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CHURCHILL DOWNS INCORPORATED
RESTRICTED STOCK AGREEMENt
65,000 SHARES
THIS RESTRICTED STOCK AGREEMENT (the "Agreement")
is made as of the 18th day of July, 2006 by and between Robert L.
Evans (the "Executive"), and Churchill Downs Incorporated (the
"Company"), a Kentucky corporation with its principal place of
business at 700 Central Avenue, Louisville, Kentucky
40208.
WITNESSETH:
WHEREAS, the Company has identified the Executive
as the successor to the current President and Chief Executive
Officer who is stepping down from such office effective
August 14, 2006;
WHEREAS, the Company has entered into an
employment agreement (the "Employment Agreement") between the
Company and the Executive pursuant to which the Executive will
become the President and Chief Executive Officer of the Company
effective August 14, 2006 (the "Start Date");
WHEREAS, under the terms of the Employment
Agreement, and as a material inducement to enter into the
Employment Agreement, the Executive is to receive certain grants of
equity compensation as a consequence of his employment by the
Company;
WHEREAS, the Compensation Committee (the
"Committee") of the Board of Directors of the Company at its
meeting on July 12, 2006 authorized and directed the Company to
make an award of stock to the Executive under the terms and
conditions set forth in this Agreement; and
WHEREAS, the parties desire to enter into this
Agreement to set forth the terms and conditions of such
award.
NOW, THEREFORE, in consideration of the foregoing
and the mutual undertakings herein contained, and for other good
and valuable consideration, the mutuality, receipt and sufficiency
of which are hereby acknowledged, the parties agree as
follows:
1. Grant of
Stock . Subject to the further terms, conditions and
restrictions contained in this Agreement, the Company hereby grants
to the Executive 65,000 shares (the "Shares") of the
Company’s common stock, no par value per share (the "Common
Stock"), in consideration for services to be performed by the
Executive as an employee of the Company and its subsidiaries. As
long as the Shares are subject to the Restrictions set forth in
Section 4 of this Agreement, such shares shall be deemed to be, and
are referred to in this Agreement as, the "Restricted
Shares".
2. Certificates
for Shares . Certificates evidencing Restricted Shares shall
be deposited with the Company to be held in escrow until such
Shares are released to the Executive or forfeited in accordance
with this Agreement. The Executive shall, simultaneously with the
execution and delivery of this Agreement, execute and deliver to
the Company a stock power in blank with respect to the Restricted
Shares. If any Restricted Shares are forfeited, the Company shall
direct the transfer agent of the Common Stock to make the
appropriate entries in its records showing the cancellation of the
certificate or certificates for such Restricted Shares.
Return to 10-Q
3. Adjustments in
Restricted Shares .
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(a)
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In the event of any change in the outstanding
Common Stock by reason of a stock dividend or distribution (or
distribution on Common Stock of any security convertible into
securities of the Company), recapitalization, merger,
consolidation, split-up, combination, subdivision,
reclassification, exchange of shares or the like, the Committee
shall make equitable adjustments in the Restricted Shares so that
the shares represent the same percentage of the Company’s
equity as was the case immediately prior to such change. Any new,
additional or different securities to which the Executive shall be
entitled in respect of Restricted Shares by reason of such
adjustment shall be deemed to be Restricted Shares and shall be
subject to the same terms, conditions and restrictions as the
Restricted Shares so adjusted.
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(b)
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In the event Company merges, consolidates or
effects a share exchange with another entity, or all or a
substantial portion of Company’s assets or outstanding
capital stock are acquired (whether by merger, purchase or
otherwise) by another entity (any such entity being hereafter
referred to as the "Successor") each of the Restricted Shares shall
automatically be converted into and replaced by shares of common
stock, or such other class of securities having rights and
preferences no less favorable than the Restricted Shares, of the
Successor, and the number of Restricted Shares shall be
correspondingly adjusted, so that Executive shall have the right to
that number of shares of common stock of the Successor that have a
value equal, as of the date of the merger, conversion or
acquisition, to the value, as of the date of the merger, conversion
or acquisition, of the Restricted Shares.
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4. Restrictions . During applicable periods of restriction
determined in accordance with Section 6 of this Agreement,
Restricted Shares, and all rights with respect to such Shares, may
not be sold, assigned, transferred, exchanged, pledged,
hypothecated or otherwise encumbered or disposed of and shall be
subject to the risk of forfeiture contained in Section 5 of this
Agreement (such limitations on transferability and risk of
forfeiture being herein referred to as the "Restrictions"), but the
Executive shall have all other rights of a stockholder;
provided , however, that, until such time as the Restrictions
lapse, the Executive shall not have the right to vote the
Restricted Shares; receive dividends thereon; or purchase any
securities pursuant to that certain Rights Agreement dated as of
March 19, 1998, between the Company and The Fifth Third Bank (as
successor Rights Agent to Bank of Louisville), as amended, and as
the same may be amended, modified or supplemented from time to
time.
5. Forfeiture of
Restricted Shares . Subject to Section 6 below, in the event
that the Executive’s employment with the Company and its
subsidiaries terminates for any reason, such event shall constitute
an "Event of Forfeiture" and all Shares which at that time are
Restricted Shares shall thereupon be forfeited by the Executive to
the Company without payment of any consideration by the Company,
and neither the Executive nor any heir, personal representative,
successor or assign of the Executive shall have any right, title or
interest in or to such Restricted Shares or the certificates
evidencing the same.
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Return to 10-Q
6. Lapse of
Restrictions .
(a) The
Restrictions on the respective Restricted Shares shall lapse upon
the satisfaction of the requirements described in Subsections (i)
and (ii) below:
(i) for **
* (**) consecutive trading days after the Start Date,
the Fair Market Value of a share of the Common Stock being equal to
or greater than *-*, * percent (***%) of the Fair Market Value of a
share of Common Stock as of July 18, 2006 (the "Share Price
Requirement"); and
(ii) for the
applicable number of Restricted Shares per the schedule immediately
below, the later of: (A) the corresponding date as listed on the
schedule below, or (B) the satisfaction of the Share Price
Requirement; provided, however, that such corre
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