EXHIBIT 10(a)

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of October 10, 2011
(the “Effective Date”), by and between Churchill Downs Incorporated, a Kentucky
corporation (the “Company”), and William E. Mudd (“Executive”).

WHEREAS, the Company desires to continue Executive’s employment and to embody
herein the terms of such continued employment, and considers it to be in its
best interests and in the best interests of its stockholders to employ Executive
during the Employment Term (as defined in Section 1 below); and

WHEREAS, Executive is willing to accept such continued employment with the
Company upon the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and
for other good and valuable consideration, the parties hereby agree as follows:

1. Term of Employment. Unless terminated earlier in accordance with the
provisions of Section 7, Executive’s employment under this Agreement shall be
effective for a term commencing on the Effective Date and ending on March 31,
2015 (the “Employment Term”). Thereafter, the Employment Term shall be
automatically extended for subsequent one (1)-year periods unless written notice
to the contrary is given by either the Company or Executive at least ninety
(90) days prior to the expiration of the Employment Term or the expiration of
any subsequent one (1)-year extension thereof.

2. Position and Duties. As of the Effective Date, Executive shall serve as the
Chief Financial Officer and Executive Vice President of the Company. In such
position, Executive shall report directly to the Company’s Chief Executive
Officer (the “CEO”) and have such authority, responsibilities, and duties
customarily exercised by a person holding such position and as assigned to him
or delegated to him by the CEO. During the Employment Term, Executive will
devote substantially all of his business time and best efforts to the
performance of his duties.

3. Base Salary. Beginning on the Effective Date and continuing during the
Employment Term, the Company shall pay Executive a base salary (the “Base
Salary”) at the annual rate of $420,000.00, payable in regular installments in
accordance with the Company’s usual payroll practices. The Base Salary shall be
prorated in 2011 based upon the proportion of the year remaining as of the
Effective Date. The Compensation Committee of the Board shall review and may
consider for increase (but not decrease) at any time Executive’s Base Salary in
its sole discretion based on Executive’s performance.

4. Incentive Compensation. Executive shall be eligible to participate in any
annual or long-term, cash or equity based, incentive plan or other arrangements
of the Company, as they exist from time-to-time. Executive shall be eligible to
participate in an annual performance bonus plan, with a target bonus for each
performance period of 70% of Base Salary.

5. Equity Grants. Executive shall retain all outstanding equity grants awarded
prior to the Effective Date, whether or not vested as of the Effective Date, in
accordance with the terms of the applicable plan documents and award agreements,
and shall continue to be eligible

--------------------------------------------------------------------------------

for Performance Share Awards under the Terms and Conditions of Performance Share
Awards Issued Pursuant to the Churchill Downs Incorporated 2007 Omnibus Stock
Incentive Plan, as amended and restated as of December 19, 2008. As of the date
the Compensation Committee shall have approved this Agreement, the Company shall
grant Executive 15,000 Restricted Shares of Common Stock which shall vest on
March 31, 2015; provided, however, that March 31, 2015 is prior to a Termination
of Employment (as defined in Section 10(s)). Notwithstanding the foregoing, in
the event the Executive’s Termination of Employment is covered under Section 7
(b), (c), (d) or (e), then the Restricted Shares shall vest and the restrictions
thereon shall lapse on the later of [1] the date of such termination or [2] six
months after the date of this Agreement.

6. Other Benefits.

(a) Retirement Benefits. During the Employment Term, Executive shall be provided
with the opportunity to participate in the Company’s qualified 401(k) retirement
plan and non-qualified deferred compensation plan, as may exist from
time-to-time, in each case, in accordance with the terms of such plans.

(b) Welfare Benefits. During the Employment Term, Executive shall be provided
with the opportunity to participate in the Company’s medical plan and other
employee welfare benefit plans on a comparable basis as such benefits are
generally provided by the Company from time-to-time to the Company’s other
senior executives, in each case, in accordance with the terms of such plans.

(c) Miscellaneous Allowance. The Company will provide Executive with an annual
allowance of $10,000 to be paid ratably throughout the year pursuant to the
Company’s normal payroll practice, so long as similar benefits are provided to
other senior executives. The Company may terminate such benefits at its
discretion.

(d) Reimbursement of Business Expenses. During the Employment Term, all
reasonable business expenses incurred by Executive in the performance of his
duties hereunder shall be reimbursed by the Company upon receipt of
documentation of such expenses in a form reasonably acceptable to the Company,
and otherwise in accordance with the Company’s expense reimbursement policies.

(e) Indemnification Agreement. The Company agrees to enter into an agreement
with Executive whereby the Company shall: (a) indemnify Executive to the maximum
extent allowed under Kentucky law and (b) maintain directors’ and officers’
liability insurance for the benefit of Executive in a form at least as
comprehensive as, and in an amount that is at least equal to, that maintained by
the Company at such time for any officer of the Company.

7. Termination. Notwithstanding any other provision of this Agreement:

(a) For Cause by the Company or Voluntary Resignation by Executive Without Good
Reason. If Executive is terminated by the Company for Cause (as defined in
Section 10(d)), or if Executive voluntarily resigns without Good Reason (as
defined in Section 10(n)), Executive shall be entitled to receive as soon as
reasonably practicable after his date of

 

2

--------------------------------------------------------------------------------

termination or such earlier time as may be required by applicable statute or
regulation: (i) his earned but unpaid Base Salary through the date of
termination; (ii) payment in respect of any paid time off days accrued but
unused through the date of termination, to the extent provided by Company
policy; (iii) reimbursement for all business expenses properly incurred in
accordance with Company policy prior to the date of termination and not yet
reimbursed by the Company; and (iv) subject to Section 7(g), any earned but
unpaid annual bonus in respect of any of the Company’s fiscal years preceding
the fiscal year in which the termination occurs (provided, however, that if
Executive’s termination is by the Company for Cause and such event(s) and/or
action(s) that constitute Cause are materially and demonstrably injurious to the
business or reputation of the Company, then no payment will be made pursuant to
this clause (iv)) (the aggregate benefits payable pursuant to clauses (i), (ii),
(iii) and (iv) hereafter referred to as the “Accrued Obligations”); and except
as provided herein he shall have no further rights to any compensation
(including any Base Salary or annual bonus, if any) or any other benefits under
this Agreement. All equity-based awards shall be treated as set forth under the
terms of this Agreement and the applicable plan, award or agreement. Except for
amounts subject to Section 7(g), the remaining Accrued Obligations shall be paid
to Executive in a lump sum amount within sixty (60) days following the
Executive’s date of termination. All other accrued and vested benefits, if any,
due Executive following Executive’s Termination of Employment pursuant to this
Section 7(a) shall be determined and provided or paid in accordance with the
plans, policies, and practices of the Company; provided such benefits shall be
provided or paid no later than the later of (A) sixty (60) days following
Executive’s date of termination or (B) the date provided under the applicable
plan, policy or practice of the Company covering such benefits.

(b) Without Cause by the Company or Voluntary Resignation by Executive for Good
Reason. If Executive is terminated by the Company other than for Cause,
Disability (as defined in Section 10(i)) or death, or if Executive voluntarily
resigns for Good Reason, Executive shall receive: (i) the Accrued Obligations;
and (ii) subject to Section 7(g), (A) cash payments equal to the product of 1.5
times the sum of (x) Executive’s Base Salary plus (y) Executive’s target bonus
for the year of the Termination of Employment, payable in equal installments
over the 18 months following Termination of Employment, (B) treatment of all
equity-based awards per the terms of this Agreement and the applicable plan,
award or agreement, and (C) the continuation of medical benefits through the end
of the calendar quarter in which Termination of Employment occurs; provided,
however, that such benefit shall be reduced or eliminated to the extent
Executive receives similar benefits from a subsequent employer. Except as
provided herein, Executive shall have no further rights to any compensation
(including any Base Salary) or any other benefits under this Agreement. Except
for amounts subject to Section 7(g), the remaining Accrued Obligations shall be
paid to Executive in a lump sum amount within sixty (60) days following the
Executive’s date of termination. All other accrued and vested benefits, if any,
due Executive following Termination of Employment pursuant to this Section 7(b)
shall be determined and provided or paid in accordance with the plans, policies
and practices of the Company; provided such benefits shall be provided or paid
no later than the later of (A) sixty (60) days following Executive’s date of
termination or (B) the date provided under the applicable plan, policy or
practice of the Company covering such benefits.

(c) Termination following a Change in Control. If, during the 2-year period
following a Change in Control (as defined in Section 10(e)), Executive is
terminated by the Company other than for Cause, Disability or death, or if
Executive voluntarily resigns for Good

 

3

--------------------------------------------------------------------------------

Reason, Executive shall receive: (i) the Accrued Obligations; and (ii) subject
to Section 7(g), the benefits set forth in Section 7(b)(ii) (with any payments
due pursuant to clause (A) of Section 7(b)(ii) payable in a lump sum on the
sixtieth (60th) day following such Termination of Employment), (B) the vesting
of any then-unvested Restricted Stock granted pursuant to Subsections 5 above,
and any then-unvested but outstanding equity granted prior to the Effective Date
shall vest according to the terms of this Agreement and the applicable plan,
award or agreement, and (C) a Tax Gross-Up Payment for purposes solely of
reimbursing Executive for the effect of any excise tax under Code Section 4999
with respect to an excess parachute payment under Code Section 280G. Except for
amounts subject to Section 7(g), the remaining Accrued Obligations shall be paid
to Executive in a lump sum amount within sixty (60) days following the
Executive’s date of termination.

(d) Death. Following a Termination of Employment for death, Executive’s estate
shall be entitled to receive: (i) the Accrued Obligations; and (ii) subject to
Section 7(g), (A) a pro-rata bonus, if any, for the year of death, based on the
target bonus for which Executive was eligible for such year, and paid when
bonuses under such applicable bonus plans are normally paid, (B) treatment of
all equity-based awards per the other terms of this Agreement and the applicable
plan, award or agreement, (C) all other benefits and payments per the applicable
plan or program, and (D) life insurance benefits paid per such applicable plans.
Except as provided herein, Executive’s estate shall have no further rights to
any compensation (including any Base Salary) or any other benefits under this
Agreement. Except for amounts subject to Section 7(g), the remaining Accrued
Obligations shall be paid to Executive in a lump sum amount within sixty
(60) days following the Executive’s date of termination. All other accrued and
vested benefits, if any, due Executive following a Termination of Employment for
death shall be determined in accordance with the plans, policies, and practices
of the Company.

(e) Disability. Following a Termination of Employment for Disability, Executive
shall be entitled to receive: (i) the Accrued Obligations; and (ii) subject to
Section 7(g), (A) a pro-rata bonus, if any, for the year of Termination of
Employment, based on the target bonus for which Executive was eligible for such
year, and paid when bonuses under the applicable bonus plans are normally paid,
(B) treatment of all other equity-based awards per the other terms of this
Agreement and the applicable plan, award or agreement, (C) all other benefits
and payments per the applicable plan or program, and (D) short-term and
long-term disability benefits per the applicable plans. Except as provided
herein, Executive shall have no further rights to any compensation (including
any Base Salary) or any other benefits under this Agreement. Except for amounts
subject to Section 7(g), the remaining Accrued Obligations shall be paid to
Executive in a lump sum amount within sixty (60) days following the Executive’s
date of termination. All other accrued and vested benefits, if any, due
Executive following a Termination of Employment for Disability shall be
determined in accordance with the plans, policies, and practices of the Company.

(f) No Mitigation or Offset. In no event shall the benefits set forth in this
Section 7 be subject to mitigation or offset.

(g) Release. Notwithstanding any other provision of this Agreement to the
contrary, Executive acknowledges and agrees that any and all payments to which
Executive is entitled under this Section 7, which are described as being subject
to this Section 7(g) are conditioned upon and shall not be payable unless
(A) Executive, or, if applicable, his or his

 

4

--------------------------------------------------------------------------------

estate’s personal representative, executes a general release and waiver, in such
reasonable and customary form as shall be prepared by the Company, of all claims
Executive may have against the Company and its directors, officers, subsidiaries
and affiliates, except as to (i) matters covered by provisions of this Agreement
that expressly survive the termination of this Agreement and (ii) rights to
which Executive is entitled by virtue of his participation in the employee
benefit plans, policies and arrangements of the Company, within the minimum time
period required under applicable state and federal laws, or if no such period,
ten business days following the date of Executive’s termination, and
(B) Executive, or, if applicable, his or his estate’s personal representative,
has not revoked such release agreement within the time permitted under
applicable law. Payments subject to this Section 7(g) shall commence or be made,
as applicable, on the sixtieth (60th) day after the Termination of Employment,
with any payments scheduled to occur between the Termination of Employment and
such sixtieth (60th) day provided on such day.

8. Covenants.

(a) Confidentiality. Executive agrees that Executive will not at any time during
Executive’s employment with the Company or thereafter, except in performance of
Executive’s obligations to the Company hereunder, disclose, either directly or
indirectly, any Confidential Information (as hereinafter defined) that Executive
may learn by reason of his association with the Company. The term “Confidential
Information” shall mean any past, present, or future confidential or secret
plans, programs, documents, agreements, internal management reports, financial
information, or other material relating to the business, strategies, services,
or activities of the Company, including, without limitation, information with
respect to the Company’s operations, processes, products, inventions, business
practices, finances, principals, vendors, suppliers, customers, potential
customers, marketing methods, costs, prices, contractual relationships,
including leases, regulatory status, compensation paid to employees, or other
terms of employment, and trade secrets, market reports, customer investigations,
customer lists, and other similar information that is proprietary information of
the Company; provided, however, the term “Confidential Information” shall not
include any of the above forms of information which has become public knowledge,
unless such Confidential Information became public knowledge due to any act or
acts by Executive or his representative(s) in violation of this Agreement.
Notwithstanding the foregoing, Executive may disclose such Confidential
Information when required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of the
Company and/or its affiliates, as the case may be, or by any administrative body
or legislative body (including a committee thereof) with jurisdiction to order
Executive to divulge, disclose or make accessible such information; provided,
further, that in the event that Executive is ordered by any such court or other
government agency, administrative body, or legislative body to disclose any
Confidential Information, Executive shall (i) promptly notify the Company of
such order, (ii) at the reasonable written request of the Company, diligently
contest such order at the sole expense of the Company as expenses occur, and
(iii) at the reasonable written request of the Company, seek to obtain, at the
sole expense of the Company, such confidential treatment as may be available
under applicable laws for any information disclosed under such order.

(b) Non-Compete. During the Employment Term and for one (1) year immediately
following a Termination of Employment for any reason, Executive shall not,
without the prior written consent of the Company, participate or engage in,
directly or indirectly

 

5

--------------------------------------------------------------------------------

(as an owner, partner, employee, officer, director, independent contractor,
consultant, advisor or in any other capacity calling for the rendition of
services, advice, or acts of management, operation or control) any business for
a Competitor (as defined below). The term “Competitor” shall mean any entity
whose principal business involves the operation of a pari-mutuel or casino
gaming or advance deposit wagering business.

(c) Non-Solicit. During the Employment Term and for one (1) year immediately
following a Termination of Employment for any reason, Executive shall not,
without the prior written consent of the Company, solicit or induce any
then-existing employee of the Company or any of its subsidiaries to leave
employment with the Company or any of its subsidiaries or contact any
then-existing customer or vendor under contract with the Company or any of its
subsidiaries for the purpose of obtaining business similar to that engaged in,
or received (as appropriate), by the Company.

(d) Cooperation. Executive agrees that during the Employment Term or following a
Termination of Employment for any reason, Executive shall, upon reasonable
advance notice, assist and cooperate with the Company with regard to any
investigation or litigation related to a matter or project in which Executive
was involved during Executive’s employment. The Company shall reimburse
Executive for all reasonable and necessary expenses related to Executive’s
services under this Section 8(d) (i.e., travel, lodging, meals, telephone and
overnight courier) within ten (10) business days of Executive submitting to the
Company appropriate receipts and expense statements.

(e) Survivability. The duties and obligations of Executive pursuant to this
Section 8 shall survive the termination of this Agreement and Executive’s
Termination of Employment for any reason.

(f) Remedies. Executive acknowledges that the protections of the Company set
forth in this Section 8 are fair and reasonable. Executive agrees that remedies
at law for a breach or threatened breach of the provisions of this Section 8
would be inadequate and, therefore, the Company shall be entitled, in addition
to any other available remedies, without posting a bond, to equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction, or any other equitable remedy that may be then available.

(g) Limitation. If the duration, scope, or nature of any restriction on business
activity covered by any provision of Section 8(b) or (c) above is in excess of
what is valid and enforceable under applicable law, such restriction shall be
construed to limit duration, scope or activity to an extent that is valid and
enforceable, with such extent to be the maximum extent possible under applicable
law. For each of Section 8(b) and (c) above, Executive hereby acknowledges that
such Section shall be given the construction which renders its provisions valid
and enforceable to the maximum extent, not exceeding its express terms, possible
under applicable law.

9. Miscellaneous.

(a) Resolution of Disputes and Reimbursement of Legal Costs. Except as otherwise
provided in Section 8, the Company and Executive agree that any controversy or
claim

 

6

--------------------------------------------------------------------------------

arising out of or relating to this Agreement or the breach thereof shall be
settled by arbitration administered by the American Arbitration Association in
accordance with its Commercial Arbitration Rules then in effect. Venue for any
arbitration pursuant to this Agreement will lie in Louisville, Kentucky. Any
award entered by the arbitrator(s) shall be final, binding and nonappealable and
judgment may be entered thereon by either party in accordance with applicable
law in any court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. Each party shall be responsible for its own expenses
relating to the conduct of the arbitration (including reasonable attorneys’ fees
and expenses) and shall share the fees of the American Arbitration Association
and the arbitrator(s), if applicable, equally.

(b) Governing Law. This Agreement will be governed by, and interpreted in
accordance with, the laws of the Commonwealth of Kentucky applicable to
agreements made and to be wholly performed within the Commonwealth of Kentucky,
without regard to the conflict of laws provisions of any jurisdiction which
would cause the application of any law other than that of the Commonwealth of
Kentucky.

(c) Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties with respect to the subject matter herein
other than those expressly set forth herein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties hereto.
Sections 7 and 8 of this Agreement shall survive the termination of Executive’s
employment with the Company, except as otherwise specifically stated therein.

(d) Neutral Interpretation. This Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement of this Agreement shall be
interpreted in a neutral manner, and not more strongly for or against any party
based upon the source of the draftsmanship of the Agreement. Each party has been
provided ample time and opportunity to review and negotiate the terms of this
Agreement and consult with legal counsel regarding the Agreement.

(e) No Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver of such
party’s rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

(f) Severability. In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby.

(g) Successors.

(i) This Agreement is personal to Executive and shall not be assignable by
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Executive’s legal
representatives.

 

7

--------------------------------------------------------------------------------

(ii) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. The Company shall require any successor
(whether direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to all or a
substantial portion of its business and/or assets, by agreement in form and
substance reasonably satisfactory to Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform this Agreement if no such succession had
taken place. Regardless of whether such an agreement is executed, this Agreement
shall be binding upon any successor of the Company and such successor shall be
deemed the “Company” for purposes of this Agreement.

(h) Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, if delivered by
overnight courier service, if sent by facsimile transmission or if mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses or sent via facsimile to the respective
facsimile numbers, as the case may be, as set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt; provided, however, that (i) notices sent by personal delivery or
overnight courier shall be deemed given when delivered; (ii) notices sent by
facsimile transmission shall be deemed given upon the sender’s receipt of
confirmation of complete transmission, and (iii) notices sent by United States
registered mail shall be deemed given two days after the date of deposit in the
United States mail.

If to the Company, to:

Churchill Downs Incorporated

Attn: General Counsel

700 Central Avenue

Louisville, KY 40208

If to Executive, to

William E. Mudd

4217 Ashleywood Ct.

Louisville, KY 40241

(i) Withholding. The Company may withhold from any amounts payable under this
Agreement such Taxes (as defined in Section 10(q)) as may be required to be
withheld pursuant to any applicable law or regulation.

(j) Counterparts and Signatures. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. Signatures delivered by
facsimile or PDF file shall constitute original signatures.

(k) Code Section 409A. It is intended that any amounts payable under this
Agreement and the Company’s and Executive’s exercise of authority or discretion
hereunder

 

8

--------------------------------------------------------------------------------

shall comply with Code Section 409A (including the Treasury regulations and
other published guidance relating thereto) so as not to subject Executive to the
payment of any interest or additional tax imposed under Code Section 409A. To
the extent any amount payable under this Agreement would trigger the additional
tax imposed by Code Section 409A, the Agreement shall be modified to avoid such
additional tax.

10. Definitions.

(a) “Agreement” — see the recitals to this Agreement.

(b) “Base Salary” — see Section 3.

(c) “Board” means the Board of Directors of the Company.

(d) “Cause” for termination by the Company of Executive’s employment with the
Company means any of the following:

(i) the willful and continued failure of Executive to perform substantially his
duties to the Company (other than any such failure resulting from incapacity due
to disability), after a written demand to cure such failure (the “Demand to
Cure”) is delivered to Executive by the Chief Executive Officer which
specifically identifies the manner in which the Board believes that Executive
has not substantially performed his duties;

(ii) Executive’s conviction of, or plea of guilty or no contest to (A) a felony
or (B) a misdemeanor involving dishonesty or moral turpitude; or

(iii) the willful engaging by 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 definition, no act or failure to act, on the part of
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that 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 Chief Executive Officer or
based upon the advice of counsel of the Company which Executive honestly
believes is within such counsel’s competence shall be conclusively presumed to
be done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. The Company shall give written notice to Executive of
the termination for Cause. Such notice shall state in detail the particular act
or acts or the failure or failures to act that constitute the grounds on which
the Cause termination is based and such notice shall be given within six
(6) months of the occurrence of, or, if later, the Company’s actual knowledge
of, the act or acts or the failure or failures to act which constitute the
grounds for Cause. Executive shall have sixty (60) days upon receipt of the
Demand to Cure in which to cure such conduct, to the extent such cure is
possible.

(e) “Change in Control” means the first to occur of the following events:

(i) the acquisition, directly or indirectly, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) of

 

9

--------------------------------------------------------------------------------

beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 50% of either the then outstanding voting securities
of the Company (the “Outstanding Company Common Stock”) or the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control: (w) any
acquisition directly from the Company, (x) any acquisition by the Company or any
of its subsidiaries, (y) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (z) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this definition;

(ii) individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;

(iii) consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the
acquisition of assets of another entity (a “Corporate Transaction”), in each
case, unless, immediately following such Corporate Transaction, (A) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate Transaction
beneficially own, directly or indirectly, more than 50% of, respectively, the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Corporate
Transaction (including, without limitation, an entity which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Corporate Transaction,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Corporate Transaction or employee benefit plan (or related
trust) of the Company or such corporation resulting from such Corporate
Transaction) beneficially owns, directly or indirectly, 50% or more of,
respectively, the then-Outstanding Company Common Stock resulting from such
Corporate Transaction or the Outstanding Company Voting Securities resulting
from such Corporate Transaction, except to the extent that such ownership
existed prior to the Corporate Transaction, and (C) at least a majority of the
members of the Board resulting from the Corporate Transaction were members of
the Incumbent Board at the time of the execution of the initial plan or action
of the Board providing for such Corporate Transaction; or

(iv) approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

 

10

--------------------------------------------------------------------------------

(f) “Code” means the Internal Revenue Code of 1986, as amended from
time-to-time.

(g) “Common Stock” means the common stock, no par value, of the Company.

(h) “Company” — see the recitals to this Agreement.

(i) “Disability” means that Executive becomes “disabled” within the meaning of
Section 409A(a)(2)(C) of the Code or any successor provision and the applicable
regulations thereunder.

(j) “Effective Date” — see recitals to this Agreement.

(k) “Employment Term” — see Section 1.

(l) “Exchange Act” means the Securities Exchange Act of 1934.

(m) “Executive” — see recitals to this Agreement.

(n) “Good Reason” for termination by Executive of Executive’s employment means
the occurrence (without Executive’s express written consent) of any one of the
following acts by the Company or failures by the Company to act:

(i) the assignment to Executive of any duties inconsistent in any material
respect with the position of Executive Vice President and Chief Financial
Officer (including status, office, title and reporting requirements), or the
authority, duties or responsibilities of the Executive Vice President and Chief
Financial Officer, or any other diminution in any material respect in such
position, authority, duties or responsibilities unless agreed to by Executive;

(ii) the Company’s requiring Executive to be based at, or perform his principal
functions at, any office or location other than a location within 35 miles of
the Main Office unless such other location is closer to Executive’s then-primary
residence than the Main Office;

(iii) a material reduction in Base Salary;

(iv) a material reduction in Executive’s welfare benefits plans, qualified
retirement plan, or paid time off benefit unless other senior executives suffer
a comparable reduction;

(v) any purported termination of Executive’s employment under this Agreement by
the Company other than for Cause, death or Disability; and

(vi) the Company’s notice to Executive of non-renewal of the Agreement, or
failure of the parties to reach mutually agreeable revised extension terms
within 60 days following a party’s notice of non-renewal of the Agreement.

 

11

--------------------------------------------------------------------------------

Prior to 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 Good Reason. Such notice shall state in detail the particular act or acts or
the failure or failures to act that constitute the grounds on which Executive’s
Good Reason 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 Good Reason. 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.

(o) “Main Office” means 700 Central Avenue, Louisville, Kentucky.

(p) “Restricted Shares” see Section 5(a).

(q) “Taxes” means the incremental United States federal, state and local income,
excise and other taxes payable by Executive with respect to any applicable item
of income.

(r) “Tax Gross-Up Payment” means an amount payable to Executive such that, after
payment of Taxes on such amount, there remains a balance sufficient to pay the
Taxes being reimbursed, which amount shall be payable in a lump sum to Executive
not later than the end of the taxable year of Executive next following the
taxable year of Executive in which the related Taxes were remitted. The amount
of Taxes eligible for reimbursement in one taxable year of Executive shall not
affect the amount of Taxes eligible for reimbursement in another taxable year of
Executive.

(s) “Termination of Employment” means a termination by the Company or by
Executive of Executive’s employment with the Company.

11. Section 409A. Notwithstanding the foregoing, to the extent required in order
to avoid accelerated taxation and/or tax penalties under Code Section 409A and
the rules and regulations thereunder (“Section 409A”), if Executive is a
“specified employee” (as defined under Section 409A) as of the date of his
“separation from service” (as defined under Section 409A) from the Company, then
any payment of benefits scheduled to be paid by the Company to Executive during
the first six (6) month period following the date of a termination of employment
hereunder shall not be paid until the earlier of (a) the expiration of the six
(6) month period measured from the date of Executive’s “separation from service”
and (b) the date of Executive’s death. All payments and benefits that are
delayed pursuant to the immediately preceding sentence shall be paid to
Executive in a lump sum as soon as practicable following the expiration of such
period (or if earlier, upon Executive’s death) but in no event later than thirty
(30) days following such period. To the extent required in order to avoid
accelerated taxation and/or tax penalties under Section 409A, no amount or
benefit that is payable upon a termination of employment or services from the
Company shall be payable unless such termination also meets the requirements of
a “separation from service” under Section 409A. In addition, the parties shall
cooperate fully with one another to ensure compliance with Section 409A,
including, without limitation, adopting amendments to arrangements subject to
Section 409A and operating such arrangements in compliance with Section 409A.

 

12

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
dates set forth next to their respective signatures.

 

    WILLIAM E. MUDD Date: October 10, 2011       /s/ William E. Mudd            
    CHURCHILL DOWNS INCORPORATED Date: October 10, 2011     By:   /s/ Robert L.
Evans       Robert L. Evans       Chairman and Chief Executive Officer

 

13