern Illinois University, the University of Kentucky and the University of Evansville.

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     SEYMOUR L. BRYSON, Ph.D. has served as a director of ResCare since 1989. Since 1984, Dr. Bryson has held several positions with Southern Illinois University at Carbondale, including professor in the University’s Rehabilitation Institute, Dean of the College of Human Resources, Special Assistant to the Chancellor, Executive Assistant to the President and Executive Assistant to the Chancellor.

     OLIVIA F. KIRTLEY, a business consultant, has served as a director of ResCare since 1998. Ms. Kirtley is Past Chair of the American Institute of Certified Public Accountants (AICPA) and currently serves as Chair of the AICPA Board of Examiners. From 1991 to 2000, Ms. Kirtley served as Vice President and Chief Financial Officer of Vermont American Corporation, a leading manufacturer and marketer of power tool accessories. Ms. Kirtley is a director of Lancer Corporation, a worldwide manufacturer and distributor of fountain drink dispensing equipment, Alderwoods Group, Inc, a provider of funeral home and cemetery services and products, and of Papa Johns International, Inc., an international pizza company.

     VINCENT D. PETTINELLI has served as a director of ResCare since 1999. Mr. Pettinelli is the founder of PeopleServe, Inc., a provider of services to persons with mental retardation and developmental disabilities, serving as President from 1979 until 1996 and as Chairman of the Board from 1996 until its acquisition by ResCare in 1999.

     MICHAEL J. FOSTER has served as a director of ResCare since 2001. Since 1989, Mr. Foster has been employed by RFE Management Corp., the investment manager for RFE Investment Partners V, L.P. and other private equity investment funds. Mr. Foster currently serves as a director of several privately held portfolio companies of RFE Investment Partners V, L.P. and the other investment funds managed by RFE Management Corp.

     STEVE S. REED has served as a director of ResCare since February 2003. Mr. Reed practices law at Reed & Wicker, LLC, Louisville, Kentucky, where he is Managing Member. Mr. Reed was United States Attorney for the Western District of Kentucky from 1999 to 2001 and an Assistant U.S. Attorney for the same district from 1993 to 1999. From 2001 to 2002 he was a partner in the Louisville, Kentucky law firm of Wyatt, Tarrant & Combs. Mr. Reed is the Chair of the Board of Trustees of the University of Kentucky, serving as a Trustee since 1994.

Executive Officers of ResCare

     The executive officers of ResCare are Ronald G. Geary, whose experience is described above, Paul G. Dunn, Ralph G. Gronefeld, Jr., L. Bryan Shaul, Vincent F. Doran, Katherine W. Gilchrist, and William J Ballard.

     Mr. Dunn, age 37, has served as Chief Development Officer since 1997 and has responsibility for overseeing all ResCare’s development activities. From 1999 to 2000, he also served as Executive Vice President for Alternative Youth Services and Youthtrack. From 1992 to 1997, Mr. Dunn was employed by Laidlaw, Inc., most recently as Corporate Director, Financial Operations for the Laidlaw Medical Transportation, Inc. subsidiary, an operator of ambulance services.

     Mr. Gronefeld, age 44, was named President, Division for Persons with Disabilities in March 2002 after serving as Executive Vice President Operations of that Division from March 2001. He also served as Chief Financial Officer from May 1998 until March 2001. He previously served as Executive Vice President of Operations for the Division for Youth Services and Vice President responsible for ResCare’s Alternative Youth Services and Youthtrack subsidiaries. Mr. Gronefeld joined ResCare in June 1995 as Director of Internal Audit. From July 1995 through March 1996, he served as interim senior administrator for ResCare’s west region in its Division for Persons with Disabilities.

     Mr. Shaul, age 58, has served as Executive Vice President of Finance and Administration and Chief Financial Officer since March 2001. Before coming to ResCare, he served at Humana Inc., a health insurance company, as Vice President-Finance and Controller from March 2000, and as Vice President of Mergers and

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Acquisitions from March 1999 to March 2000. Before joining Humana, Mr. Shaul was Chief Financial Officer of Primary Health, Inc. in Boise, Idaho, a physician practice management and HMO company, from February 1997 to February 1999.

     Mr. Doran, age 52, has served as President, Division for Training Services since January 2002 after serving as President of the Division for Youth Services from August 2000 and as President, Job Corps Operations from 1997. Before joining ResCare, Mr. Doran was President for Job Corps Operations for Teledyne Economic Development, a product line of the Teledyne Controls business of Teledyne Industries, Inc., a publicly traded conglomerate where he had been employed in various capacities for twenty-five years.

     Ms. Gilchrist, age 50, a certified public accountant, joined ResCare as Vice President and Chief Financial Officer for the Division for Persons with Disabilities in March 2001. From 1998 to 2001, Ms. Gilchrist served as Vice President-Financial Operations for the East Region of American Medical Response, Inc. (a subsidiary of Laidlaw, Inc.), a national healthcare transportation services company. From 1996 to 1998, she was Vice President of Operations for ConnectiCare, Inc., a health maintenance organization serving the state of Connecticut.

     Mr. Ballard, age 61, joined ResCare as President of the Division for Youth Services in January 2002. From 1992 until he joined ResCare, Mr. Ballard served as Chairman and Chief Executive Officer of Children’s Comprehensive Services, Inc., a publicly traded provider of services for at-risk and troubled youth.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires ResCare’s directors and executive officers and people who own more than 10 percent of ResCare’s common shares to file initial stock ownership reports and reports of changes in ownership with the Securities and Exchange Commission. Based on a review of these reports, there were no late filings of the reports in 2002.

Item 11.  Executive Compensation

Summary Compensation Table

     The following table provides information concerning compensation awarded to, earned by or paid to the executive officers of ResCare during the year ended December 31, 2002:

								Long-Term
								Compensation
		Annual Compensation						Awards
								Securities
								Underlying
Name and Principal Position								Options/SAR		All Other
as of December 31, 2002		Year		Salary		Bonus(1)		(shares)		Compensation(2)
Ronald G. Geary			2002	$	332,935	$	—		112,500	$	14,982
	Chairman of the Board, President and		2001		355,344		—		112,500		15,542
	Chief Executive Officer		2000		332,253		—		—		14,459
Vincent F. Doran			2002		272,580		—		—		12,101
	President, Division for Training		2001		273,079		—		—		5,957
	Services		2000		192,457		60,000		50,000		8,228
Ralph G. Gronefeld, Jr.			2002		225,674		—		—		8,271
	President, Division for Persons with		2001		207,119		55,650		35,000		7,878
	Disabilities		2000		164,504		—		—		7,127

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								Long-Term
								Compensation
		Annual Compensation						Awards
								Securities
								Underlying
Name and Principal Position								Options/SAR		All Other
as of December 31, 2002		Year		Salary		Bonus(1)		(shares)		Compensation(2)
Paul G. Dunn			2002		216,750		—		—		9,830
	Chief Development Officer		2001		210,736		48,300		35,000		16,421
			2000		163,178		—		—		7,074
L. Bryan Shaul			2002		200,000		—		—		1,385
	Chief Financial Officer		2001		150,000		45,200		35,000		—
			2000		—		—		—		—

(1)	Bonuses paid to the executive officers are based on attainment of performance goals and as otherwise provided in their employment agreements.
(2)	Except as noted, All Other Compensation represents amounts ResCare contributed to the Retirement Savings Plan, and to the 401(k) Restoration Plan, which is described later. Mr. Dunn’s other compensation for 2001 includes forgiveness of the balance of $8,482 due on a loan ResCare made to him.

     ResCare has established the 401(k) Restoration Plan to permit certain members of management to defer compensation pre-tax and to permit ResCare to contribute on behalf of such employees without the restrictions imposed by the Internal Revenue Code on the tax-qualified Retirement Savings Plan. ResCare’s matching contribution is coordinated between the two plans so that ResCare matches on behalf of each participant the employee’s contribution dollar for dollar up to the first 3 percent and one-half of the next 3 percent of the employee’s salary, which is the same as the contribution ResCare makes for employees who participate in ResCare’s Retirement Savings Plan.

Option Grants for 2002

Potential Realized Value at Assumed

Annual Rates of Stock Price

Individual Grants

Appreciation for Option Term(1)

Number of

% of Total

Securities

Options/SARs

Underlying

Granted to

Exercise or

Options/SARs

Employees in

Base Price

Expiration

Name

Granted (#)

Fiscal Year

($/SH)

Date

5% ($)

10% ($)

Ronald G. Geary

112,500

31.49

%

$

8.17

02-22-08

$

312,590

$

709,161

⁽¹⁾ The dollar amounts in this table represent the potential value that may be realized of the stock options granted, assuming that the market price of the shares appreciate in value from the date of grant to the end of the option term at annualized rates of five and ten percent. Therefore, these amounts are not the actual value of the options granted and are not intended to forecast possible future appreciation, if any, of the prices of ResCare common shares. No assurances can be given that the share prices will appreciate at these rates or at all.

Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values

     No officer exercised stock options during the year ending December 31, 2002. The following table indicates the total number of exercisable and unexercisable stock options on December 31, 2002 held by the executive officers named in the Summary Compensation Table and the related value of such options based on the last sales price of the common stock on The NASDAQ National Market on December 28, 2002 of $3.62 per share.

					Number of Securities Underlying		Value of Unexercised
					Unexercised Options		In-the-Money Options
	Shares				at December 31, 2002 (#)		At December 31, 2002 ($)
	Acquired on		Value Realized
Name	Exercise (#)		($) (1)		Exercisable	Unexercisable	Exercisable		Unexercisable
Ronald G. Geary		—	$	—	500,600 shares	0 shares	$	—	$	—
Vincent F. Doran		—		—	68,400 shares	23,750 shares		—		—

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					Number of Securities Underlying		Value of Unexercised
					Unexercised Options		In-the-Money Options
	Shares				at December 31, 2002 (#)		At December 31, 2002 ($)
	Acquired on		Value Realized
Name	Exercise (#)		($) (1)		Exercisable	Unexercisable	Exercisable		Unexercisable
Ralph G. Gronefeld, Jr.		—		—	14,000 shares	21,000 shares		—		—
Paul G. Dunn		—		—	145,200 shares	21,000 shares		—		—
L. Bryan Shaul		—		—	14,000 shares	21,000 shares		—		—

⁽¹⁾ Market value on the date of exercise of shares acquired upon exercise, less the option exercise price.

Employment Agreements

     Mr. Geary has an employment agreement with ResCare that was signed in 1995. The Agreement automatically renews for one-year periods beginning one year before the expiration date so that the remaining term equals two years unless either ResCare or Mr. Geary gives notice of termination. The current term of the Agreement is scheduled to expire in September 2003. Under the agreement, Mr. Geary received a base salary of $300,000 in 1995 which is adjusted each year based on the increase in the consumer price index for Urban Wage Earners and Clerical Workers. Mr. Geary waived the CPI increase for the calendar year 2002. Mr. Geary is eligible for an annual bonus equal to up to 50 percent of his base salary based on performance criteria to which Mr. Geary and the executive compensation committee of the Board of Directors mutually agree on or before January 1 of each year. In addition, ResCare grants Mr. Geary options to purchase 112,500 common shares on the last Thursday of February during each of the remaining years of the term of the agreement at the fair market value on the date of the grant. In May 2000, Mr. Geary terminated options for 112,500 shares granted under his employment agreement for February 1998 for total consideration of $1.00 and he waived options for 112,500 shares that would have been granted for February 2000 under his employment agreement for total consideration of $1.00.

     In addition, ResCare provides to Mr. Geary the maximum disability insurance coverage permitted under ResCare’s current benefit plan, equips an office in Mr. Geary’s home, and pays fees for personal tax and financial planning and for an annual physical. The agreement also provides that if Mr. Geary’s employment is terminated following a change in the control of ResCare, Mr. Geary will be entitled to receive the unpaid balance of his full base salary through the effective termination date of the agreement and for an additional two years. The agreement may be terminated with or without cause at any time. If it is terminated without cause, Mr. Geary will continue to receive his base salary for the balance of the term. He would also receive a prorated bonus earned for that year plus any unpaid cash bonus for a prior year. If there is a change of control of ResCare, or if the agreement is terminated without cause, ResCare will repurchase unexercised vested options.

     ResCare has employment agreements with Messrs. Dunn, Gronefeld, Doran, and Shaul that contain substantially the same terms and conditions. The agreements are for initial terms of three years commencing January 1, 2001 for Messrs. Dunn and Gronefeld, and August 1, 2000 for Mr. Doran. Mr. Shaul’s contract is for an initial term of thirty-three months commencing on March 31, 2001. The agreements renew automatically for one-year periods after the expiration of their respective terms unless either ResCare or the employee gives notice of termination. ResCare may terminate all of the agreements with or without cause at any time. Base salary for Mr. Dunn is $210,000, $235,000 for Mr. Gronefeld, $250,000 for Mr. Doran, and $200,000 for Mr. Shaul subject to annual increases equal to the greater of 5 percent or the consumer price index “All Items” category (Washington-Baltimore All Items for Mr. Doran). All of the executives waived the CPI increase for the calendar year 2002. When Mr. Dunn was employed by ResCare, he executed a promissory note to ResCare for $15,000. The maturity date of the note was extended in Mr. Dunn’s employment agreement to May 2003 and on May 1 of each year beginning in 2001, ResCare forgives one-third of the outstanding principal balance of the note and one-third of the accrued and unpaid interest provided Mr. Dunn remains a full-time employee of ResCare. At December 31, 2002 the balance of this note was $10,000. In April 2000, ResCare paid Mr. Doran a retention bonus of $60,000. In addition, Mr. Doran receives an automobile allowance as allowed under federal regulations for Job Corps, and reimbursement of up to $3,000 for attorney fees.

     Each of these executives is eligible to receive a cash bonus based on an incentive program for the executive established each year in the contract and by ResCare’s Executive Compensation Committee. Messrs. Dunn, Gronefeld, and Shaul may earn up to 40 percent and Mr. Doran up to 35 percent of their base salaries

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based on meeting established division and/or company performance goals. The incentive payments are determined annually. In addition to the annual bonus, Mr. Doran is eligible to earn an additional bonus upon the award of additional Job Corps contracts to ResCare. The bonus is equal to 10 percent of the first year base management fee payable to ResCare under each new Job Corps contract. The bonus is earned upon the commencement of such new contract but is not payable until the first anniversary of the contract. If ResCare loses a Job Corps contract, Mr. Doran’s bonus can be reduced by 10 percent of the annual base fee of the lost contract.

     Upon entering into the employment agreements, each of the executives received a one-time grant of stock options. Mr. Doran was granted options to purchase 50,000 ResCare common shares, and Messrs. Gronefeld, Dunn, and Shaul were each granted options to purchase 35,000 ResCare common shares. For each executive, the options vest in 20 percent increments annually beginning as of the grant date and expire after five years.

     If their respective agreements are terminated by ResCare without cause, Messrs. Dunn, Gronefeld, and Shaul will receive the full base salary for one year and Mr. Doran for six months after termination. If Mr. Doran’s agreement is terminated without cause within one year after a change of ownership of ResCare, Mr. Doran will receive his full base salary for fifteen months after termination. In addition, for Mr. Dunn, ResCare will forgive the remaining principal balance and accrued but unpaid interest on his note payable to ResCare. If ResCare terminates an executive’s employment agreement for cause, the executive would not be entitled to any compensation following the date of termination other than the pro rata amount of the then current base salary through such date. If their employment is terminated for any reason, Messrs. Geary and Doran will be prohibited from competing with ResCare for one year and Messrs. Dunn, Shaul and Gronefeld will be prohibited from competing with ResCare for eighteen months. If Mr. Geary’s employment is terminated without cause, he is prohibited from competing until one year after his payments under the agreement end.

     In March 2003, all the named executives agreed to amend their employment agreements. Under the amendments: (1) ResCare granted stock options in lieu of the CPI salary increase for calendar 2003, (2) the executives agreed that ResCare may elect to pay all or a portion of the bonus earned for calendar 2003 and succeeding years in cash and/or stock options, and (3) ResCare granted stock options in lieu of the executives’ waiver of accrued paid time off for the five months between February 1 and June 30, 2003 and the executives agreed to use at least forty hours of their previously accrued paid time off during that same period.

Compensation of Directors

     Directors who are employees of ResCare receive no compensation for their services as directors. Each of ResCare’s non-employee directors (all of the directors except Mr. Geary) receives:

• an annual retainer of $18,000;

• $1,500 for participation in each board meeting;

• $750 for participation in each committee meeting; except the executive committee

• an annual retainer of $36,000 for each member of the executive committee;

• an annual retainer of $3,000 as a chair of a committee; and

• an annual grant of options to purchase 4,500 ResCare common shares under the 2000 Nonemployee Directors Stock Ownership Incentive Plan.

     Mr. Foster waives his fees and has directed ResCare to use them to fund a recognition program for ResCare employees.

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Executive Compensation Committee Interlocks and Insider Participation

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Ownership of Equity Securities

     The following table shows information about the beneficial ownership of ResCare common shares as of March 31, 2003 by:

• each person known to ResCare who beneficially owns more than 5 percent of the outstanding ResCare common shares or has filed a Schedule 13G with the Securities and Exchange Commission with respect to ResCare shares:

• each of ResCare’s directors and nominees for director;

• each of ResCare’s executive officers named in the Summary Compensation Table; and

• all directors and executive officers of ResCare as a group.

     Unless otherwise indicated, each of the shareholders listed below has sole voting and investment power over the shares.

	Number of Shares
Name of Beneficial Owner(1)	Beneficially Owned(2)				Percent of Total(2)
DIRECTORS AND NAMED EXECUTIVE OFFICERS
James R. Fornear		1,843,706	(3	)(4)		7.6	%
Ronald G. Geary		1,561,355	(5	)		6.3	%
Vincent D. Pettinelli		1,345,596	(6	)		5.5	%
Michael J. Foster		1,140,613	(7	)		4.7	%
Spiro B. Mitsos, Ph.D.		235,390	(8	)		1.0	%
Paul G. Dunn		160,220	(9	)		*
E. Halsey Sandford		119,064	(10	)		*
Vincent F. Doran		75,520	(11	)		*
Olivia F. Kirtley		44,175	(12	)		*
L. Bryan Shaul		29,990	(13	)		*
Ralph G. Gronefeld, Jr.		27,744	(14	)		*
Seymour L. Bryson, Ph.D.		23,312	(15	)		*
Steven S. Reed		—	—			*
All directors and executive officers as a group (15 persons)		6,660,685	(16	)		26.4	%
* Indicates less than 1 percent of outstanding common shares
OTHER SECURITY HOLDERS WITH MORE THAN 5% OWNERSHIP
FMR Corporation		2,608,645	(17	)		10.7	%
FleetBoston Financial Corporation		2,447,387	(17	)		10.1	%
Amalgamated Gadget, LP		1,305,716	(17),	(18)		5.3	%
Margaret H. Fornear		1,363,876	(3	)		5.6	%

⁽¹⁾ The following are addresses of the people ResCare knows beneficially own more than five percent of the outstanding common shares: James R. and Margaret H. Fornear, 175 Bayview Avenue, Naples, Florida 34108; Vincent D. Pettinelli, 5943 Macewen

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	Court, Dublin, Ohio 43017; Ronald G. Geary, 10140 Linn Station Road, Louisville, Kentucky 40223; FMR Corporation, 82 Devonshire Street, Boston, Massachusetts 02109; FleetBoston Financial Corporation, 100 Federal Street, Boston, Massachusetts 02110; Amalgamated Gadget, LP, City Center Tower II, 301 Commerce Street, Suite 2975, Fort Worth, Texas 76102.
(2)	Each named person or group is considered to be the beneficial owner of securities that the person may acquire within 60 days through the exercise or conversion of convertible securities, options, warrants and rights, if any. Those securities are included in the total number of outstanding shares when computing the percentage beneficially owned by the person or group. The securities are not included in the total number of outstanding shares when computing the percentage of shares beneficially owned by any other person or group. The number of shares includes shares that would be issued when a person converts convertible securities or when a person or group exercises options (including employee stock options).
(3)	As husband and wife, James R. Fornear and Margaret H. Fornear each may be considered the beneficial owner of the common shares owned by the other under the applicable rules of the SEC. Both Mr. and Mrs. Fornear disclaim such beneficial ownership and the amounts shown for each of them excludes the shares beneficially owned by the other. The totals do not include shares owned by Mr. and Mrs. Fornear’s adult children nor does it include shares held for the benefit of family members in trusts with an independent trustee.
(4)	Includes 10,575 shares subject to options that are presently exercisable.
(5)	Includes 485,570 shares subject to options that are presently exercisable and 1,712 shares held for the benefit of Mr. Geary by the Retirement Savings Plan over which Mr. Geary has no voting power but does have investment power. Also includes 224,000 shares held by three limited liability companies in each of which Mr. Geary holds a 50 percent interest. Mr. Geary shares voting and investment power with respect to the shares held by these limited liability companies. Excludes 4,400 shares held by Mrs. Geary in which Mr. Geary disclaims beneficial ownership.
(6)	Includes 6,075 shares subject to options that are currently exercisable and 1,159,908 shares held by a trust of which Mr. Pettinelli is trustee and beneficiary and 13,500 shares held by a charitable remainder trust of which Mr. Pettinelli is trustee. Does not include 300,000 shares held in a charitable remainder trust of which Mrs. Pettinelli is trustee and in which Mr. Pettinelli disclaims beneficial ownership.
(7)	Includes shares held by a limited partnership of which Mr. Foster is the general partner of the general partner of the limited partnership. Also includes 1,125 shares subject to options that are presently exercisable.
(8)	Represents shares owned jointly by Dr. and Mrs. Mitsos over which they share voting and investment power and includes 3,375 shares subject to options that are presently exercisable.
(9)	Includes 3,300 shares owned jointly by Mr. and Mrs. Dunn over which they share voting and investment power and 156,920 shares subject to options that are presently exercisable.
(10)	Includes 3,375 shares subject to options that are presently exercisable. Does not include 155,622 shares held in trust for the benefit of Mrs. Sandford and their children for which Mrs. Sandford is trustee and over which Mr. Sandford has no voting or investment power and in which he disclaims any beneficial interest.
(11)	Includes 74,520 shares subject to options that are presently exercisable.
(12)	Includes 4,500 shares over which Ms. Kirtley exercises sole voting and investment power and 28,500 shares over which she shares voting and investment power with her husband. Also includes 600 shares in Dr. Kirtley’s IRA over which Ms. Kirtley has neither voting nor investment power and includes 10,575 shares subject to options that are presently exercisable.
(13)	Includes 25,490 shares subject to options that are presently exercisable.
(14)	Includes 26,280 shares subject to options that are presently exercisable and 764 shares held by the Retirement Savings Plan over which Mr. Gronefeld has no voting power, but does have investment power. Also includes 700 shares held in Mrs. Gronefeld’s IRA over which Mr. Gronefeld holds neither voting nor investment power.
(15)	Includes 15,075 shares subject to options that are presently exercisable.
(16)	Includes 870,455 shares subject to options that are presently exercisable.
(17)	The information is based on the Schedule 13-G filed with the SEC reflecting ownership as of December 31, 2002.
(18)	Includes 305,716 shares issuable upon the conversion of ResCare 6% Subordinated Convertible Notes due 2004.

10

Equity Compensation Plan Information

					Number of
	Number of				securities
	securities to be				remaining available
	issued upon		Weighted average		for future issuance
	exercise of		exercise price of		under equity
Plan Category	outstanding options		outstanding options		compensation plans
Equity compensation plans approved by shareholders		2,935,665	$	8.15		1,425,519

Item 13.  Certain Relationships and Related Transactions

     Mr. Pettinelli has an interest in partnerships that own approximately 60 properties that are leased to subsidiaries of ResCare or to non-profit agencies with which subsidiaries of ResCare have management agreements. The leases generally have original terms ranging from 10 to 25 years. Rental expense under the leases with the ResCare subsidiaries totals approximately $1.0 million annually. ResCare subsidiaries have guarantee obligations with respect to certain of the indebtedness of the lessor partnerships. Mr. Pettinelli currently holds the debt and the mortgages on certain of the properties. If ResCare or any of its subsidiaries should incur any liability with respect to financing of the properties, Mr. Pettinelli has agreed to assign his rights under the financing instruments he holds to a subsidiary of ResCare. Mr. Pettinelli also has an obligation to indemnify the ResCare subsidiaries with regard to any such guarantee obligations and the indemnification is secured by a pledge of escrowed ResCare common shares and/or other securities.

     In June 2001, a subsidiary of ResCare sold nine real estate properties to S-M Properties, LLC, in which a stepdaughter of Mr. Fornear and her husband have an interest. The property was sold for $3.7 million and is leased by another ResCare subsidiary. The lease is for a term of 15 years with options to renew for two 5-year and one 4-year, 11 month terms. The annual rent expense is equal to 11.367 percent of the sales price for the first three years then 11 percent of the sales price for the next two years of the initial term. The annual rent increases to 12.14 percent of the sales price annually for the next five years and to 13.41 percent of the sales price for the final five years of the initial term. Mr. Fornear did not participate when the executive committee and the board discussed the transaction.

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized.

RES-CARE, INC.     

Date:   April 29, 2003                  By: /s/ Ronald G. Geary                              
Ronald G. Geary
Chairman, President and Chief Executive Officer

11

Item 15  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

Exhibit
No.	Exhibit
10.1	Amendment to Amended and Restated 1991 Incentive Stock Option Plan of the Company (filed herewith).
10.2	Amended and Restated Employment Agreement dated as of October 26, 1995 and amended November 5, 1996 between the Company and Ronald G. Geary (filed herewith).
10.3	Amendment to Employment Agreement between the Company and L. Bryan Shaul dated December 31, 2002 (filed herewith).
10.4	Amendment to Employment Agreement between the Company and Ralph G. Gronefeld, Jr. dated December 31, 2002 (filed herewith).
10.5	Amendment to Employment Agreement between the Company and William J Ballard dated December 31, 2002.
10.6	Amendment to Employment Agreement between the Company and Paul G. Dunn dated December 31, 2002.
23.1	Consent of KPMG LLP

12 EX-10.1 3 l00616aexv10w1.txt EX-10.1 AMEND. TO AMENDED/RESTATED 91 INCEN STOCK Exhibit 10.1 AMENDMENT TO AMENDED AND RESTATED 1991 INCENTIVE STOCK OPTION PLAN OF RES-CARE, INC. This Amendment to the Amended and Restated 1991 Incentive Stock Option Plan effective as of February 26, 1997. 1. That Section 2(d) is hereby amended to read in its entirety as follows: "Company" shall mean Res-Care, Inc. and its subsidiaries or partnerships or limited liability companies owned by it." 2. That, except as otherwise amended as provided herein, all other provisions of the Plan remain in full force and effect. IN WITNESS WHEREOF, this Amendment is executed as of the date first referenced above. RES-CARE, INC. BY: /s/ Ronald G. Geary --------------------------------- Ronald G. Geary, President and Chief Executive Officer EX-10.2 4 l00616aexv10w2.txt EX-10.2 AMENDED & RESTATED EMPLOYEE AGREEMENT Exhibit 10.2 AMENDED AND RESTATED EMPLOYMENT AGREEMENT This is an Amended and Restated Employment Agreement ("AGREEMENT") dated as of October 26, 1995, between RES-CARE, INC., a Kentucky corporation (the "COMPANY"), and RONALD G. GEARY (the "EXECUTIVE"). Recitals A. The Executive has been employed by the Company since February 5, 1990, and the services of the Executive, his managerial, legal and financial experience, and his knowledge of the affairs of the Company is of great value to the Company; B. The Executive possesses an intimate knowledge of the business and affairs of the Company, its policies, methods, personnel and plans for the future; C. The Company's Board of Directors recognizes that the Executive's contribution to the growth and success of the Company has been substantial and wishes to offer an inducement to the Executive to remain in the employ of the Company; and D. This Agreement amends, restates and supersedes in its entirety the Employment Agreement dated October 26, 1995, between the Company and the Executive. 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 Executive, and the Executive accepts such employment, upon the terms and conditions herein set forth for an initial term commencing as of September 15, 1995, and ending on September 14, 2000, subject to earlier termination only in accordance with the express provisions of this Agreement ("INITIAL TERM"). The Initial Term of this Agreement shall be automatically extended for additional 12 month periods (each an "ADDITIONAL TERM" and collectively the "ADDITIONAL TERMS"), commencing on September 15, 1999 and on each anniversary date of this Agreement thereafter, unless sooner terminated in accordance with the express provisions of this Agreement, so that the remaining period of the Term shall always equal two years. For purposes of this Agreement, the term "TERM" shall mean the Initial Term plus any Additional Terms. 2. DUTIES. (a) EMPLOYMENT AS PRESIDENT AND CHIEF EXECUTIVE OFFICER. During the Term the Executive shall serve as the Company's President and Chief Executive Officer. The Executive shall, subject to the supervision and control of the Company's Board of Directors, perform such duties and exercise such powers over and with regard to the Company's business as are presently being performed and exercised by him and such additional duties which are similar in nature and responsibility to those presently being performed by the Executive as may be prescribed from time to time by the Company's Board of Directors, including, without limitation, serving as a director and/or officer of the Company or one or more subsidiaries or affiliates of the Company, if elected to either or both of such positions, without any further salary or other compensation, including directors' fees. (b) TIME AND EFFORT. The Executive shall devote all of his business time, energies and talents exclusively to the Company's business and to no other business during the Term; provided, however, that subject to paragraph 7 of this Agreement, the Executive 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 paragraph 2(a) of this Agreement, 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) subject to satisfactory performance of the duties described in paragraph 2(a) of this Agreement, devote such time as may be reasonably required for him to continue to serving as a director on various for-profit and non-profit boards of directors, including without limitation, serving as director on the board of The First Capital Bank of Kentucky. 3. COMPENSATION. (a) BASE SALARY. The Company shall pay to the Executive during the Term a fixed, annual salary of $300,000.00, plus, beginning one year from the date of this Agreement, any cost of living increase determined in accordance with the formula set forth in paragraph 3(b) of this Agreement (the "BASE SALARY"). (b) COMPUTATION OF COST OF LIVING INCREASES. The Executive's cost of living increase, if any, shall be determined as promptly as practicable after each anniversary of the date of this Agreement. The cost of living increase shall be determined as follows: (i) The basis of the computation shall be the "Consumer Price Index for Urban Wage Earners and Clerical Workers" (CPI-W with base 1982-84 = 100) (the "INDEX") published by the Bureau of Labor Statistics of the United States Department of Labor. If the Bureau of Labor Statistics at any time during the Term compiles the Index in a different manner than is in effect on the date of this Agreement, the Company shall have the right, in its reasonable discretion, to determine which Consumer Price Index as then compiled by the Bureau of Labor Statistics will be used for the purpose of this Agreement. Upon written notice to the Executive of its reasonable determination of any change, such Index shall be the "Index" for purposes of this Agreement. (ii) The Index for the month of August, 1995 shall be the "BASE INDEX NUMBER" and the Index for the month of August next preceding each determination shall be the "CURRENT INDEX NUMBER." (iii) The rate of the cost of living increase on any annual anniversary of this Agreement shall be determined by dividing the Current Index Number by the Base Index Number, and subtracting the integer 1 from the quotient, in accordance with the following formula: Rate = (Current Index Number/Base Index Number) - 1. 2 (iv) The product of the rate of the cost of living increase multiplied by $300,000.00 shall be the cost of living increase for that following 12 month period, effective on the applicable anniversary of the Term. (c) CASH BONUS. The Executive shall be entitled to the bonus described in Section 3(b) of the Employment Agreement dated January 1, 1991, between the Executive and the Company (the "1991 EMPLOYMENT AGREEMENT") for the 1995 calendar year, payable as described in the 1991 Employment Agreement. For the calendar year beginning January 1, 1996, and thereafter during the Term, the Executive shall be eligible for an annual bonus (or pro rata portion thereof) during the Term equal to 0% to 50% of Base Salary, based upon performance criteria to be mutually agreed upon by the Executive and the Board of Directors' Compensation Committee on or before January I of each year during the Term (the "CASH BONUS"). (d) INCENTIVE STOCK OPTION. (i) The Company hereby grants to the Executive, effective as of October 26, 1995 (the "EFFECTIVE DATE"), an incentive stock option (the "BASE OPTION") to purchase up to a total of 65,000 shares (the "OPTION SHARES") of the common stock of the Company, no par value, on the terms and conditions of and pursuant to the Res-Care, Inc. 1991 Incentive Stock Option Plan (the "PLAN"), at a price per share equal to fair market value (as defined in the Plan) as of the Effective Date (the "EXERCISE PRICE"). The Base Option is fully, vested and immediately exercisable by the Executive as of the Effective Date. The right to exercise the Base Option shall expire six years from the date of this Agreement, except as the right to exercise the Option is otherwise qualified by the terms of the Plan or this Agreement. The Company also agrees to grant to the Executive additional incentive stock options (each an "ADDITIONAL OPTION" and collectively, the "ADDITIONAL OPTIONS") to purchase (A) up to a total of 50,000 shares of the common stock of the Company ("COMPANY COMMON STOCK"), no par value, at the then fair market value, on the last Thursday of each February during the Term, commencing on the last Thursday of February 1997, and (B) 112,797 shares of Company Common Stock, no par value, at the fair market value on November 5, 1996 (the date of execution of this Amended and Restated Employment Agreement), and in each case otherwise on the terms and conditions of and pursuant to the Plan. The Additional Option described in clause (A) shall be fully vested and immediately exercisable on the respective date of issuance of such Additional Option and the Additional Option described in clause (B) shall become fully vested and immediately exercisable on March 15, 1997 (and prior to that date shall not be exercisable). The Base Option and the Additional Options shall be referred to as the "OPTION". The right to exercise each Additional Option shall expire six years from the date of issuance of such Additional Option. The Company's Board of Directors shall have approved the granting of the Base Option and the Additional Options as of the date of this Agreement. (ii) The Option is not transferable otherwise than by will or the laws of descent and distribution, and is exercisable during the Executive's lifetime only by him. The Option is not liable for or subject to, in whole or in part, the debts, contracts, liabilities, or torts of the Executive nor shall it be subject to garnishment, attachment, execution, levy or other legal or equitable process. A modification, extension or renewal of an outstanding incentive stock option, including the Option, shall be treated as the granting of a new incentive stock option to the extent required under applicable provisions of the Internal Revenue Code. 3 (iii) The Option shall be subject to the provisions of the Plan and the Plan is incorporated in its entirety into this Agreement by this reference. (iv) The Option shall automatically terminate on the Date of Termination (as defined in paragraph 4(f) of this Agreement) with respect to all unexercised Option Shares, and the Executive shall be entitled to receive an amount equal to the number of Option Shares exercisable immediately prior to the Date of Termination multiplied by the excess, if any, of the fair market value (defined to mean the closing price of the Company's common stock on the last trading day prior to the Date of Termination) of each such Option Share over the Option Price (or zero, if the fair market value is less than or equal to the Option Price); (v) The Option may be exercised only by written notice by the Executive in the manner set forth in paragraph 10 of this Agreement. Such notice shall state the number of Option Shares in respect of which the option is being exercised and, if the Option Shares for which the option is being exercised are to be evidenced by more than one stock certificate, the denominations in which the stock certificates are to be issued; provided that no stock certificate shall be issued for less than 100 Option Shares. The notice shall be signed by the Executive. Such notice shall be accompanied by payment of the full Exercise Price of such Option Shares by cash or check payable to the order of the Company. (vi) The certificates for the Option Shares as to which the Option shall have been so exercised shall be registered in the name of the Executive and shall be delivered to the Executive at the address set forth in paragraph 10 of this Agreement. Each certificate shall bear any legend required under applicable state or federal securities laws. (vii) Subject to the limitations, expressed herein, the Option may be exercised with respect to all or a part of the Option Shares; provided, however, that no one exercise of the Option shall result in the issuance of less than 500 Option Shares. (viii) Neither the Executive nor any person claiming under or through the Executive shall be or have any rights or privileges of a stockholder of the Company in respect of any of the Option Shares, unless and until certificates representing such Option Shares shall have been issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). (ix) In the event of a stock dividend, stock split or other subdivision, consolidation, reorganization or change in the shares of the Company Common Stock or otherwise with respect to the capital structure of the Company, the number of Option Shares shall be proportionately adjusted. All such adjustments shall be made so as not to constitute a modification within the meaning of Section 425 of the Internal Revenue Code of 1986, as amended (the "CODE"). (x) If the Company shall be a party to a binding, agreement to any merger, consolidation, reorganization or sale of substantially all the assets of the Company, the Option shall pertain and apply to the securities and/or property which a share owner of the number of shares of Company Common Stock subject to the Option would be entitled to receive pursuant to such merger, consolidation, reorganization or sale of assets. 4 (xi) In the event that: (A) any person other than the Company shall acquire more than 50% of the Company Common Stock through a tender offer, exchange offer or otherwise; or (B) there shall be a sale of all or substantially all of the assets of the Company; then the Executive shall be entitled to receive in lieu of exercise of the Option, to the extent that it is then exercisable, a cash payment in an amount equal to the difference between the aggregate Exercise Price of such Option, or portion thereof, and (1) in the case of an event covered by (A) above, the final offer price per share paid for Company Common Stock, or such lower price as the Company's Board of Directors may determine is necessary to preserve the Option's status as an "incentive stock option" within the meaning of Section 422 of the Code, multiplied by the number of shares of Company Common Stock granted pursuant to the Option, and (2) in the case of an event covered by (B) above, the aggregate fair market value of the Option Shares, as determined by the Company's Board of Directors at such time. Any payment which the Company is required to make under this paragraph 3(d)(xi) shall be made within 15 business days following the event which results in the Executive's right to such payment. Notwithstanding anything in this paragraph 3(d)(xi) to the contrary, if an event covered by (A) above results in the Company receiving non-cash compensation, then the Executive's payment pursuant to this paragraph 3(d)(xi) shall, to the extent possible, be in the same form of non-cash payment as received by the Company's shareholders with respect to their shares of Company Common Stock. (e) OUT-OF-POCKET EXPENSES. The Company shall pay to the Executive the ordinary, necessary and reasonable expenses incurred by him in the performance of his duties hereunder (or if such expenses are paid directly by the Executive, shall reimburse him for such payment), provided that the Executive properly accounts therefor in accordance with the Company's policy. (f) PARTICIPATION IN BENEFIT PLANS. The Executive shall be entitled to participate in (i) health insurance, (ii) term life insurance, (iii) 401(k) plan, (iv) sick leave, and (v) long-term disability and other benefits generally made available to officers of the Company during the Term, which shall include all normal benefits available under the Company's current "Flex-Care" plan, subject to any eligibility, coverage, qualification or other limitations or restrictions applicable to such benefits. The Company further agrees to provide the Executive with the maximum disability insurance coverage permitted under the Company's Current "Flex-Care" plan, at the Company's expense. (g) VACATION; PROFESSIONAL LICENSES. The Executive shall be entitled to an annual vacation leave of three weeks at full pay, such vacation to be taken during each relevant year at time(s) mutually agreeable to the parties hereto. The Executive shall also be entitled to be absent from work for up to one week at full pay so as to maintain his CPA and law licenses. The Company shall pay all reasonable fees and expenses (including transportation, lodging, food and tuition) associated with such courses and shall also pay all state licensing fees and dues for local, state and federal professional associations in which the Executive is a member. (h) WITHHOLDING OF TAXES: INCOME TAX TREATMENT. If, upon the payment of any compensation or benefit to the Executive under this Agreement (including, without limitation, in connection with the exercise of the Option), 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 Executive agrees that the Company may satisfy such requirement by: 5 (i) withholding an amount necessary to satisfy such withholding requirement from the Executive's compensation or benefit; or (ii) conditioning the payment or transfer of such compensation or benefit upon the Executive's payment to the Company of an amount sufficient to satisfy such withholding requirement. The Executive agrees that he will treat all of the amounts payable pursuant to this Agreement as compensation for income tax purposes. (i) OFFICE. The Company shall provide to the Executive during the Term at the Company's expense a fully equipped office in the Executive's home, in addition to his office at the corporate headquarters, including without limitation, all furniture, fax machine, copier, printer, computer, telephone, and all expenses associated with the use of such equipment, and all fees and costs for computer on-line services to monitor the various public markets. Upon termination of the Executive's employment with the Company, the Executive shall return to the Company, at the Company's expense, all equipment provided to the Executive pursuant to this paragraph 3(i). (j) FINANCIAL PLANNING. The Company agrees to pay all reasonable legal and accounting fees incurred each year during the Term by the Executive in connection with the Executive's personal tax and financial planning. (k) ANNUAL PHYSICAL. The Company shall pay any reasonable expenses for the Executive's annual physical that are not covered by insurance. 4. TERMINATION. The Executive's employment hereunder may be terminated under this Agreement as follows, subject to the Executive's rights pursuant to paragraph 5 of this Agreement: (a) DEATH. The Executive's employment hereunder shall terminate upon his death. (b) DISABILITY. If, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from his duties hereunder on a full-time basis for 90 consecutive calendar days, and within 30 days after written Notice of Termination is given (which may occur no earlier than 30 days before, but at any time after, the end of such 90-day period), the Executive shall not have returned to the performance of his duties hereunder on a full-time basis, the Company may terminate the Executive's employment hereunder. (c) CAUSE. The Company may terminate the Executive's employment hereunder for Cause. For purposes of this Agreement, the Company shall have "CAUSE" to terminate the Executive's employment because of the Executive's breach of fiduciary duty involving personal profit, repeated and gross neglect of or failure to perform his material duties under this Agreement, or conviction of, or plea of nolo contendere to, any law, rule or regulation (other than traffic violations or similar offenses). (d) WITHOUT CAUSE. By appropriate action of the Company's Board of Directors, the Company shall have the right to terminate the Executive's employment under this Agreement at any time without Cause. (e) NOTICE OF TERMINATION. Any termination during the term of this Agreement of the Executive's employment hereunder (other than termination pursuant to 6 paragraphs 4(a) or (d) above) shall be communicated by written Notice of Termination to the Executive hereto. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. If the Company's Board of Directors terminate the Executive pursuant to paragraph 4(d), then the Company shall notify the Executive that he is being terminated pursuant to paragraph 4(d) of this Agreement. (f) DATE OF TERMINATION. The "DATE OF TERMINATION" shall, for purposes of this Agreement, mean: (i) if the Executive's employment is terminated by his death, the date of his death; (ii) if the Executive's employment is terminated on account of disability pursuant to paragraph 4(b) above, 30 days after Notice of Termination is given (provided that the Executive shall not, during such 30-day period, have returned to the performance of his duties on a full-time basis), (iii) if the Executive's employment is terminated by the Company for Cause pursuant to paragraph 4(c) above, the date specified in the Notice of Termination, (iv) if the Executive's employment is terminated by the Company without Cause, pursuant to paragraph 4(d) above, 30 days after Notice of Termination is given, or (v) if the Executive's employment is terminated by the Executive's voluntary resignation, upon the date of notice of such resignation by the Executive or such later date as specified in such notice. 5. COMPENSATION UPON TERMINATION OR DURING DISABILITY. (a) DEATH. If the Executive's employment shall be terminated by reason of his death, the Executive shall continue to receive his full Base Salary until the date of his death and a Cash Bonus, prorated based upon the number of full months that have elapsed from the immediately preceding January 1 until the date of his death (plus any earned but unpaid Cash Bonus for a prior period). (b) DISABILITY. During any period that the Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness, the Executive shall continue to receive his full Base Salary until the Date of Termination and shall be entitled to receive a Cash Bonus, prorated based upon the number of full months that have elapsed from the immediately preceding January 1 until the Date of Termination (plus any earned but unpaid Cash Bonus for a prior period). Upon termination due to death prior to a termination as specified in the preceding sentence, paragraph 5(a) above shall apply. (c) CAUSE; VOLUNTARY RESIGNATION. If the Executive's employment shall be terminated for Cause or the Executive's voluntary resignation, the Company shall, through the Date of Termination, continue to pay the Executive his full Base Salary but the Executive shall not be entitled to receive a Cash Bonus (other than any earned but unpaid Cash Bonus for a prior period). (d) WITHOUT CAUSE. If the Executive's employment shall be terminated without Cause, the Executive shall continue to receive his full Base Salary for the balance of the Term. The Executive shall also be entitled to receive a Cash Bonus, prorated based upon the number of full months that have elapsed from the immediately preceding January 1 until the Date of Termination (plus any earned but unpaid Cash Bonus for a prior period). 7 (e) NO FURTHER OBLIGATIONS AFTER PAYMENT. After all payments, if any, have been made to the Executive pursuant to paragraph 3(c) of this Agreement and any of paragraphs 5(a) through 5(d) of this Agreement, the Company shall have no further obligations to the Executive under this Agreement other than the provision of any employee benefits required to be continued under applicable law. (f) TERMINATION FOLLOWING CHANGE OF CONTROL. Notwithstanding anything else in this Agreement to the contrary, if any of the events constituting a Change of Control of the Company shall have occurred, then the Executive shall be entitled to an amount equal to (i) the unpaid balance of the Executive's full base salary through the Date of Termination at the rate in effect as of the Date of Termination, and (ii) an amount equal to the Executive's full base salary for 24 months at the rate in effect as of the Date of Termination, upon the concurrent or subsequent termination of the Executive's employment, or the voluntary resignation of the Employee, unless such termination is because of the Executive's death or for Cause. A "CHANGE OF CONTROL" of the Company shall mean a change of control of the Company which is of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended ("EXCHANGE ACT"); provided that, without limitation, such a change of control shall be deemed to have occurred if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner as defined in Rule l3d-3 under the Exchange A, directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company's then outstanding securities; or (B) during any period of two consecutive years, individuals who at the beginning of such period constitute the Company's Board of Directors cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Company's shareholders, of each new director was approved by vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; or (C) the Company's shareholders approve a merger or consolidation of the Company with another corporation if the Company's shareholders immediately before such vote will not, as a result of such merger or consolidation own more than 50% of the voting stock of the corporation resulting from such merger or consolidation; or (D) the business of the Company and its subsidiaries is disposed of pursuant to a partial or complete liquidation of the Company or its subsidiaries or the sale of substantially all of the assets of the Company or its subsidiaries, or otherwise. 6. DUTIES UPON TERMINATION. Upon the Executive's termination of employment hereunder for any reason whatsoever, the Executive shall promptly return to the Company any Confidential Information (as hereinafter defined) and, whether or not constituting Confidential Information, any technical data, marketing plans, customer lists, rolodexes and any tape recordings, computer programs, disks, and any other physical representations of any information relating to the Company or to the Business (as hereinafter defined) of the Company. The Executive hereby acknowledges that any and all of such items, physical representations and information are and shall remain at all times the exclusive property of the Company. 7. RESTRICTIVE COVENANTS IN CONNECTION WITH THE EXECUTIVE'S EMPLOYMENT. (a) ACKNOWLEDGMENTS. The Executive 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 clients and employees of the Company and its affiliates and allows him access to Confidential Information, (ii) the nature and 8 periods of restrictions imposed by the covenants contained in this paragraph 7 are fair, and reasonable and necessary to protect and preserve for the Company the benefits of the Executive's employment hereunder, (iii) the Company would sustain great and irreparable loss and damage if the Executive were to breach any of such covenants, (iv) the Company conducts its business actively in and throughout the entire Territory, and (vi) the Territory is reasonably sized because the Business of the Company is scattered over a wide geographical area, and requires the entire Territory for profitable operations. (b) COVENANTS. Having acknowledged the foregoing, the Executive covenants and agrees with the Company that he will not, directly or indirectly, from the date of this Agreement until the later of (i) one year after the Date of Termination, or (ii) if the Executive receives payments after termination pursuant to paragraphs 5(c) or (d), then one year after the date that he ceases to receive such payments: (A) solicit, divert or appropriate to himself or any other person, or attempt to solicit or divert or appropriate to himself or any other person, any business or services (similar in nature to the Business) of any person who was a client, an employee or an agent of the Company or any affiliate of the Company at any time during the 12 months immediately preceding the Date of Termination (or if a Date of Termination has not occurred, the date of such solicitation, diversion or appropriation); or (B) 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, in competition within the Territory with the Business of the Company or any affiliate of the Company. The Executive covenants further that, without limitation as to time, he will not, directly or indirectly disclose or use or otherwise exploit for his own benefit, or the benefit of any other person, except as may be necessary in the performance of his duties hereunder, any Confidential Information. (c) DEFINITIONS. For purposes of this Agreement, (i) The "TERRITORY" shall mean the area described on SCHEDULE A to this Agreement. (ii) "CONFIDENTIAL INFORMATION" shall mean any business information relating to the Company or any of its affiliates or to the Business of the Company or any of its affiliates (whether or not constituting a trade secret), which has been or is treated by the Company or any of its affiliates as proprietary and confidential. without limiting the generality of the foregoing, so long as such information is treated by the Company or any of its affiliates as proprietary and confidential, Confidential Information shall include, information regarding the Company's or any of its affiliates' services, technology, processes, research, pricing, purchasing, accounting, operations, finances, marketing, employment practices, customer and prospective customer lists, agents and affiliates; provided, however, that Confidential Information shall not include any information that (A) has been lawfully disclosed on a non-confidential basis by the Company or any of its affiliates to any third party, (B) has been independently developed or disclosed by others, or (C) otherwise enters the public domain by lawful means. (iii) The "BUSINESS" of the Company and its affiliates shall mean any business engaged in by the Company or its affiliates during the Term. 9 (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. (d) INJUNCTIVE RELIEF; INVALIDITY OF ANY PROVISION. The Executive acknowledges that his breach of any covenant contained in this paragraph 7 will result in irreparable injury to the Company and its affiliates and that the company's and the affiliate's remedy at law for such a breach will be inadequate. Accordingly, the Executive agrees and consents that the Company or any of its affiliates, in addition to all other remedies available to any of 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 the Executive of any covenant contained in this paragraph 7. If any provision of this paragraph 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. 8. ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. This Agreement supersedes (i) the 1991 Employment Agreement and the Employment Agreement Addendum dated November 25, 1991, except with respect to (A) the incentive stock option granted pursuant to the 1991 Employment Agreement, with respect to which the rights of the Executive shall not be affected by this Agreement, and (B) the bonus for the calendar year 1995 as provided for under the 1991 Employment Agreement and in paragraph 3(c) of this Agreement, with respect to which the rights of the Executive shall not be affected by this Agreement and (ii) the Employment Agreement dated as of October 26, 1995. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all parties hereto (other than as provided in the next to last sentence of paragraph 7(d) of this Agreement. No waiver of any of the provisions of this 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 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 Agreement is intended to be personal to the Executive and the rights and obligations of the Executive 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 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 paragraph 10): TO THE COMPANY: 10 Res-Care, Inc. 1300 Embassy Square Louisville, Kentucky 40299 Attn: Chairman of the Board TO THE EXECUTIVE: Ronald G. Geary 603 Flat Rock Road Louisville, Kentucky 40245 11. EXECUTION IN COUNTERPARTS. This 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 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 Agreement. 13. SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions of this Agreement and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted. 14. GOVERNING LAW. This Agreement is executed and delivered in, and shall be governed by, enforced and interpreted in accordance with the laws of, the Commonwealth of Kentucky. 15. TENSE; CAPTIONS. In construing this Agreement, whenever appropriate, the singular tense shall also be deemed to mean the plural, and vice versa, and the captions contained in this Agreement shall be ignored. 16. SURVIVAL. The provisions of paragraph 7 of this Agreement shall survive the termination, for any reason, of this Agreement, in accordance with their terms. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above but actually on the dates set forth below. RES-CARE, INC. By: /S/ James R. Fornear ----------------------------------- Title: Chairman -------------------------------- 11 Date: 11/5/96 --------------------------------- /S/ Ronald G. Geary -------------------------------------- RONALD G. GEARY Date: 11/5/96 --------------------------------- 12 EX-10.3 5 l00616aexv10w3.txt EX-10.3 AMEND. TO EMPLOYEE AGREEMENT Exhibit 10.3 RES-CARE, INC. 10140 LINN STATION ROAD LOUISVILLE, KENTUCKY 40223 December 31, 2002 L. Bryan Shaul 5603 Chapel View Way Crestwood, Kentucky 40014 RE: EMPLOYMENT AGREEMENT - AMENDMENTS Dear Bryan: This letter is in reference to that certain Employment Agreement between Res-Care, Inc. and you ("Employment Agreement"). Any capitalized terms not otherwise specifically defined in this letter agreement shall have the meanings given to them in the Employment Agreement. Pursuant to the second literary paragraph of paragraph (a) of Section 3 of the Employment Agreement, Employee is entitled to an increase in Base Salary as of January 1, 2003. Company and Employee have agreed that in lieu of such increase in Base Salary, effective March 28, 2003, the Company shall grant to Employee options to purchase 6,070 shares of Company common stock, at an exercise price based upon the closing sale price of Company common stock as reported on the Nasdaq National Market on such date. Provided Employee is employed by the Company on December 1, 2003, all of such options shall vest and be exercisable on December 1, 2003. Except as otherwise agreed in writing by the Company and you, provided that the Employment Agreement or your employment thereunder is not terminated for any reason, your Base Salary shall continue to be $200,000 during the period January 1, 2003 through December 31, 2003. Pursuant to paragraph (b) of Section 3 of the Employment Agreement, Employee participates in the Incentive Program. Company and Employee agree that commencing with the calendar year 2003 and for succeeding calendar years the Performance Incentive shall be calculated and payable on an annual, rather than quarterly, basis. In addition, paragraphs (a) through (f), inclusive, of Section 5 of the Employment Agreement shall be amended by deleting the word "quarter" each place it appears therein and substituting the word "year" for the same. Company and Employee have also agreed that the Company may elect to pay all or a portion of any Performance Incentive earned by Employee for any period during the calendar year 2003 and succeeding calendar years 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 Performance Incentive so earned by Employee in options to purchase shares of Company common stock, such options shall be issued on the date that the Performance Incentive so earned is payable, at an exercise price based upon 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 of grant. L. Bryan Shaul December 31, 2002 Page 2 Pursuant to the Company's vacation pay and/or paid time off plans, Employee is entitled to accrue and utilize certain amounts of vacation pay and/or paid time off. Employee agrees that during the period February 1, 2003 through June 30, 2003 (the "Suspension Period"), Employee shall not accrue any amount of vacation pay and/or paid time off and shall not be paid for such time. The amount of such vacation pay and/or paid time off that does not accrue by reason of the immediately preceding sentence shall be hereinafter referred to as the "Waived PTO." In addition, during the Suspension Period, the Employee shall utilize at least forty (40) hours of previously accrued vacation pay and/or paid time off (or if Employee has less than forty (40) hours of previously accrued vacation pay and/or paid time off as of February 1, 2003, such lesser amount) (the "Minimum Amount"). If and to the extent that Employee does not utilize the Minimum Amount, it shall be forfeited and Employee shall not be paid for such amount. In consideration for the agreements of Employee in this paragraph, either: [ LBS ] The Company shall, effective on March 28, 2003, grant to Employee options to purchase 4,490 shares of Company common stock, at an exercise price based upon the closing sale price of Company common stock as reported on the Nasdaq National Market on such date. All of such options shall vest and be exercisable on March 28, 2003. [ ] If the earnings of the Company and its subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles consistently applied, for each of the first, second and third quarters of the calendar year 2003 equal or exceed the respective earnings targets for each of such quarters as established by the Company's Board of Directors at its meeting on January 6, 2003, fifty percent (50%) of the Waived PTO shall be restored to the Employee on December 31, 2003 and the remaining fifty percent (50%) of the Waived PTO shall be restored to the Employee on January 31, 2004. Such restored amounts shall be eligible for the Company's PTO buy-back plan commencing on the respective dates of restoration. Employee must make an election at the time of the Employee's execution of this letter agreement as to which of alternatives above shall be applicable to the Employee by initialing the box adjacent to the alternative selected. Such election is irrevocable and may not be changed. If the provisions of the preceding paragraph regarding the waiver and forfeiture of the Employee's vacation pay and/or paid time off create a hardship for Employee, not later than June 30, 2003, Employee may request review of such hardship by the Hardship Committee described on Exhibit A attached hereto. Any such request for hardship review shall be addressed to me. L. Bryan Shaul December 31, 2002 Page 3 All stock options granted as provided in this letter agreement shall be granted pursuant to and, to the extent not expressly inconsistent herewith, governed by the Stock Plan. The number of shares to be issued under such options shall 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 by the Company shall expire and any vested options shall expire in accordance with the terms of the Stock Plan. Except as otherwise provided herein, the Employment Agreement shall remain unamended and in full force and effect. If the foregoing amendment to the Employment Agreement is acceptable to you, please execute both originals of this letter agreement, return both executed originals to me, and I will execute both originals, add my initials adjacent to your initials above and return one original to you. The provisions of this letter agreement are subject to approval by the Executive Compensation Committee of the Company's Board of Directors. Sincerely, /s/ Ronald G. Geary Ronald G. Geary Chairman, President and Chief Executive Officer Agreed to this ___ day of ________, 2003, but effective as of December 31, 2002: /s/ L. Bryan Shaul - ------------------------ L. Bryan Shaul EX-10.4 6 l00616aexv10w4.txt EX-10.4 AMEND. TO EMPLOYEE AGREEMENT Exhibit 10.4 RES-CARE, INC. 10140 LINN STATION ROAD LOUISVILLE, KENTUCKY 40223 December 31, 2002 Ralph G. Gronefeld, Jr. 4106 Willow Reed Place Louisville, Kentucky 40299 RE: EMPLOYMENT AGREEMENT - AMENDMENTS Dear Ralph: This letter is in reference to that certain Employment Agreement between Res-Care, Inc. and you ("Employment Agreement"). Any capitalized terms not otherwise specifically defined in this letter agreement shall have the meanings given to them in the Employment Agreement. Pursuant to the second literary paragraph of paragraph (a) of Section 3 of the Employment Agreement, Employee is entitled to an increase in Base Salary as of January 1, 2003. Company and Employee have agreed that in lieu of such increase in Base Salary, effective March 28, 2003, the Company shall grant to Employee options to purchase 7,130 shares of Company common stock, at an exercise price based upon the closing sale price of Company common stock as reported on the Nasdaq National Market on such date. Provided Employee is employed by the Company on December 1, 2003, all of such options shall vest and be exercisable on December 1, 2003. Except as otherwise agreed in writing by the Company and you, provided that the Employment Agreement or your employment thereunder is not terminated for any reason, your Base Salary shall continue to be $235,000 during the period January 1, 2003 through December 31, 2003. Pursuant to paragraph (b) of Section 3 of the Employment Agreement, Employee participates in the Incentive Program. Company and Employee agree that commencing with the calendar year 2003 and for succeeding calendar years the Operational Incentive shall be calculated and payable on an annual, rather than quarterly, basis. In addition, paragraphs (a) through (f), inclusive, of Section 5 of the Employment Agreement shall be amended by deleting the word "quarter" each place it appears therein and substituting the word "year" for the same. Company and Employee have also agreed that the Company may elect to pay all or a portion of any Operational Incentive earned by Employee for any period during the calendar year 2003 and succeeding calendar years 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 Operational Incentive so earned by Employee in options to purchase shares of Company common stock, such options shall be issued on the date that the Operational Incentive so earned is payable, at an exercise price based upon 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 of grant. Ralph G. Gronefeld, Jr. December 31, 2002 Page 2 Pursuant to the Company's vacation pay and/or paid time off plans, Employee is entitled to accrue and utilize certain amounts of vacation pay and/or paid time off. Employee agrees that during the period February 1, 2003 through June 30, 2003 (the "Suspension Period"), Employee shall not accrue any amount of vacation pay and/or paid time off and shall not be paid for such time. The amount of such vacation pay and/or paid time off that does not accrue by reason of the immediately preceding sentence shall be hereinafter referred to as the "Waived PTO." In addition, during the Suspension Period, the Employee shall utilize at least forty (40) hours of previously accrued vacation pay and/or paid time off (or if Employee has less than forty (40) hours of previously accrued vacation pay and/or paid time off as of February 1, 2003, such lesser amount) (the "Minimum Amount"). If and to the extent that Employee does not utilize the Minimum Amount, it shall be forfeited and Employee shall not be paid for such amount. In consideration for the agreements of Employee in this paragraph, either: [ X ] The Company shall, effective on March 28, 2003, grant to Employee options to purchase 5,280 shares of Company common stock, at an exercise price based upon the closing sale price of Company common stock as reported on the Nasdaq National Market on such date. All of such options shall vest and be exercisable on March 28, 2003. [ ] If the earnings of the Company and its subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles consistently applied, for each of the first, second and third quarters of the calendar year 2003 equal or exceed the respective earnings targets for each of such quarters as established by the Company's Board of Directors at its meeting on January 6, 2003, fifty percent (50%) of the Waived PTO shall be restored to the Employee on December 31, 2003 and the remaining fifty percent (50%) of the Waived PTO shall be restored to the Employee on January 31, 2004. Such restored amounts shall be eligible for the Company's PTO buy-back plan commencing on the respective dates of restoration. Employee must make an election at the time of the Employee's execution of this letter agreement as to which of alternatives above shall be applicable to the Employee by initialing the box adjacent to the alternative selected. Once made, the Employee's election is irrevocable and may not be changed. Ralph G. Gronefeld, Jr. December 31, 2002 Page 3 If the provisions of the preceding paragraph regarding the waiver and forfeiture of the Employee's vacation pay and/or paid time off create a hardship for Employee, not later than June 30, 2003, Employee may request review of such hardship by the Hardship Committee described on Exhibit A attached hereto. Any such request for hardship review shall be addressed to me. All stock options granted as provided in this letter agreement shall be granted pursuant to and, to the extent not expressly inconsistent herewith, governed by the Stock Plan. The number of shares to be issued under such options shall 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 by the Company shall expire and any vested options shall expire in accordance with the terms of the Stock Plan. Except as otherwise provided herein, the Employment Agreement shall remain unamended and in full force and effect. If the foregoing amendment to the Employment Agreement is acceptable to you, please execute both originals of this letter agreement, return both executed originals to me, and I will execute both originals, add my initials adjacent to your initials above and return one original to you. The provisions of this letter agreement are subject to approval by the Executive Compensation Committee of the Company's Board of Directors. Sincerely, /s/ Ronald G. Geary Ronald G. Geary Chairman, President and Chief Executive Officer Agreed to this 25th day of February 2003, but effective as of December 31, 2002: /s/ Ralph G. Gronefeld, Jr. - ------------------------------------ Ralph G. Gronefeld, Jr. EX-10.5 7 l00616aexv10w5.txt EX-10.5 EMPLOYEE AGREEMENT AMENDMENTS Exhibit 10.5 RES-CARE, INC. 10140 LINN STATION ROAD LOUISVILLE, KENTUCKY 40223 December 31, 2002 William J Ballard 4117 Hillsboro Pike Nashville, Tennessee 37215 RE: EMPLOYMENT AGREEMENT - AMENDMENTS Dear Bill: This letter is in reference to that certain Employment Agreement between Res-Care, Inc. and you ("Employment Agreement"). Any capitalized terms not otherwise specifically defined in this letter agreement shall have the meanings given to them in the Employment Agreement. Pursuant to the second literary paragraph of paragraph (a) of Section 3 of the Employment Agreement, Employee is entitled to an increase in Base Salary as of January 1, 2003. Company and Employee have agreed that in lieu of such increase in Base Salary, effective March 28, 2003, the Company shall grant to Employee options to purchase 6,070 shares of Company common stock, at an exercise price based upon the closing sale price of Company common stock as reported on the Nasdaq National Market on such date. Provided Employee is employed by the Company on December 1, 2003, all of such options shall vest and be exercisable on December 1, 2003. Except as otherwise agreed in writing by the Company and you, provided that the Employment Agreement or your employment thereunder is not terminated for any reason, your Base Salary shall continue to be $200,000 during the period January 1, 2003 through December 31, 2003. Pursuant to paragraph (b) of Section 3 of the Employment Agreement, Employee participates in the Incentive Program. Company and Employee have agreed that the Company may elect to pay all or a portion of any Performance Incentive earned by Employee for any period during the calendar year 2003 and succeeding calendar years 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 Performance Incentive so earned by Employee in options to purchase shares of Company common stock, such options shall be issued on the date that the Performance Incentive so earned is payable, at an exercise price based upon 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 of grant. Pursuant to the Company's vacation pay and/or paid time off plans, Employee is entitled to accrue and utilize certain amounts of vacation pay and/or paid time off. Employee agrees that during the period February 1, 2003 through June 30, 2003 (the "Suspension Period"), Employee shall not William J Ballard December 31, 2002 Page 2 accrue any amount of vacation pay and/or paid time off and shall not be paid for such time. The amount of such vacation pay and/or paid time off that does not accrue by reason of the immediately preceding sentence shall be hereinafter referred to as the "Waived PTO." In addition, during the Suspension Period, the Employee shall utilize at least forty (40) hours of previously accrued vacation pay and/or paid time off (or if Employee has less than forty (40) hours of previously accrued vacation pay and/or paid time off as of February 1, 2003, such lesser amount) (the "Minimum Amount"). If and to the extent that Employee does not utilize the Minimum Amount, it shall be forfeited and Employee shall not be paid for such amount. In consideration for the agreements of Employee in this paragraph, either: [ X ] The Company shall, effective on March 28, 2003, grant to Employee options to purchase 3,590 shares of Company common stock, at an exercise price based upon the closing sale price of Company common stock as reported on the Nasdaq National Market on such date. All of such options shall vest and be exercisable on March 28, 2003. [ ] If the earnings of the Company and its subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles consistently applied, for each of the first, second and third quarters of the calendar year 2003 equal or exceed the respective earnings targets for each of such quarters as established by the Company's Board of Directors at its meeting on January 6, 2003, fifty percent (50%) of the Waived PTO shall be restored to the Employee on December 31, 2003 and the remaining fifty percent (50%) of the Waived PTO shall be restored to the Employee on January 31, 2004. Such restored amounts shall be eligible for the Company's PTO buy-back plan commencing on the respective dates of restoration. Employee must make an election at the time of the Employee's execution of this letter agreement as to which of alternatives above shall be applicable to the Employee by initialing the box adjacent to the alternative selected. Such election is irrevocable and may not be changed. If the provisions of the preceding paragraph regarding the waiver and forfeiture of the Employee's vacation pay and/or paid time off create a hardship for Employee, not later than June 30, 2003, Employee may request review of such hardship by the Hardship Committee described on Exhibit A attached hereto. Any such request for hardship review shall be addressed to me. All stock options granted as provided in this letter agreement shall be granted pursuant to and, to the extent not expressly inconsistent herewith, governed by the Stock Plan. The number of shares to be issued under such options shall be adjusted in accordance with the terms of the Stock William J Ballard December 31, 2002 Page 3 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 by the Company shall expire and any vested options shall expire in accordance with the terms of the Stock Plan. Except as otherwise provided herein, the Employment Agreement shall remain unamended and in full force and effect. If the foregoing amendment to the Employment Agreement is acceptable to you, please execute both originals of this letter agreement, return both executed originals to me, and I will execute both originals, add my initials adjacent to your initials above and return one original to you. The provisions of this letter agreement are subject to approval by the Executive Compensation Committee of the Company's Board of Directors. Sincerely, /s/ Ronald G. Geary Ronald G. Geary Chairman, President and Chief Executive Officer Agreed to this 25th day of February, 2003, but effective as of December 31, 2002: /s/ William J Ballard - ------------------------ William J Ballard EX-10.6 8 l00616aexv10w6.txt EX-10.6 EMPLOYEE AGREEMENTS Exhibit 10.6 RES-CARE, INC. 10140 LINN STATION ROAD LOUISVILLE, KENTUCKY 40223 December 31, 2002 Paul G. Dunn 6704 Glastonburg Lane Louisville, Kentucky 40291 RE: EMPLOYMENT AGREEMENT - AMENDMENTS Dear Paul: This letter is in reference to that certain Employment Agreement between Res-Care, Inc. and you ("Employment Agreement"). Any capitalized terms not otherwise specifically defined in this letter agreement shall have the meanings given to them in the Employment Agreement. Pursuant to the second literary paragraph of paragraph (a) of Section 3 of the Employment Agreement, Employee is entitled to an increase in Base Salary as of January 1, 2003. Company and Employee have agreed that in lieu of such increase in Base Salary, effective March 28, 2003, the Company shall grant to Employee options to purchase 6,370 shares of Company common stock, at an exercise price based upon the closing sale price of Company common stock as reported on the Nasdaq National Market on such date. Provided Employee is employed by the Company on December 1, 2003, all of such options shall vest and be exercisable on December 1, 2003. Except as otherwise agreed in writing by the Company and you, provided that the Employment Agreement or your employment thereunder is not terminated for any reason, your Base Salary shall continue to be $210,000 during the period January 1, 2003 through December 31, 2003. Pursuant to paragraph (b) of Section 3 of the Employment Agreement, Employee participates in the Incentive Program. Company and Employee agree that commencing with the calendar year 2003 and for succeeding calendar years the Performance Incentive shall be calculated and payable on an annual, rather than quarterly, basis. In addition, paragraphs (a) through (f), inclusive, of Section 5 of the Employment Agreement shall be amended by deleting the word "quarter" each place it appears therein and substituting the word "year" for the same. Company and Employee have also agreed that the Company may elect to pay all or a portion of any Performance Incentive earned by Employee for any period during the calendar year 2003 and succeeding calendar years 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 Performance Incentive so earned by Employee in options to purchase shares of Company common stock, such options shall be issued on the date that the Performance Incentive so earned is payable, at an exercise price based upon 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 of grant. Paul G. Dunn December 31, 2002 Page 2 Pursuant to the Company's vacation pay and/or paid time off plans, Employee is entitled to accrue and utilize certain amounts of vacation pay and/or paid time off. Employee agrees that during the period February 1, 2003 through June 30, 2003 (the "Suspension Period"), Employee shall not accrue any amount of vacation pay and/or paid time off and shall not be paid for such time. The amount of such vacation pay and/or paid time off that does not accrue by reason of the immediately preceding sentence shall be hereinafter referred to as the "Waived PTO." In addition, during the Suspension Period, the Employee shall utilize at least forty (40) hours of previously accrued vacation pay and/or paid time off (or if Employee has less than forty (40) hours of previously accrued vacation pay and/or paid time off as of February 1, 2003, such lesser amount) (the "Minimum Amount"). If and to the extent that Employee does not utilize the Minimum Amount, it shall be forfeited and Employee shall not be paid for such amount. In consideration for the agreements of Employee in this paragraph, either: [ X ] The Company shall, effective on March 28, 2003, grant to Employee options to purchase 4,720 shares of Company common stock, at an exercise price based upon the closing sale price of Company common stock as reported on the Nasdaq National Market on such date. All of such options shall vest and be exercisable on March 28, 2003. [ ] If the earnings of the Company and its subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles consistently applied, for each of the first, second and third quarters of the calendar year 2003 equal or exceed the respective earnings targets for each of such quarters as established by the Company's Board of Directors at its meeting on January 6, 2003, fifty percent (50%) of the Waived PTO shall be restored to the Employee on December 31, 2003 and the remaining fifty percent (50%) of the Waived PTO shall be restored to the Employee on January 31, 2004. Such restored amounts shall be eligible for the Company's PTO buy-back plan commencing on the respective dates of restoration. Employee must make an election at the time of the Employee's execution of this letter agreement as to which of alternatives above shall be applicable to the Employee by initialing the box adjacent to the alternative selected. Such election is irrevocable and may not be changed. If the provisions of the preceding paragraph regarding the waiver and forfeiture of the Employee's vacation pay and/or paid time off create a hardship for Employee, not later than June 30, 2003, Employee may request review of such hardship by the Hardship Committee described on Exhibit A attached hereto. Any such request for hardship review shall be addressed to me. Paul G. Dunn December 31, 2002 Page 3 All stock options granted as provided in this letter agreement shall be granted pursuant to and, to the extent not expressly inconsistent herewith, governed by the Stock Plan. The number of shares to be issued under such options shall 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 by the Company shall expire and any vested options shall expire in accordance with the terms of the Stock Plan. Except as otherwise provided herein, the Employment Agreement shall remain unamended and in full force and effect. If the foregoing amendment to the Employment Agreement is acceptable to you, please execute both originals of this letter agreement, return both executed originals to me, and I will execute both originals, add my initials adjacent to your initials above and return one original to you. The provisions of this letter agreement are subject to approval by the Executive Compensation Committee of the Company's Board of Directors. Sincerely, /s/ Ronald G. Geary Ronald G. Geary Chairman, President and Chief Executive Officer Agreed to this ___ day of ________, 2003, but effective as of December 31, 2002: /s/ Paul G. Dunn - --------------------------- Paul G. Dunn EX-23.1 9 l00616aexv23w1.txt EX-23.1 CONSENT OF KPMG Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Res-Care, Inc. We consent to incorporation by reference in the registration statements (No. 33-61878), (No. 33-76612), (No. 33-85964), (No. 33-80331), (No. 333-57167), (No. 333-81465) and (No. 333-50726) on Form S-8, (No. 333-75875) and (No. 333-82708) on Form S-4 and (No. 333-23599), (No. 333-32513) and (No. 333-44029) on Form S-3 of Res-Care, Inc. of our report dated March 4, 2003, relating to the consolidated balance sheets of Res-Care, Inc. and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2002, which report appears in the December 31, 2002 annual report on Form 10-K of Res-Care, Inc. Our report refers to changes in the method of accounting in 2002 for goodwill and other intangible assets. KPMG LLP Louisville, Kentucky March 27, 2003 -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

                                                                    Exhibit 10.1

                        AMENDMENT TO AMENDED AND RESTATED

                        1991 INCENTIVE STOCK OPTION PLAN

                                OF RES-CARE, INC.


     This Amendment to the Amended and Restated 1991 Incentive Stock Option Plan
effective as of February 26, 1997.

     1. That Section 2(d) is hereby amended to read in its entirety as follows:
"Company" shall mean Res-Care, Inc. and its subsidiaries or partnerships or
limited liability companies owned by it."

     2. That, except as otherwise amended as provided herein, all other
provisions of the Plan remain in full force and effect.

     IN WITNESS WHEREOF, this Amendment is executed as of the date first
referenced above.


                                         RES-CARE, INC.



                                         BY: /s/ Ronald G. Geary
                                             ---------------------------------
                                             Ronald G. Geary, President and
                                             Chief Executive Officer

EX-10.2

                                                                    Exhibit 10.2


                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT


     This is an Amended and Restated Employment Agreement ("AGREEMENT") dated as
of October 26, 1995, between RES-CARE, INC., a Kentucky corporation (the
"COMPANY"), and RONALD G. GEARY (the "EXECUTIVE").

                                    Recitals

     A.   The Executive has been employed by the Company since February 5, 1990,
and the services of the Executive, his managerial, legal and financial
experience, and his knowledge of the affairs of the Company is of great value to
the Company;

     B.   The Executive possesses an intimate knowledge of the business and
affairs of the Company, its policies, methods, personnel and plans for the
future;

     C.   The Company's Board of Directors recognizes that the Executive's
contribution to the growth and success of the Company has been substantial and
wishes to offer an inducement to the Executive to remain in the employ of the
Company; and

     D.   This Agreement amends, restates and supersedes in its entirety the
Employment Agreement dated October 26, 1995, between the Company and the
Executive.

     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 Executive, and the
Executive accepts such employment, upon the terms and conditions herein set
forth for an initial term commencing as of September 15, 1995, and ending on
September 14, 2000, subject to earlier termination only in accordance with the
express provisions of this Agreement ("INITIAL TERM"). The Initial Term of this
Agreement shall be automatically extended for additional 12 month periods (each
an "ADDITIONAL TERM" and collectively the "ADDITIONAL TERMS"), commencing on
September 15, 1999 and on each anniversary date of this Agreement thereafter,
unless sooner terminated in accordance with the express provisions of this
Agreement, so that the remaining period of the Term shall always equal two
years. For purposes of this Agreement, the term "TERM" shall mean the Initial
Term plus any Additional Terms.

     2.   DUTIES.

          (a) EMPLOYMENT AS PRESIDENT AND CHIEF EXECUTIVE OFFICER. During the
Term the Executive shall serve as the Company's President and Chief Executive
Officer. The Executive shall, subject to the supervision and control of the
Company's Board of Directors, perform such duties and exercise such powers over
and with regard to the Company's business




as are presently being performed and exercised by him and such additional duties
which are similar in nature and responsibility to those presently being
performed by the Executive as may be prescribed from time to time by the
Company's Board of Directors, including, without limitation, serving as a
director and/or officer of the Company or one or more subsidiaries or affiliates
of the Company, if elected to either or both of such positions, without any
further salary or other compensation, including directors' fees.

          (b) TIME AND EFFORT. The Executive shall devote all of his business
time, energies and talents exclusively to the Company's business and to no other
business during the Term; provided, however, that subject to paragraph 7 of this
Agreement, the Executive 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 paragraph 2(a) of this Agreement, 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) subject to satisfactory performance of the duties described in paragraph
2(a) of this Agreement, devote such time as may be reasonably required for him
to continue to serving as a director on various for-profit and non-profit boards
of directors, including without limitation, serving as director on the board of
The First Capital Bank of Kentucky.

     3.   COMPENSATION.

          (a) BASE SALARY. The Company shall pay to the Executive during the
Term a fixed, annual salary of $300,000.00, plus, beginning one year from the
date of this Agreement, any cost of living increase determined in accordance
with the formula set forth in paragraph 3(b) of this Agreement (the "BASE
SALARY").

          (b) COMPUTATION OF COST OF LIVING INCREASES. The Executive's cost of
living increase, if any, shall be determined as promptly as practicable after
each anniversary of the date of this Agreement. The cost of living increase
shall be determined as follows:

               (i) The basis of the computation shall be the "Consumer Price
Index for Urban Wage Earners and Clerical Workers" (CPI-W with base 1982-84 =
100) (the "INDEX") published by the Bureau of Labor Statistics of the United
States Department of Labor. If the Bureau of Labor Statistics at any time during
the Term compiles the Index in a different manner than is in effect on the date
of this Agreement, the Company shall have the right, in its reasonable
discretion, to determine which Consumer Price Index as then compiled by the
Bureau of Labor Statistics will be used for the purpose of this Agreement. Upon
written notice to the Executive of its reasonable determination of any change,
such Index shall be the "Index" for purposes of this Agreement.

               (ii) The Index for the month of August, 1995 shall be the "BASE
INDEX NUMBER" and the Index for the month of August next preceding each
determination shall be the "CURRENT INDEX NUMBER."

               (iii) The rate of the cost of living increase on any annual
anniversary of this Agreement shall be determined by dividing the Current Index
Number by the Base Index Number, and subtracting the integer 1 from the
quotient, in accordance with the following formula: Rate = (Current Index
Number/Base Index Number) - 1.


                                       2



               (iv) The product of the rate of the cost of living increase
multiplied by $300,000.00 shall be the cost of living increase for that
following 12 month period, effective on the applicable anniversary of the Term.

          (c)  CASH BONUS. The Executive shall be entitled to the bonus
described in Section 3(b) of the Employment Agreement dated January 1, 1991,
between the Executive and the Company (the "1991 EMPLOYMENT AGREEMENT") for the
1995 calendar year, payable as described in the 1991 Employment Agreement. For
the calendar year beginning January 1, 1996, and thereafter during the Term, the
Executive shall be eligible for an annual bonus (or pro rata portion thereof)
during the Term equal to 0% to 50% of Base Salary, based upon performance
criteria to be mutually agreed upon by the Executive and the Board of Directors'
Compensation Committee on or before January I of each year during the Term (the
"CASH BONUS").

          (d)  INCENTIVE STOCK OPTION.

               (i) The Company hereby grants to the Executive, effective as of
October 26, 1995 (the "EFFECTIVE DATE"), an incentive stock option (the "BASE
OPTION") to purchase up to a total of 65,000 shares (the "OPTION SHARES") of the
common stock of the Company, no par value, on the terms and conditions of and
pursuant to the Res-Care, Inc. 1991 Incentive Stock Option Plan (the "PLAN"), at
a price per share equal to fair market value (as defined in the Plan) as of the
Effective Date (the "EXERCISE PRICE"). The Base Option is fully, vested and
immediately exercisable by the Executive as of the Effective Date. The right to
exercise the Base Option shall expire six years from the date of this Agreement,
except as the right to exercise the Option is otherwise qualified by the terms
of the Plan or this Agreement. The Company also agrees to grant to the Executive
additional incentive stock options (each an "ADDITIONAL OPTION" and
collectively, the "ADDITIONAL OPTIONS") to purchase (A) up to a total of 50,000
shares of the common stock of the Company ("COMPANY COMMON STOCK"), no par
value, at the then fair market value, on the last Thursday of each February
during the Term, commencing on the last Thursday of February 1997, and (B)
112,797 shares of Company Common Stock, no par value, at the fair market value
on November 5, 1996 (the date of execution of this Amended and Restated
Employment Agreement), and in each case otherwise on the terms and conditions of
and pursuant to the Plan. The Additional Option described in clause (A) shall be
fully vested and immediately exercisable on the respective date of issuance of
such Additional Option and the Additional Option described in clause (B) shall
become fully vested and immediately exercisable on March 15, 1997 (and prior to
that date shall not be exercisable). The Base Option and the Additional Options
shall be referred to as the "OPTION". The right to exercise each Additional
Option shall expire six years from the date of issuance of such Additional
Option. The Company's Board of Directors shall have approved the granting of the
Base Option and the Additional Options as of the date of this Agreement.

               (ii) The Option is not transferable otherwise than by will or the
laws of descent and distribution, and is exercisable during the Executive's
lifetime only by him. The Option is not liable for or subject to, in whole or in
part, the debts, contracts, liabilities, or torts of the Executive nor shall it
be subject to garnishment, attachment, execution, levy or other legal or
equitable process. A modification, extension or renewal of an outstanding
incentive stock option, including the Option, shall be treated as the granting
of a new incentive stock option to the extent required under applicable
provisions of the Internal Revenue Code.


                                       3




               (iii) The Option shall be subject to the provisions of the Plan
and the Plan is incorporated in its entirety into this Agreement by this
reference.

               (iv) The Option shall automatically terminate on the Date of
Termination (as defined in paragraph 4(f) of this Agreement) with respect to all
unexercised Option Shares, and the Executive shall be entitled to receive an
amount equal to the number of Option Shares exercisable immediately prior to the
Date of Termination multiplied by the excess, if any, of the fair market value
(defined to mean the closing price of the Company's common stock on the last
trading day prior to the Date of Termination) of each such Option Share over the
Option Price (or zero, if the fair market value is less than or equal to the
Option Price);

               (v) The Option may be exercised only by written notice by the
Executive in the manner set forth in paragraph 10 of this Agreement. Such notice
shall state the number of Option Shares in respect of which the option is being
exercised and, if the Option Shares for which the option is being exercised are
to be evidenced by more than one stock certificate, the denominations in which
the stock certificates are to be issued; provided that no stock certificate
shall be issued for less than 100 Option Shares. The notice shall be signed by
the Executive. Such notice shall be accompanied by payment of the full Exercise
Price of such Option Shares by cash or check payable to the order of the
Company.

               (vi) The certificates for the Option Shares as to which the
Option shall have been so exercised shall be registered in the name of the
Executive and shall be delivered to the Executive at the address set forth in
paragraph 10 of this Agreement. Each certificate shall bear any legend required
under applicable state or federal securities laws.

               (vii) Subject to the limitations, expressed herein, the Option
may be exercised with respect to all or a part of the Option Shares; provided,
however, that no one exercise of the Option shall result in the issuance of less
than 500 Option Shares.

               (viii) Neither the Executive nor any person claiming under or
through the Executive shall be or have any rights or privileges of a stockholder
of the Company in respect of any of the Option Shares, unless and until
certificates representing such Option Shares shall have been issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company).

               (ix) In the event of a stock dividend, stock split or other
subdivision, consolidation, reorganization or change in the shares of the
Company Common Stock or otherwise with respect to the capital structure of the
Company, the number of Option Shares shall be proportionately adjusted. All such
adjustments shall be made so as not to constitute a modification within the
meaning of Section 425 of the Internal Revenue Code of 1986, as amended (the
"CODE").

               (x) If the Company shall be a party to a binding, agreement to
any merger, consolidation, reorganization or sale of substantially all the
assets of the Company, the Option shall pertain and apply to the securities
and/or property which a share owner of the number of shares of Company Common
Stock subject to the Option would be entitled to receive pursuant to such
merger, consolidation, reorganization or sale of assets.


                                       4




               (xi) In the event that: (A) any person other than the Company
shall acquire more than 50% of the Company Common Stock through a tender offer,
exchange offer or otherwise; or (B) there shall be a sale of all or
substantially all of the assets of the Company; then the Executive shall be
entitled to receive in lieu of exercise of the Option, to the extent that it is
then exercisable, a cash payment in an amount equal to the difference between
the aggregate Exercise Price of such Option, or portion thereof, and (1) in the
case of an event covered by (A) above, the final offer price per share paid for
Company Common Stock, or such lower price as the Company's Board of Directors
may determine is necessary to preserve the Option's status as an "incentive
stock option" within the meaning of Section 422 of the Code, multiplied by the
number of shares of Company Common Stock granted pursuant to the Option, and (2)
in the case of an event covered by (B) above, the aggregate fair market value of
the Option Shares, as determined by the Company's Board of Directors at such
time. Any payment which the Company is required to make under this paragraph
3(d)(xi) shall be made within 15 business days following the event which results
in the Executive's right to such payment. Notwithstanding anything in this
paragraph 3(d)(xi) to the contrary, if an event covered by (A) above results in
the Company receiving non-cash compensation, then the Executive's payment
pursuant to this paragraph 3(d)(xi) shall, to the extent possible, be in the
same form of non-cash payment as received by the Company's shareholders with
respect to their shares of Company Common Stock.

          (e)  OUT-OF-POCKET EXPENSES. The Company shall pay to the Executive
the ordinary, necessary and reasonable expenses incurred by him in the
performance of his duties hereunder (or if such expenses are paid directly by
the Executive, shall reimburse him for such payment), provided that the
Executive properly accounts therefor in accordance with the Company's policy.

          (f)  PARTICIPATION IN BENEFIT PLANS. The Executive shall be entitled
to participate in (i) health insurance, (ii) term life insurance, (iii) 401(k)
plan, (iv) sick leave, and (v) long-term disability and other benefits generally
made available to officers of the Company during the Term, which shall include
all normal benefits available under the Company's current "Flex-Care" plan,
subject to any eligibility, coverage, qualification or other limitations or
restrictions applicable to such benefits. The Company further agrees to provide
the Executive with the maximum disability insurance coverage permitted under the
Company's Current "Flex-Care" plan, at the Company's expense.

          (g)  VACATION; PROFESSIONAL LICENSES. The Executive shall be entitled
to an annual vacation leave of three weeks at full pay, such vacation to be
taken during each relevant year at time(s) mutually agreeable to the parties
hereto. The Executive shall also be entitled to be absent from work for up to
one week at full pay so as to maintain his CPA and law licenses. The Company
shall pay all reasonable fees and expenses (including transportation, lodging,
food and tuition) associated with such courses and shall also pay all state
licensing fees and dues for local, state and federal professional associations
in which the Executive is a member.

          (h)  WITHHOLDING OF TAXES: INCOME TAX TREATMENT. If, upon the payment
of any compensation or benefit to the Executive under this Agreement (including,
without limitation, in connection with the exercise of the Option), 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 Executive
agrees that the Company may satisfy such requirement by:


                                       5




(i) withholding an amount necessary to satisfy such withholding requirement from
the Executive's compensation or benefit; or (ii) conditioning the payment or
transfer of such compensation or benefit upon the Executive's payment to the
Company of an amount sufficient to satisfy such withholding requirement. The
Executive agrees that he will treat all of the amounts payable pursuant to this
Agreement as compensation for income tax purposes.

          (i)  OFFICE. The Company shall provide to the Executive during the
Term at the Company's expense a fully equipped office in the Executive's home,
in addition to his office at the corporate headquarters, including without
limitation, all furniture, fax machine, copier, printer, computer, telephone,
and all expenses associated with the use of such equipment, and all fees and
costs for computer on-line services to monitor the various public markets. Upon
termination of the Executive's employment with the Company, the Executive shall
return to the Company, at the Company's expense, all equipment provided to the
Executive pursuant to this paragraph 3(i).

          (j)  FINANCIAL PLANNING. The Company agrees to pay all reasonable
legal and accounting fees incurred each year during the Term by the Executive in
connection with the Executive's personal tax and financial planning.

          (k)  ANNUAL PHYSICAL. The Company shall pay any reasonable expenses
for the Executive's annual physical that are not covered by insurance.

     4.   TERMINATION. The Executive's employment hereunder may be terminated
under this Agreement as follows, subject to the Executive's rights pursuant to
paragraph 5 of this Agreement:

          (a)  DEATH. The Executive's employment hereunder shall terminate upon
his death.

          (b)  DISABILITY. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his duties
hereunder on a full-time basis for 90 consecutive calendar days, and within 30
days after written Notice of Termination is given (which may occur no earlier
than 30 days before, but at any time after, the end of such 90-day period), the
Executive shall not have returned to the performance of his duties hereunder on
a full-time basis, the Company may terminate the Executive's employment
hereunder.

          (c)  CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"CAUSE" to terminate the Executive's employment because of the Executive's
breach of fiduciary duty involving personal profit, repeated and gross neglect
of or failure to perform his material duties under this Agreement, or conviction
of, or plea of nolo contendere to, any law, rule or regulation (other than
traffic violations or similar offenses).

          (d)  WITHOUT CAUSE. By appropriate action of the Company's Board of
Directors, the Company shall have the right to terminate the Executive's
employment under this Agreement at any time without Cause.

          (e)  NOTICE OF TERMINATION. Any termination during the term of this
Agreement of the Executive's employment hereunder (other than termination
pursuant to

                                       6




paragraphs 4(a) or (d) above) shall be communicated by written Notice of
Termination to the Executive hereto. For purposes of this Agreement, a "NOTICE
OF TERMINATION" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated. If
the Company's Board of Directors terminate the Executive pursuant to paragraph
4(d), then the Company shall notify the Executive that he is being terminated
pursuant to paragraph 4(d) of this Agreement.

          (f)  DATE OF TERMINATION. The "DATE OF TERMINATION" shall, for
purposes of this Agreement, mean: (i) if the Executive's employment is
terminated by his death, the date of his death; (ii) if the Executive's
employment is terminated on account of disability pursuant to paragraph 4(b)
above, 30 days after Notice of Termination is given (provided that the Executive
shall not, during such 30-day period, have returned to the performance of his
duties on a full-time basis), (iii) if the Executive's employment is terminated
by the Company for Cause pursuant to paragraph 4(c) above, the date specified in
the Notice of Termination, (iv) if the Executive's employment is terminated by
the Company without Cause, pursuant to paragraph 4(d) above, 30 days after
Notice of Termination is given, or (v) if the Executive's employment is
terminated by the Executive's voluntary resignation, upon the date of notice of
such resignation by the Executive or such later date as specified in such
notice.

     5.   COMPENSATION UPON TERMINATION OR DURING DISABILITY.

          (a)  DEATH. If the Executive's employment shall be terminated by
reason of his death, the Executive shall continue to receive his full Base
Salary until the date of his death and a Cash Bonus, prorated based upon the
number of full months that have elapsed from the immediately preceding January 1
until the date of his death (plus any earned but unpaid Cash Bonus for a prior
period).

          (b)  DISABILITY. During any period that the Executive fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, the Executive shall continue to receive his full Base Salary until the
Date of Termination and shall be entitled to receive a Cash Bonus, prorated
based upon the number of full months that have elapsed from the immediately
preceding January 1 until the Date of Termination (plus any earned but unpaid
Cash Bonus for a prior period). Upon termination due to death prior to a
termination as specified in the preceding sentence, paragraph 5(a) above shall
apply.

          (c)  CAUSE; VOLUNTARY RESIGNATION. If the Executive's employment shall
be terminated for Cause or the Executive's voluntary resignation, the Company
shall, through the Date of Termination, continue to pay the Executive his full
Base Salary but the Executive shall not be entitled to receive a Cash Bonus
(other than any earned but unpaid Cash Bonus for a prior period).

          (d)  WITHOUT CAUSE. If the Executive's employment shall be terminated
without Cause, the Executive shall continue to receive his full Base Salary for
the balance of the Term. The Executive shall also be entitled to receive a Cash
Bonus, prorated based upon the number of full months that have elapsed from the
immediately preceding January 1 until the Date of Termination (plus any earned
but unpaid Cash Bonus for a prior period).


                                       7




          (e)  NO FURTHER OBLIGATIONS AFTER PAYMENT. After all payments, if any,
have been made to the Executive pursuant to paragraph 3(c) of this Agreement and
any of paragraphs 5(a) through 5(d) of this Agreement, the Company shall have no
further obligations to the Executive under this Agreement other than the
provision of any employee benefits required to be continued under applicable
law.

          (f)  TERMINATION FOLLOWING CHANGE OF CONTROL. Notwithstanding anything
else in this Agreement to the contrary, if any of the events constituting a
Change of Control of the Company shall have occurred, then the Executive shall
be entitled to an amount equal to (i) the unpaid balance of the Executive's full
base salary through the Date of Termination at the rate in effect as of the Date
of Termination, and (ii) an amount equal to the Executive's full base salary for
24 months at the rate in effect as of the Date of Termination, upon the
concurrent or subsequent termination of the Executive's employment, or the
voluntary resignation of the Employee, unless such termination is because of the
Executive's death or for Cause. A "CHANGE OF CONTROL" of the Company shall mean
a change of control of the Company which is of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("EXCHANGE
ACT"); provided that, without limitation, such a change of control shall be
deemed to have occurred if (A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner as
defined in Rule l3d-3 under the Exchange A, directly or indirectly, of
securities of the Company representing 40% or more of the combined voting power
of the Company's then outstanding securities; or (B) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Company's Board of Directors cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company's shareholders, of each new director was approved by vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period; or (C) the Company's shareholders approve a merger or
consolidation of the Company with another corporation if the Company's
shareholders immediately before such vote will not, as a result of such merger
or consolidation own more than 50% of the voting stock of the corporation
resulting from such merger or consolidation; or (D) the business of the Company
and its subsidiaries is disposed of pursuant to a partial or complete
liquidation of the Company or its subsidiaries or the sale of substantially all
of the assets of the Company or its subsidiaries, or otherwise.

     6.   DUTIES UPON TERMINATION. Upon the Executive's termination of
employment hereunder for any reason whatsoever, the Executive shall promptly
return to the Company any Confidential Information (as hereinafter defined) and,
whether or not constituting Confidential Information, any technical data,
marketing plans, customer lists, rolodexes and any tape recordings, computer
programs, disks, and any other physical representations of any information
relating to the Company or to the Business (as hereinafter defined) of the
Company. The Executive hereby acknowledges that any and all of such items,
physical representations and information are and shall remain at all times the
exclusive property of the Company.

     7.   RESTRICTIVE COVENANTS IN CONNECTION WITH THE EXECUTIVE'S EMPLOYMENT.

          (a)  ACKNOWLEDGMENTS. The Executive 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 clients and employees of the Company and its affiliates and allows him
access to Confidential Information, (ii) the nature and


                                       8




periods of restrictions imposed by the covenants contained in this paragraph 7
are fair, and reasonable and necessary to protect and preserve for the Company
the benefits of the Executive's employment hereunder, (iii) the Company would
sustain great and irreparable loss and damage if the Executive were to breach
any of such covenants, (iv) the Company conducts its business actively in and
throughout the entire Territory, and (vi) the Territory is reasonably sized
because the Business of the Company is scattered over a wide geographical area,
and requires the entire Territory for profitable operations.

          (b)  COVENANTS. Having acknowledged the foregoing, the Executive
covenants and agrees with the Company that he will not, directly or indirectly,
from the date of this Agreement until the later of (i) one year after the Date
of Termination, or (ii) if the Executive receives payments after termination
pursuant to paragraphs 5(c) or (d), then one year after the date that he ceases
to receive such payments: (A) solicit, divert or appropriate to himself or any
other person, or attempt to solicit or divert or appropriate to himself or any
other person, any business or services (similar in nature to the Business) of
any person who was a client, an employee or an agent of the Company or any
affiliate of the Company at any time during the 12 months immediately preceding
the Date of Termination (or if a Date of Termination has not occurred, the date
of such solicitation, diversion or appropriation); or (B) 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, in competition within the Territory with the
Business of the Company or any affiliate of the Company. The Executive covenants
further that, without limitation as to time, he will not, directly or indirectly
disclose or use or otherwise exploit for his own benefit, or the benefit of any
other person, except as may be necessary in the performance of his duties
hereunder, any Confidential Information.

          (c)  DEFINITIONS. For purposes of this Agreement,

               (i)  The "TERRITORY" shall mean the area described on SCHEDULE A
to this Agreement.

               (ii) "CONFIDENTIAL INFORMATION" shall mean any business
information relating to the Company or any of its affiliates or to the Business
of the Company or any of its affiliates (whether or not constituting a trade
secret), which has been or is treated by the Company or any of its affiliates as
proprietary and confidential. without limiting the generality of the foregoing,
so long as such information is treated by the Company or any of its affiliates
as proprietary and confidential, Confidential Information shall include,
information regarding the Company's or any of its affiliates' services,
technology, processes, research, pricing, purchasing, accounting, operations,
finances, marketing, employment practices, customer and prospective customer
lists, agents and affiliates; provided, however, that Confidential Information
shall not include any information that (A) has been lawfully disclosed on a
non-confidential basis by the Company or any of its affiliates to any third
party, (B) has been independently developed or disclosed by others, or (C)
otherwise enters the public domain by lawful means.

               (iii) The "BUSINESS" of the Company and its affiliates shall mean
any business engaged in by the Company or its affiliates during the Term.


                                       9




               (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.

          (d)  INJUNCTIVE RELIEF; INVALIDITY OF ANY PROVISION. The Executive
acknowledges that his breach of any covenant contained in this paragraph 7 will
result in irreparable injury to the Company and its affiliates and that the
company's and the affiliate's remedy at law for such a breach will be
inadequate. Accordingly, the Executive agrees and consents that the Company or
any of its affiliates, in addition to all other remedies available to any of
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
the Executive of any covenant contained in this paragraph 7. If any provision of
this paragraph 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.

     8.   ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement constitutes the
entire agreement between the parties pertaining to the subject matter contained
in it and supersedes all prior and contemporaneous agreements, representations,
and understandings of the parties. This Agreement supersedes (i) the 1991
Employment Agreement and the Employment Agreement Addendum dated November 25,
1991, except with respect to (A) the incentive stock option granted pursuant to
the 1991 Employment Agreement, with respect to which the rights of the Executive
shall not be affected by this Agreement, and (B) the bonus for the calendar year
1995 as provided for under the 1991 Employment Agreement and in paragraph 3(c)
of this Agreement, with respect to which the rights of the Executive shall not
be affected by this Agreement and (ii) the Employment Agreement dated as of
October 26, 1995. No supplement, modification, or amendment of this Agreement
shall be binding unless executed in writing by all parties hereto (other than as
provided in the next to last sentence of paragraph 7(d) of this Agreement. No
waiver of any of the provisions of this 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 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 Agreement is intended to be personal to the Executive and the rights
and obligations of the Executive 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 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 paragraph
10):

          TO THE COMPANY:


                                       10




          Res-Care, Inc.
          1300 Embassy Square
          Louisville, Kentucky 40299
          Attn: Chairman of the Board

          TO THE EXECUTIVE:

          Ronald G. Geary
          603 Flat Rock Road
          Louisville, Kentucky 40245

     11.  EXECUTION IN COUNTERPARTS. This 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 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 Agreement.

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

     14.  GOVERNING LAW. This Agreement is executed and delivered in, and shall
be governed by, enforced and interpreted in accordance with the laws of, the
Commonwealth of Kentucky.

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

     16.  SURVIVAL. The provisions of paragraph 7 of this Agreement shall
survive the termination, for any reason, of this Agreement, in accordance with
their terms.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above but actually on the dates set forth below.

                                       RES-CARE, INC.



                                       By:      /S/ James R. Fornear
                                          -----------------------------------

                                       Title:   Chairman
                                             --------------------------------



                                       11





                                       Date:    11/5/96
                                            ---------------------------------



                                                /S/ Ronald G. Geary
                                       --------------------------------------
                                       RONALD G. GEARY

                                       Date:    11/5/96
                                            ---------------------------------




                                       12

EX-10.3

                                                                    Exhibit 10.3


                                 RES-CARE, INC.
                             10140 LINN STATION ROAD
                           LOUISVILLE, KENTUCKY 40223

                                December 31, 2002


L. Bryan Shaul
5603 Chapel View Way
Crestwood, Kentucky 40014

     RE:    EMPLOYMENT AGREEMENT - AMENDMENTS

Dear Bryan:

     This letter is in reference to that certain Employment Agreement between
Res-Care, Inc. and you ("Employment Agreement"). Any capitalized terms not
otherwise specifically defined in this letter agreement shall have the meanings
given to them in the Employment Agreement.

     Pursuant to the second literary paragraph of paragraph (a) of Section 3 of
the Employment Agreement, Employee is entitled to an increase in Base Salary as
of January 1, 2003. Company and Employee have agreed that in lieu of such
increase in Base Salary, effective March 28, 2003, the Company shall grant to
Employee options to purchase 6,070 shares of Company common stock, at an
exercise price based upon the closing sale price of Company common stock as
reported on the Nasdaq National Market on such date. Provided Employee is
employed by the Company on December 1, 2003, all of such options shall vest and
be exercisable on December 1, 2003. Except as otherwise agreed in writing by the
Company and you, provided that the Employment Agreement or your employment
thereunder is not terminated for any reason, your Base Salary shall continue to
be $200,000 during the period January 1, 2003 through December 31, 2003.

     Pursuant to paragraph (b) of Section 3 of the Employment Agreement,
Employee participates in the Incentive Program. Company and Employee agree that
commencing with the calendar year 2003 and for succeeding calendar years the
Performance Incentive shall be calculated and payable on an annual, rather than
quarterly, basis. In addition, paragraphs (a) through (f), inclusive, of Section
5 of the Employment Agreement shall be amended by deleting the word "quarter"
each place it appears therein and substituting the word "year" for the same.
Company and Employee have also agreed that the Company may elect to pay all or a
portion of any Performance Incentive earned by Employee for any period during
the calendar year 2003 and succeeding calendar years 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 Performance Incentive so earned by Employee in options
to purchase shares of Company common stock, such options shall be issued on the
date that the Performance Incentive so earned is payable, at an exercise price
based upon 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 of grant.





L. Bryan Shaul
December 31, 2002
Page 2



     Pursuant to the Company's vacation pay and/or paid time off plans, Employee
is entitled to accrue and utilize certain amounts of vacation pay and/or paid
time off. Employee agrees that during the period February 1, 2003 through June
30, 2003 (the "Suspension Period"), Employee shall not accrue any amount of
vacation pay and/or paid time off and shall not be paid for such time. The
amount of such vacation pay and/or paid time off that does not accrue by reason
of the immediately preceding sentence shall be hereinafter referred to as the
"Waived PTO." In addition, during the Suspension Period, the Employee shall
utilize at least forty (40) hours of previously accrued vacation pay and/or paid
time off (or if Employee has less than forty (40) hours of previously accrued
vacation pay and/or paid time off as of February 1, 2003, such lesser amount)
(the "Minimum Amount"). If and to the extent that Employee does not utilize the
Minimum Amount, it shall be forfeited and Employee shall not be paid for such
amount. In consideration for the agreements of Employee in this paragraph,
either:

[ LBS ]        The Company shall, effective on March 28, 2003, grant to Employee
          options to purchase 4,490 shares of Company common stock, at an
          exercise price based upon the closing sale price of Company common
          stock as reported on the Nasdaq National Market on such date. All of
          such options shall vest and be exercisable on March 28, 2003.

[      ]       If the earnings of the Company and its subsidiaries on a
          consolidated basis, determined in accordance with generally accepted
          accounting principles consistently applied, for each of the first,
          second and third quarters of the calendar year 2003 equal or exceed
          the respective earnings targets for each of such quarters as
          established by the Company's Board of Directors at its meeting on
          January 6, 2003, fifty percent (50%) of the Waived PTO shall be
          restored to the Employee on December 31, 2003 and the remaining fifty
          percent (50%) of the Waived PTO shall be restored to the Employee on
          January 31, 2004. Such restored amounts shall be eligible for the
          Company's PTO buy-back plan commencing on the respective dates of
          restoration.

Employee must make an election at the time of the Employee's execution of this
letter agreement as to which of alternatives above shall be applicable to the
Employee by initialing the box adjacent to the alternative selected. Such
election is irrevocable and may not be changed.

     If the provisions of the preceding paragraph regarding the waiver and
forfeiture of the Employee's vacation pay and/or paid time off create a hardship
for Employee, not later than June 30, 2003, Employee may request review of such
hardship by the Hardship Committee described on Exhibit A attached hereto. Any
such request for hardship review shall be addressed to me.





L. Bryan Shaul
December 31, 2002
Page 3



     All stock options granted as provided in this letter agreement shall be
granted pursuant to and, to the extent not expressly inconsistent herewith,
governed by the Stock Plan. The number of shares to be issued under such options
shall 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 by the Company shall expire and any vested options shall expire in
accordance with the terms of the Stock Plan.

     Except as otherwise provided herein, the Employment Agreement shall remain
unamended and in full force and effect. If the foregoing amendment to the
Employment Agreement is acceptable to you, please execute both originals of this
letter agreement, return both executed originals to me, and I will execute both
originals, add my initials adjacent to your initials above and return one
original to you. The provisions of this letter agreement are subject to approval
by the Executive Compensation Committee of the Company's Board of Directors.

                                         Sincerely,


                                         /s/  Ronald G. Geary
                                         Ronald G. Geary
                                         Chairman, President and Chief Executive
                                         Officer



Agreed to this ___ day of ________, 2003,
but effective as of December 31, 2002:


/s/ L. Bryan Shaul
- ------------------------
L. Bryan Shaul

EX-10.4

                                                                    Exhibit 10.4

                                 RES-CARE, INC.
                             10140 LINN STATION ROAD
                           LOUISVILLE, KENTUCKY 40223

                                December 31, 2002



Ralph G. Gronefeld, Jr.
4106 Willow Reed Place
Louisville, Kentucky 40299

     RE:   EMPLOYMENT AGREEMENT - AMENDMENTS

Dear Ralph:

     This letter is in reference to that certain Employment Agreement between
Res-Care, Inc. and you ("Employment Agreement"). Any capitalized terms not
otherwise specifically defined in this letter agreement shall have the meanings
given to them in the Employment Agreement.

     Pursuant to the second literary paragraph of paragraph (a) of Section 3 of
the Employment Agreement, Employee is entitled to an increase in Base Salary as
of January 1, 2003. Company and Employee have agreed that in lieu of such
increase in Base Salary, effective March 28, 2003, the Company shall grant to
Employee options to purchase 7,130 shares of Company common stock, at an
exercise price based upon the closing sale price of Company common stock as
reported on the Nasdaq National Market on such date. Provided Employee is
employed by the Company on December 1, 2003, all of such options shall vest and
be exercisable on December 1, 2003. Except as otherwise agreed in writing by the
Company and you, provided that the Employment Agreement or your employment
thereunder is not terminated for any reason, your Base Salary shall continue to
be $235,000 during the period January 1, 2003 through December 31, 2003.

     Pursuant to paragraph (b) of Section 3 of the Employment Agreement,
Employee participates in the Incentive Program. Company and Employee agree that
commencing with the calendar year 2003 and for succeeding calendar years the
Operational Incentive shall be calculated and payable on an annual, rather than
quarterly, basis. In addition, paragraphs (a) through (f), inclusive, of Section
5 of the Employment Agreement shall be amended by deleting the word "quarter"
each place it appears therein and substituting the word "year" for the same.
Company and Employee have also agreed that the Company may elect to pay all or a
portion of any Operational Incentive earned by Employee for any period during
the calendar year 2003 and succeeding calendar years 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 Operational Incentive so earned by Employee in options
to purchase shares of Company common stock, such options shall be issued on the
date that the Operational Incentive so earned is payable, at an exercise price
based upon 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 of grant.




Ralph G. Gronefeld, Jr.
December 31, 2002
Page 2



     Pursuant to the Company's vacation pay and/or paid time off plans, Employee
is entitled to accrue and utilize certain amounts of vacation pay and/or paid
time off. Employee agrees that during the period February 1, 2003 through June
30, 2003 (the "Suspension Period"), Employee shall not accrue any amount of
vacation pay and/or paid time off and shall not be paid for such time. The
amount of such vacation pay and/or paid time off that does not accrue by reason
of the immediately preceding sentence shall be hereinafter referred to as the
"Waived PTO." In addition, during the Suspension Period, the Employee shall
utilize at least forty (40) hours of previously accrued vacation pay and/or paid
time off (or if Employee has less than forty (40) hours of previously accrued
vacation pay and/or paid time off as of February 1, 2003, such lesser amount)
(the "Minimum Amount"). If and to the extent that Employee does not utilize the
Minimum Amount, it shall be forfeited and Employee shall not be paid for such
amount. In consideration for the agreements of Employee in this paragraph,
either:

[  X  ]        The Company shall, effective on March 28, 2003, grant to Employee
          options to purchase 5,280 shares of Company common stock, at an
          exercise price based upon the closing sale price of Company common
          stock as reported on the Nasdaq National Market on such date. All of
          such options shall vest and be exercisable on March 28, 2003.

[     ]        If the earnings of the Company and its subsidiaries on a
          consolidated basis, determined in accordance with generally accepted
          accounting principles consistently applied, for each of the first,
          second and third quarters of the calendar year 2003 equal or exceed
          the respective earnings targets for each of such quarters as
          established by the Company's Board of Directors at its meeting on
          January 6, 2003, fifty percent (50%) of the Waived PTO shall be
          restored to the Employee on December 31, 2003 and the remaining fifty
          percent (50%) of the Waived PTO shall be restored to the Employee on
          January 31, 2004. Such restored amounts shall be eligible for the
          Company's PTO buy-back plan commencing on the respective dates of
          restoration.

Employee must make an election at the time of the Employee's execution of this
letter agreement as to which of alternatives above shall be applicable to the
Employee by initialing the box adjacent to the alternative selected. Once made,
the Employee's election is irrevocable and may not be changed.




Ralph G. Gronefeld, Jr.
December 31, 2002
Page 3


         If the provisions of the preceding paragraph regarding the waiver and
forfeiture of the Employee's vacation pay and/or paid time off create a hardship
for Employee, not later than June 30, 2003, Employee may request review of such
hardship by the Hardship Committee described on Exhibit A attached hereto. Any
such request for hardship review shall be addressed to me.

         All stock options granted as provided in this letter agreement shall be
granted pursuant to and, to the extent not expressly inconsistent herewith,
governed by the Stock Plan. The number of shares to be issued under such options
shall 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 by the Company shall expire and any vested options shall expire in
accordance with the terms of the Stock Plan.

         Except as otherwise provided herein, the Employment Agreement shall
remain unamended and in full force and effect. If the foregoing amendment to the
Employment Agreement is acceptable to you, please execute both originals of this
letter agreement, return both executed originals to me, and I will execute both
originals, add my initials adjacent to your initials above and return one
original to you. The provisions of this letter agreement are subject to approval
by the Executive Compensation Committee of the Company's Board of Directors.

                                         Sincerely,


                                         /s/ Ronald G. Geary
                                         Ronald G. Geary
                                         Chairman, President and Chief Executive
                                         Officer



Agreed to this 25th day of February 2003,
but effective as of December 31, 2002:


/s/  Ralph G. Gronefeld, Jr.
- ------------------------------------
Ralph G. Gronefeld, Jr.

EX-10.5

                                                                    Exhibit 10.5


                                 RES-CARE, INC.
                             10140 LINN STATION ROAD
                           LOUISVILLE, KENTUCKY 40223

                                December 31, 2002


William J Ballard
4117 Hillsboro Pike
Nashville, Tennessee 37215

     RE:   EMPLOYMENT AGREEMENT - AMENDMENTS

Dear Bill:

     This letter is in reference to that certain Employment Agreement between
Res-Care, Inc. and you ("Employment Agreement"). Any capitalized terms not
otherwise specifically defined in this letter agreement shall have the meanings
given to them in the Employment Agreement.

     Pursuant to the second literary paragraph of paragraph (a) of Section 3 of
the Employment Agreement, Employee is entitled to an increase in Base Salary as
of January 1, 2003. Company and Employee have agreed that in lieu of such
increase in Base Salary, effective March 28, 2003, the Company shall grant to
Employee options to purchase 6,070 shares of Company common stock, at an
exercise price based upon the closing sale price of Company common stock as
reported on the Nasdaq National Market on such date. Provided Employee is
employed by the Company on December 1, 2003, all of such options shall vest and
be exercisable on December 1, 2003. Except as otherwise agreed in writing by the
Company and you, provided that the Employment Agreement or your employment
thereunder is not terminated for any reason, your Base Salary shall continue to
be $200,000 during the period January 1, 2003 through December 31, 2003.

     Pursuant to paragraph (b) of Section 3 of the Employment Agreement,
Employee participates in the Incentive Program. Company and Employee have agreed
that the Company may elect to pay all or a portion of any Performance Incentive
earned by Employee for any period during the calendar year 2003 and succeeding
calendar years 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
Performance Incentive so earned by Employee in options to purchase shares of
Company common stock, such options shall be issued on the date that the
Performance Incentive so earned is payable, at an exercise price based upon 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 of grant.

     Pursuant to the Company's vacation pay and/or paid time off plans, Employee
is entitled to accrue and utilize certain amounts of vacation pay and/or paid
time off. Employee agrees that during the period February 1, 2003 through June
30, 2003 (the "Suspension Period"), Employee shall not




William J Ballard
December 31, 2002
Page 2



accrue any amount of vacation pay and/or paid time off and shall not be paid for
such time. The amount of such vacation pay and/or paid time off that does not
accrue by reason of the immediately preceding sentence shall be hereinafter
referred to as the "Waived PTO." In addition, during the Suspension Period, the
Employee shall utilize at least forty (40) hours of previously accrued vacation
pay and/or paid time off (or if Employee has less than forty (40) hours of
previously accrued vacation pay and/or paid time off as of February 1, 2003,
such lesser amount) (the "Minimum Amount"). If and to the extent that Employee
does not utilize the Minimum Amount, it shall be forfeited and Employee shall
not be paid for such amount. In consideration for the agreements of Employee in
this paragraph, either:

[  X  ]        The Company shall, effective on March 28, 2003, grant to Employee
          options to purchase 3,590 shares of Company common stock, at an
          exercise price based upon the closing sale price of Company common
          stock as reported on the Nasdaq National Market on such date. All of
          such options shall vest and be exercisable on March 28, 2003.

[     ]        If the earnings of the Company and its subsidiaries on a
          consolidated basis, determined in accordance with generally accepted
          accounting principles consistently applied, for each of the first,
          second and third quarters of the calendar year 2003 equal or exceed
          the respective earnings targets for each of such quarters as
          established by the Company's Board of Directors at its meeting on
          January 6, 2003, fifty percent (50%) of the Waived PTO shall be
          restored to the Employee on December 31, 2003 and the remaining fifty
          percent (50%) of the Waived PTO shall be restored to the Employee on
          January 31, 2004. Such restored amounts shall be eligible for the
          Company's PTO buy-back plan commencing on the respective dates of
          restoration.

Employee must make an election at the time of the Employee's execution of this
letter agreement as to which of alternatives above shall be applicable to the
Employee by initialing the box adjacent to the alternative selected. Such
election is irrevocable and may not be changed.

     If the provisions of the preceding paragraph regarding the waiver and
forfeiture of the Employee's vacation pay and/or paid time off create a hardship
for Employee, not later than June 30, 2003, Employee may request review of such
hardship by the Hardship Committee described on Exhibit A attached hereto. Any
such request for hardship review shall be addressed to me.

     All stock options granted as provided in this letter agreement shall be
granted pursuant to and, to the extent not expressly inconsistent herewith,
governed by the Stock Plan. The number of shares to be issued under such options
shall be adjusted in accordance with the terms of the Stock





William J Ballard
December 31, 2002
Page 3



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 by the Company shall expire and any vested options
shall expire in accordance with the terms of the Stock Plan.

     Except as otherwise provided herein, the Employment Agreement shall remain
unamended and in full force and effect. If the foregoing amendment to the
Employment Agreement is acceptable to you, please execute both originals of this
letter agreement, return both executed originals to me, and I will execute both
originals, add my initials adjacent to your initials above and return one
original to you. The provisions of this letter agreement are subject to approval
by the Executive Compensation Committee of the Company's Board of Directors.

                                        Sincerely,


                                        /s/  Ronald G. Geary
                                        Ronald G. Geary
                                        Chairman, President and Chief Executive
                                        Officer


Agreed to this 25th day of February, 2003,
but effective as of December 31,
2002:


/s/ William J Ballard
- ------------------------
William J Ballard

EX-10.6

                                                                    Exhibit 10.6


                                 RES-CARE, INC.
                             10140 LINN STATION ROAD
                           LOUISVILLE, KENTUCKY 40223

                                December 31, 2002


Paul G. Dunn
6704 Glastonburg Lane
Louisville, Kentucky 40291

     RE:   EMPLOYMENT AGREEMENT - AMENDMENTS

Dear Paul:

     This letter is in reference to that certain Employment Agreement between
Res-Care, Inc. and you ("Employment Agreement"). Any capitalized terms not
otherwise specifically defined in this letter agreement shall have the meanings
given to them in the Employment Agreement.

     Pursuant to the second literary paragraph of paragraph (a) of Section 3 of
the Employment Agreement, Employee is entitled to an increase in Base Salary as
of January 1, 2003. Company and Employee have agreed that in lieu of such
increase in Base Salary, effective March 28, 2003, the Company shall grant to
Employee options to purchase 6,370 shares of Company common stock, at an
exercise price based upon the closing sale price of Company common stock as
reported on the Nasdaq National Market on such date. Provided Employee is
employed by the Company on December 1, 2003, all of such options shall vest and
be exercisable on December 1, 2003. Except as otherwise agreed in writing by the
Company and you, provided that the Employment Agreement or your employment
thereunder is not terminated for any reason, your Base Salary shall continue to
be $210,000 during the period January 1, 2003 through December 31, 2003.

     Pursuant to paragraph (b) of Section 3 of the Employment Agreement,
Employee participates in the Incentive Program. Company and Employee agree that
commencing with the calendar year 2003 and for succeeding calendar years the
Performance Incentive shall be calculated and payable on an annual, rather than
quarterly, basis. In addition, paragraphs (a) through (f), inclusive, of Section
5 of the Employment Agreement shall be amended by deleting the word "quarter"
each place it appears therein and substituting the word "year" for the same.
Company and Employee have also agreed that the Company may elect to pay all or a
portion of any Performance Incentive earned by Employee for any period during
the calendar year 2003 and succeeding calendar years 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 Performance Incentive so earned by Employee in options
to purchase shares of Company common stock, such options shall be issued on the
date that the Performance Incentive so earned is payable, at an exercise price
based upon 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 of grant.





Paul G. Dunn
December 31, 2002
Page 2


     Pursuant to the Company's vacation pay and/or paid time off plans, Employee
is entitled to accrue and utilize certain amounts of vacation pay and/or paid
time off. Employee agrees that during the period February 1, 2003 through June
30, 2003 (the "Suspension Period"), Employee shall not accrue any amount of
vacation pay and/or paid time off and shall not be paid for such time. The
amount of such vacation pay and/or paid time off that does not accrue by reason
of the immediately preceding sentence shall be hereinafter referred to as the
"Waived PTO." In addition, during the Suspension Period, the Employee shall
utilize at least forty (40) hours of previously accrued vacation pay and/or paid
time off (or if Employee has less than forty (40) hours of previously accrued
vacation pay and/or paid time off as of February 1, 2003, such lesser amount)
(the "Minimum Amount"). If and to the extent that Employee does not utilize the
Minimum Amount, it shall be forfeited and Employee shall not be paid for such
amount. In consideration for the agreements of Employee in this paragraph,
either:

[  X  ]        The Company shall, effective on March 28, 2003, grant to Employee
          options to purchase 4,720 shares of Company common stock, at an
          exercise price based upon the closing sale price of Company common
          stock as reported on the Nasdaq National Market on such date. All of
          such options shall vest and be exercisable on March 28, 2003.

[     ]        If the earnings of the Company and its subsidiaries on a
          consolidated basis, determined in accordance with generally accepted
          accounting principles consistently applied, for each of the first,
          second and third quarters of the calendar year 2003 equal or exceed
          the respective earnings targets for each of such quarters as
          established by the Company's Board of Directors at its meeting on
          January 6, 2003, fifty percent (50%) of the Waived PTO shall be
          restored to the Employee on December 31, 2003 and the remaining fifty
          percent (50%) of the Waived PTO shall be restored to the Employee on
          January 31, 2004. Such restored amounts shall be eligible for the
          Company's PTO buy-back plan commencing on the respective dates of
          restoration.

Employee must make an election at the time of the Employee's execution of this
letter agreement as to which of alternatives above shall be applicable to the
Employee by initialing the box adjacent to the alternative selected. Such
election is irrevocable and may not be changed.

     If the provisions of the preceding paragraph regarding the waiver and
forfeiture of the Employee's vacation pay and/or paid time off create a hardship
for Employee, not later than June 30, 2003, Employee may request review of such
hardship by the Hardship Committee described on Exhibit A attached hereto. Any
such request for hardship review shall be addressed to me.




Paul G. Dunn
December 31, 2002
Page 3


     All stock options granted as provided in this letter agreement shall be
granted pursuant to and, to the extent not expressly inconsistent herewith,
governed by the Stock Plan. The number of shares to be issued under such options
shall 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 by the Company shall expire and any vested options shall expire in
accordance with the terms of the Stock Plan.

     Except as otherwise provided herein, the Employment Agreement shall remain
unamended and in full force and effect. If the foregoing amendment to the
Employment Agreement is acceptable to you, please execute both originals of this
letter agreement, return both executed originals to me, and I will execute both
originals, add my initials adjacent to your initials above and return one
original to you. The provisions of this letter agreement are subject to approval
by the Executive Compensation Committee of the Company's Board of Directors.

                                      Sincerely,


                                      /s/  Ronald G. Geary
                                      Ronald G. Geary
                                      Chairman, President and Chief Executive
                                      Officer



Agreed to this ___ day of ________, 2003,
but effective as of December 31, 2002:


/s/ Paul G. Dunn
- ---------------------------
Paul G. Dunn

EX-23.1

                                                                    Exhibit 23.1

                        CONSENT OF INDEPENDENT AUDITORS


The Board of Directors
Res-Care, Inc.

     We consent to incorporation by reference in the registration statements
(No. 33-61878), (No. 33-76612), (No. 33-85964), (No. 33-80331), (No. 333-57167),
(No. 333-81465) and (No. 333-50726) on Form S-8, (No. 333-75875) and (No.
333-82708) on Form S-4 and (No. 333-23599), (No. 333-32513) and (No. 333-44029)
on Form S-3 of Res-Care, Inc. of our report dated March 4, 2003, relating to the
consolidated balance sheets of Res-Care, Inc. and subsidiaries as of December
31, 2002 and 2001, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 2002, which report appears in the December 31, 2002
annual report on Form 10-K of Res-Care, Inc. Our report refers to changes in the
method of accounting in 2002 for goodwill and other intangible assets.


                                                       KPMG LLP


Louisville, Kentucky
March 27, 2003