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Exhibit
10.1
TRANSITION AND
SEPARATION AGREEMENT
This TRANSITION
AND SEPARATION AGREEMENT (“Agreement”), dated April 7,
2008, is entered into by and between CHURCHILL DOWNS INCORPORATED
and C. KENNETH DUNN (“Ken”) (together the
“Parties”).
WHEREAS, Ken is
employed by Churchill Downs Incorporated and certain of its
subsidiaries (collectively, “Churchill Downs”) on an
at-will basis.
WHEREAS, the
Parties have decided mutually to terminate Ken's at-will employment
relationship with Churchill Downs as of close of business on
August
1, 2008
, and that such termination shall constitute a "Job Elimination" as
defined in the Churchill Downs Executive Severance Policy (the
actual termination date hereinafter referred to as the "Separation
Date").
WHEREAS, the
Parties desire to finalize their arrangements for Ken's employment
transition and to resolve, fully and finally, all outstanding
matters between them.
NOW THEREFORE, in
consideration of the mutual covenants and agreements set forth
hereinafter, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Parties intending to be legally bound, hereby agree as
follows:
PARAGRAPH
1. EMPLOYMENT
TRANSITION AND SEPARATION.
Ken acknowledges
and represents that as of the date of this Agreement, he has fully
complied with all policies and procedures and codes of conduct of
Churchill Downs. Pursuant to this Agreement, Ken's
separation from Churchill Downs shall be effective as of the
Separation Date. The period between the date of this Agreement and
the Separation Date shall be the "Transition
Period." During the Transition Period, Ken will perform
such duties as defined by the Executive Vice President of Racing
Operations for Churchill Downs Incorporated. During the Transition
Period, Ken agrees that he will fully comply with all policies and
procedures and codes of conduct of Churchill Downs, will perform
his employment duties in good faith, using his best efforts and to
the reasonable satisfaction of the Executive Vice President of
Racing Operations for Churchill Downs Incorporated; Ken's
employment duties will be generally consistent with the employment
duties for which Ken is presently responsible. Any
material breach of this section or of Ken's obligations to
Churchill Downs will be considered a material breach of this
Agreement and Ken will not be entitled to any part of the
Completion Bonus, the benefits set forth in Paragraph 2 below or
the pro-rated Incentive
Compensation Plan (ICP) bonus
set forth in
Paragraph 3(c) below . In the event of any material
breach of this section or Ken's obligations to Churchill Downs,
Churchill Downs agrees to provide written notice of such material
breach to Ken, and Ken will have a period of five (5) business days
from receipt of such notice within which to cure any such material
breach, if such breach is curable, as determined by Churchill
Downs. In consideration of Ken’s
compliance with the obligations set forth in this Paragraph 1 and
his full waiver and release of all claims set forth in the attached
Waiver and General Release (the "Release") and the other agreements
and covenants contained herein, Churchill Downs will pay to Ken,
in a lump sum payment, THREE HUNDRED TEN T HOUSAND and 00/100s DOLLARS
($31 0,000.00)
(the “Completion Bonus” amount) less deductions
required by law or otherwise authorized by Ken.
Such payment will be
made on the same terms as the Severance Amount
set forth in
Paragraph 2(a) of this
Agreement.
PARAGRAPH 2. SEVERANCE
PACKAGE.
For and in
consideration of the promises by Ken in this Agreement and the
Release attached hereto, the sufficiency of which Churchill Downs
hereby acknowledges, and in lieu of any compensation and benefits
to which Ken may otherwise claim to be entitled based upon his
employment with Churchill Downs, including, but not limited to any
benefits pursuant to the Churchill Downs Executive Severance
Policy, Churchill Downs agrees that it will do the following for
Ken, to which he is not otherwise entitled:
(a) Churchill
Downs will pay to Ken the gross amount of ONE HUNDRED TWENTY-FIVE
THOUSAND ONE-HUNDRED SEVENTEEN and 00/100s DOLLARS ($125,117.00)
(an amount equal to twenty-six (26) weeks salary) (“the
Severance
Amount”). The payment of the Severance Amount will
be made in a lump sum payment, less deductions required by law or
otherwise authorized by Ken, by mailing same to him at his home
address within ten (10) days following the effective date of the
Release and following receipt by Churchill Downs of the Agreement
and the Release, both fully executed by Ken, it being understood
that no payment under this Paragraph 2(a) will be made to Ken until
the expiration of the seven (7) day revocation period set forth in
Section 2.b. of the Release.
(b)
Churchill Downs will
pay the monthly premium for Ken for his current group health care plan,
including the group dental plan, on the same terms and conditions
as such health care plan, including the group dental plan, are
currently provided from the effective date of
the Release through February 28, 2010
, (or until Ken becomes covered
under another health care plan, whichever first occurs)
provided Ken
makes a timely COBRA
continuation election following the effective date of
his
separation of
employment with Churchill Downs. Such COBRA continuation
coverage will be offered to Ken on the same basis as such
coverage is offered to any ot her eligible employee.
The
coverage afforded Ken
under COBRA will be on the same basis as such coverage is afforded
to other employees under COBRA pursuant to the health insurance
plan of Churchill Downs.
(c )
In lieu of any
outplacement services, Churchill Downs will pay
to Ken the gross amount of EIGHT THOUSAND AND 00/100s
DOLLARS ($8,000.00), which amount will be made on the same terms as
the Severance Amount set forth in Paragraph 2(a) of this
Agreement .
(d)
As of the Separation
Date, the Parties acknowledge that Ken shall be entitled to 5,480
shares of Churchill Downs common stock pursuant to his Restricted
Stock Agreement, dated November 9, 2005, and Restricted Stock
Agreement, dated November 26, 2004, which shares will be
delivered on
the same terms as the Severance Amount
set forth in
Paragraph 2(a) of this Agreement
.
PARAGRAPH 3.
OTHER
PAYMENTS.
(a) Between
the execution date of this Agreement and Ken’s last day of
employment, Ken will be paid at his current salary and on the same
basis as he is presently being paid.
(b)
Ken will be paid for
all accrued but unused PTO days within ten (10) days
following the Separation Date .
(c)
Ken will be paid a
pro-rated Incentive Compensation Plan (ICP) bonus at the Target
Discretionary Goal (as defined in the ICP) for the period January
1, 2008 through August 1, 2008. The pro-rated ICP bonus
will be FIFTY-EIGHT THOUSAND THREE HUNDRED EIGHTY-EIGHT
AND 00/100s DOLLARS ($58,388.00). Such payment will be made on the
same terms as the Severance Amount
set forth in
Paragraph 2(a) of this
Agreement.
(d)
Pursuant to Paragraph
13, any amounts payable to Ken pursuant to Ken's Deferred
Compensation Account, Post 2004 shall be delayed for a period of
six months from the Separation Date pursuant to the terms of
Churchill Downs
Incorporated Deferred Compensation Plan (As Amended and Restated
Effective November 14, 2007).
(e)
As of the Separation
Date, Ken shall no longer be provided with use of his Churchill
Downs provided automobile or any automobile allowance, and shall no
longer be eligible for reimbursement received from Churchill Downs
for club dues or professional memberships.
PARAGRAPH
4. RELEASE;
OTHER OBLIGATIONS.
In consideration of the promises made by Churchill Downs in
Paragraph 1 of this Agreement, the sufficiency of which Ken hereby
acknowledges, Ken agrees as follows:
(a) Ken
understands and agrees that he will sign the attached Release no
earlier than the Separation Date and that he may review and
consider the Release in accordance with the terms and conditions
specified therein.
(b) Ken
agrees to return to Churchill Downs all property of Churchill Downs
in his possession, including but not limited to, Churchill Downs
credit cards, cellular telephone, keys for any facility of any of
the Released Parties, facility access cards, leased vehicle, all
records, electronic files, documents, computers, software, computer
discs, financial information, information regarding the business of
Churchill Downs, and any other similar proprietary and confidential
information, or any other property of the Released Parties (as
defined in the Release) in his possession or control as a result of
his employment with Churchill Downs, and Ken represents that he has
delivered all of said property to Churchill Downs as of the
Separation Date.
(c) Ken
also agrees that he will not assist or participate in any way in
any claim brought by any current or former employee of the Released
Parties, except as required by law.
(d)
Each party (meaning,
in the case of Churchill Downs, its current officers)
further
agrees not to make
any negative or derogatory statements to any persons regarding
the other party hereto , Ken ’s employment with
Churchill Downs or his separation from employment with
Churchill Downs. Each party (meaning, in
the case of Churchill Downs, its current officers) agrees not to do
or say anything that a reasonable person would expect to diminish
or constrain the good will and good reputation of the
other party hereto . Ken
understands and
acknowledges that his agreement under the two
immediate ly
preceding sentences of this P aragrap h 4(d ) extends to the Released
Parties. Churchill Downs
and Ken will mutually agree to
the content of any press release or public communication (other
than the Form 8-K) regarding the separation of employment of Ken
with Churchill Downs.
(e) The
Parties further understand that it shall be an unlawful practice,
judicially enforceable, for a party to this Agreement to violate
the terms hereof, and that this document may be used in evidence by
either party in any action for enforcement of any provision of this
Agreement. If suit is brought by Ken or
Churchill
Downs for breach of the Agreement or to enforce the terms of the
Agreement, it is hereby expressly agreed the unsuccessful party
shall be liable for damages, court costs and reasonable
attorney’s fees incurred by the prevailing party in the
successful enforcement, in whole or in part, of this
Agreement.
(f) It
is understood that Paragraphs 4(c) and 4(d) are material
elements of this Agreement and are material consideration for Ken
and Churchill Downs to enter into this Agreement. Ken
acknowledges that a breach of
Paragraph 4(c) or 4(d) will result in irreparable injury to
Churchill Downs and Churchill Downs acknowledges that a breach of
4(d) will result in irreparable injury to
Ken. Therefore, Ken and Churchill Downs each consents
and agrees that, for any violation of Paragraph 4(c) or 4(d) of
this Agreement, the rights of Ken or Churchill Downs under the
terms of this Agreement may be specifically enforced with
injunctive relief. This remedy shall be in addition to
the right of Ken or Churchill Downs to pursue any other available
legal and equitable remedies, including the recovery of
damages.
PARAGRAPH 5.
COVENANT NOT TO DISCLOSE COMPANY
CONFIDENTIAL INFORMATION.
Ken acknowledges that
by reason of his employment with Churchill Downs, he was provided
with or has otherwise become aware of (i) information relating to
those who do business with Churchill Downs and the nature of their
business, and the business and operations of Churchill Downs
generally; (ii) administrative and corporate matters of every kind
and character of Churchill Downs; and (iii) administrative and
corporate matters between Churchill Downs and its customers,
vendors and others, which constitute trade secrets, or confidential
or proprietary information (hereafter collectively referred to as
“Confidential Information”) and the sole and exclusive
property of Churchill Downs, and that the disclosure or use hereof
by Ken to the detriment of Churchill Downs would be unfair and
injurious to Churchill Downs and would merit injunctive
relief.
Accordingly, all
Confidential Information of Churchill Downs not otherwise publicly
available, including but not limited to, customer names and
addresses; employee names and addresses; lists or compilations of
customers of Churchill Downs of any kind made by Ken or provided to
Ken
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