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September 8, 2006

Mr. Vernon Niven III
1310 Quiet Cove Lane
Gulf Breeze, FL 32563
 
Dear Vernon:
 
I am pleased to offer you the position of Executive Vice President technology
initiatives, as a Churchill Downs Incorporated (CDI) employee, reporting
directly to our CEO, Bob Evans. Your responsibilities will be similar to those
of other CDI business unit leaders. Your start date will be Monday, September
11, 2006.
 
Your base salary will be $11,538.46 bi-weekly. You will be eligible to
participate in a cash bonus plan beginning for calendar year 2007, which is
payable in March 2008 and is based on objectives mutually agreed upon between
you and our CEO, and approved by the Compensation Committee of the Board of
Directors. The target bonus for this position is 60% of base pay. In calendar
year 2007 (paid out in March 2008) your target bonus award is up to $180,000.

In this role, you may also be eligible for Long Term Incentives based on
achievement of certain performance goals and vesting criteria as described in
Exhibit A (attached). The Long Term Incentive payments are intended to be in the
form of Company stock but require Board of Director and shareholder approval.
Should Company stock not be available at the time of payment (based on the
performance and vesting criteria in Exhibit A), the Long Term Incentives will be
paid in cash. Should there be a change in control, defined as an acquisition by
any individual, entity or group, with at least 51% of the voting control of CDI
or CDI’s technology initiative, the remaining unforfeited Long Term Incentives
as outlined in Exhibit A will vest at 50% of the scheduled value, paid in the
year that the incentive otherwise would have been paid by Churchill Downs
Incorporated.
    
You will be provided relocation assistance similar to that offered to other
senior CDI executives of comparable level, once your relocation destination has
been mutually agreed upon. Relocation Today, Inc. will administer and manage
your relocation.

We will forward to you separately a summary of the customary fringe benefits you
will be entitled to, including health insurance, life insurance, 401(k),
Employee Stock Purchase Plan, Deferred Compensation Plan, and our executive
severance policy. Please refer to the benefits summary for a description of the
benefit, corresponding employee contribution and eligibility dates.

Your employment with Churchill Downs Incorporated is "at will" and it can be
terminated with or without cause, and with or without notice, at any time, at
the option of either Churchill Downs Incorporated or yourself.
 

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Vernon Niven III
September 8, 2006
Page 2

Should your employment be terminated by the Company without “just cause” as
defined below, the Company will convey the following:

a.  
pay through the month in which the severance occurs and severance pay and
benefits per the Executive Severance Policy,

b.  
pay a pro rata annual bonus for the year in which your termination occurs based
on the bonus target,

c.  
pay the balance of any long term incentive awards, if any, earned through your
termination date but not yet paid,

d.  
pay 20% of the then remaining unforfeited Long Term Incentives ( payable only if
executive has completed one year of continuous service)

“Just cause” shall mean [i] failure to perform substantially your duties after
written demand for substantial performance improvement, or [ii] engaging in
illegal conduct or gross misconduct which, in the sole direction of the Company,
is injurious to the business or reputation of the Company.

You agree that for a period of two years from the date you cease to be an
employee of CDI or any subsidiary of CDI, regardless of the reason for no longer
being an employee, you will not directly or indirectly:

-  
solicit any customers or prospective customers of CDI for the purpose of selling
them products or services that compete with those of CDI;

-  
solicit or recruit in any form, as employees, contractors, sub-contractors,
consultants or other capacity in which such individuals provide services of
material business value, any employees or ex-employees of CDI, unless such
ex-employees’ employment with CDI has been terminated for at least two years;

-  
disclose to any third parties or use to your own benefit, directly or
indirectly, any confidential or proprietary information or knowledge of CDI; and

-  
work with or for a competitor of CDI or yourself which would potentially subject
CDI trade secrets or confidential information to misuse.

Furthermore, you agree that any intellectual property developed while an
employee of CDI is the sole exclusive property of CDI, including but not limited
to any business processes, product or service designs, software code, and other
such knowledge regardless of its form of expression, including such knowledge
developed by contractors employed by you on CDI’s behalf.

While you are employed by CDI, you agree to devote 100% of your business efforts
to CDI and not to accept employment or otherwise engage with any third-parties
whereby your obligations to such third-parties inhibit in any way your
performance in discharging your CDI responsibilities.
 

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Vernon Niven III
September 8, 2006
Page 3

Our employment offer is contingent upon a successful background check and
submission of satisfactory proof of your identity and legal authorization to
work in the United States. If you fail to submit this proof, federal law
prohibits us from hiring you. As an Officer of Churchill Downs Incorporated,
this employment agreement is also subject to the approval of the Board of
Directors.

Vernon, we are excited about the prospect of you joining us during this most
exciting period for our Company. Please call me at 502-636-4836 as soon as you
have had the opportunity to review the contents of this letter so I may promptly
address any concerns you may have.

If you agree with and accept the terms of this offer of employment, please sign
the letter and return it to me. We are confident your employment with Churchill
Downs Incorporated will prove mutually beneficial, and we look forward to having
you join the team.

Sincerely,

/s/ Chuck Kenyon
Chuck Kenyon
Vice President Human Resources
Churchill Downs Incorporated

 
Accepted by:
 
 
/s/ Vernon Niven      Sept. 12, 2006
 
 
Vernon Niven III      Date
 
 

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