EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

AS AMENDED AND RESTATED

AS OF DECEMBER 31, 2005

THIS EMPLOYMENT AGREEMENT is entered into as of March 13, 2003 and as amended and restated as of December 31, 2005 between CHURCHILL DOWNS INCORPORATED, a Kentucky corporation ("Company"), and THOMAS H. MEEKER (the "Executive”).  

WHEREAS, the Board of Directors of Churchill Downs Incorporated (the “Board"), determined that it is in the best interest of the Company and its shareholders, to retain the Executive as its President and Chief Executive Officer; and

WHEREAS, the Executive is currently willing and competent to serve the Company as its President and Chief Executive Officer under the terms and conditions of this Employment Agreement (the “Agreement”); and

WHEREAS, the Executive is currently a member of the Board and has agreed to resign as a member of the Board if requested to do so with the expectation that, upon such resignation, the Executive would then be designated a Director Emeritus; and

WHEREAS, the Company and the Executive agree that it is in the best interest of the Company and its shareholders to amend the Agreement to provide for the effective and efficient transition of the Company's management.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1.   Employment . The Company hereby employs the Executive, and the Executive hereby accepts employment, in the capacity of President and Chief Executive Officer of the Company. Subject to the general direction, approval and control of the Board, the Executive shall exert his best efforts and devote his full time and attention to the business and affairs of the Company. The Executive shall be in complete charge of the operation of the Company, shall have all powers and responsibilities as provided in the Company's current bylaws attendant to the position of President and Chief Executive Officer, and shall have full authority and responsibility for formulating and executing the business policies and managing and supervising the business of the Company in all respects. At all times during the Term (as hereinafter defined) the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with those held, exercised and assigned on the date this Agreement was first executed. The Executive’s office shall be located at the Company’s headquarters in Louisville, Kentucky. Further, at no time during the term or any renewal term shall the Executive’s office be located more than 35 miles from 700 Central Avenue, Louisville, Kentucky.

2.   Term . This Employment Agreement shall commence on March 13, 2003, and shall expire on March 13, 2007, unless terminated earlier as herein provided (the "Term").

3.   Compensation and Perquisites . During the Term:

A.   Base Salary . As compensation for the services rendered by the Executive hereunder, the Company shall pay to the Executive a base salary of $500,580 a year (effective for 2005 and 2006), payable in arrears in semi-monthly installments (the “Base Salary”). Base Salary adjustments, if any, shall be made, in the discretion of the Board of Directors, at any time, but in no event may the Executive's Base Salary be reduced below that paid in the preceding year. All payments or other compensation to the Executive shall be subject to appropriate withholding.

B.   Incentive Compensation . In addition to any other compensation provided under this Agreement, the Executive shall be entitled to participate in any Company sponsored annual or long-term, cash or equity based, incentive plan or other such arrangement, now in existence or hereafter created, made available to its executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. The plans currently in existence include: The Incentive Compensation Plan, Restricted Stock Option Plan and the Deferred Compensation Plan. The Company may, from time to time, amend the provisions of these plans prospectively.

C.   Travel and Entertainment Expenses. The Company shall reimburse the Executive for all reasonable and necessary travel and other out-of-pocket expenses incurred by him in the performance of his duties. The Company shall pay the Executive's reasonable travel and entertainment expenses and other reasonable expenses incurred on behalf of the Company's business. The Company also shall pay for such expenses for the Executive's wife when she travels with him on the Company's business. The Executive shall present to the Company on a timely basis an itemized account of such expenses in such form as may be required by the Company and the reimbursement of such expenses shall be subject to the customary policies of the Company.

D.   Supplemental Benefit Plan . The Company shall provide the Executive various retirement benefits under the provisions of the Company’s Supplemental Benefit Plan as described in Exhibit A attached hereto. The Company may, from time to time, amend the Supplemental Benefit Plan prospectively.

E.   Automobile . The Company shall provide the Executive with an automobile and shall pay for maintenance, repairs, insurance and all operating costs incident thereto.

F.   Life Insurance . The Company shall provide the Executive a $250,000 life insurance policy with a reputable and responsible insurance company acceptable to the Company and the Executive, with all premiums being paid by the Company.

G.   Dues . The Company shall pay for the Executive's dues for one country club and for all appropriate professional or business associations to which he may belong.

4.   Other Employee Benefits .

A.   Welfare Benefit Plans . During the Term, the Executive and/or the Executive’s family, as the case may be, shall be eligible to participate in and shall receive all benefits under all welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, disability, group life, accidental death) to the extent applicable generally to other executives of the Company.

C.   Health Insurance . During the Term, the Company shall provide the Executive and his wife, as the case may be, major medical and health insurance coverage consistent with that provided to other employees of the Company. All premiums shall be paid by the Company.

D.   Vacation. The Executive shall be awarded paid time off (PTO) consistent with the Company’s then established policy. The Executive shall consult with the Chairman of the Board prior to scheduling PTO days.

5.   Termination of Employment .

A.   Termination for Cause . The Company may terminate the Executive’s employment during the Term for cause. For purposes of this Agreement, “Cause” shall mean: (i) the willful and continued failure of the Executive to perform substantially the duties of president and chief executive officer (other than any such failure resulting from incapacity due to disability), after a written demand for substantial performance improvement is delivered to the Executive by the Chairman of the Board which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the duties of president and chief executive officer, or (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the business or reputation of the Company. For purposes of this paragraph, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon specific authority given pursuant to a resolution duly adopted by the Board or upon instructions of the Chairman of the Board or based upon the advice of counsel of the Company which the Executive honestly believes is within such counsel’s competence shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. In the event the Company terminates the Executive for cause, he shall be entitled to receive:

(2)   The balance of any annual or long term awards, if any, earned but not yet paid pursuant to any Long Term Incentive Compensation Plan maintained by the Company in which the Executive participated at the time of his termination subject to and payable in accordance with the Plan and the customary practices of the Company for other executives; and

(3)   Any other benefits or payments due to the Executive under and subject to applicable plans or programs maintained by the Company in which the Executive participated at the time of termination, including without limitation, any benefits due under the Supplemental Benefit Plan.

B.   Termination Without Cause, By Constructive Termination or Due to Death, Disability or Retirement.

(1)   Termination Without Cause . The Company may terminate the Executive’s employment with the Company, other than due to death, disability (as provided under Paragraph 5.B.(2)) or Cause and such termination shall be deemed a termination “without cause.”

(2)   Termination Due to Disability. If the Executive shall become disabled (as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the "Code") and the regulations thereunder) during the Term, he shall be entitled to the payment of his Base Salary and benefits being paid or provided at the time of the commencement of such disability and such shall continue for the duration of such disability but in no event for a period longer than six (6) consecutive months or an aggregate of six (6) months in any 12-month period. If such disability continues for a period of six (6) consecutive months, the Company, at its option, may thereafter, upon written notice to the Executive or his personal representative, terminate his employment.

(3)   Constructive Termination. The Executive may, in his sole discretion, terminate his employment with the Company by virtue of the Company’s Constructive Termination of his employment. For purposes of the Agreement, “Constructive Termination” shall mean: (i) The assignment to the Executive of any duties inconsistent in any material respect with those of the president and chief executive officer (including status, office, title and reporting requirements), or the authority, duties or responsibilities as contemplated by Paragraph 1 of this Agreement, or any other diminution in any material respect in such position, authority, duties or responsibilities unless agreed to by the Executive; (ii) the Company’s requiring the Executive to be based at any office or location other than as provided in Paragraph 1 hereof; (iii) reduction of Base Salary or material reduction of other compensation or perquisites described in Paragraph 3; (iv) a reduction in the Executive’s Other Employee Benefits including incentive opportunities, benefits or perquisites described in Paragraph 4 unless other senior executives suffer a comparable reduction; and (v) any purported termination of the Executive’s employment under this Agreement by the Company other than due to death, disability (as provided under Paragraph 5.B.(2)) or Cause. Prior to the Executive’s right to terminate this Agreement, he shall give written notice to the Company of his intention to terminate his employment on account of a Constructive Termination. Such notice shall state in detail the particular act or acts of the failure or failures to act that constitute the grounds on which the Executive’s Constructive Termination is based and such notice shall be given within six (6) months of the occurrence of the act or acts or the failure or failures to act which constitute the grounds for the Constructive Termination. The Company shall have sixty (60) days upon receipt of the notice in which to cure such conduct, to the extent such cure is possible.

(4)   Accrued But Unpaid Benefits Due Upon Termination Without Cause, Constructive Termination or Termination Due to Death, Disability or Retirement. In the event the Executive's employment is terminated by the Company without Cause, by the Executive by reason of Constructive Termination or due to death, disability (as provided under Paragraph 5.B.(2)) or in the event the Executive's Retirement Date (as defined in the Company's Supplemental Benefit Plan) occurs during the Term, the Executive (or his estate or his beneficiaries, as the case may be), shall be entitled to receive the following accrued but unpaid benefits ("Accrued But Unpaid Benefits"):

a.   Base Salary through the date of termination;

b.   All accrued vacation or PTO pay due to the Executive; and

c.   Any other benefits or payments due to the Executive under and subject to applicable plans or programs maintained by the Company in which the Executive participated at the time of termination; provided, however, that this provision shall not result in any duplicative benefits or payments otherwise provided for hereunder.

(5)   Severance Benefits Due Upon Termination Without Cause, Constructive Termination or Termination Due to Death, Disability, or Retirement. In the event the Executive’s employment is terminated by the Company without Cause, due to Disability or death, in the event there is a Constructive Termination, in the event the Executive's Retirement Date (as defined under the Supplemental Benefit Plan) occurs during the Term, th