CHURCHILL DOWNS INCORPORATED
AMENDED AND RESTATED
INCENTIVE COMPENSATION PLAN (1997)

ARTICLE 1

PURPOSE

        The purpose of the CHURCHILL DOWNS INCORPORATED AMENDED AND RESTATED
INCENTIVE COMPENSATION PLAN is to promote the interests of the Company and its
stockholders by providing greater incentives to officers and other key
management employees by rewarding them for services rendered with compensation
in an amount which is directly related to the success of the Company as well as
the performance of the operating units and the individual employees.

ARTICLE 2

DEFINITIONS

        2.1 Definitions. The following words and phrases, when used herein,
unless their context clearly indicates otherwise, shall have the following
respective meanings:

    A.        Beneficiary. A person or persons (natural or otherwise) designated
by a Participant in accordance with the provisions of Article 8 to receive any
benefits which shall be payable under this Plan.

    B.        Board. The Board of Directors of Churchill Downs Incorporated.

    C.        Budget. The annual operating budget approved by the Board for each
year during the term of the Plan.

    D.        CEO. The Chief Executive Officer of Churchill Downs Incorporated.

    E.        Company. Churchill Downs Incorporated and its subsidiaries.

    F.        Company Achievement Percentage Levels. The percentages established
annually by the Committee to be used, as provided in Section 6.2, in computing a
part of an Annual Incentive Compensation Award based upon achievement of a
Company Performance Goal.

    G.        Company Performance Goals. The goal defined in Section 6.1.A.

    H.        Disability. A physical or mental condition arising after the
Effective Date hereof which qualifies a Participant for disability benefits
under the Social Security Act in effect on the date of disability.

    1

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

   

    I.        Discretionary Achievement Percentage Levels. The percentages
established annually by the Committee to be used, as provided in Section 6.5, in
computing a part of an Annual Incentive Compensation Award, based upon
achievement of a Discretionary Performance Goal.

    J.        Discretionary Performance Goals. The goals defined in Section
6.1.D.

    K.        Effective Date. January 1, 1997.

    L.        Incentive Compensation Award. The award as defined in Article 6.
An award under the Churchill Downs Incorporated Incentive Compensation Plan
(1997) during any year shall be an “Annual Incentive Compensation Award.”

    M.        Participant. An employee of the Company who is selected for
participation in the Plan in accordance with the provisions of Article 5. For
purposes of Articles 7 and 8, the term Participant shall also include a former
employee who is entitled to benefits under this Plan.

    N.        Participation Classification. The classification assigned to each
Participant in accordance with the provisions of Article 5.

    O.        Participation Percentage. The percentages of participation in the
Plan as defined in Article 6.

    P.        Performance Goals. The performance goals as defined in Article 6.

    Q.        Plan. The Churchill Downs Incorporated Incentive Compensation Plan
(1997).

    R.        Plan Year. The twelve-month period commencing on January 1 of one
calendar year and ending on December 31 of the same calendar year, which period
is also the Company’s fiscal year.

    S.        Profit Center. Each Churchill Downs Incorporated racing operation,
Churchill Downs Incorporated Corporate Sales, Churchill Downs Management
Company, and any other profit centers designated by the CEO.

    T.        Pre-tax Income. The annual consolidated income of the Company,
before federal and state income taxes, after any allowance for payments made or
to be made under this Plan, and after inclusion of all extraordinary revenues
and deduction of all extraordinary expenses, all as calculated in accordance
with generally accepted accounting principles consistently applied and confirmed
by the audit report of the Company’s independent public accountants. The
Compensation Committee shall have the discretion to exclude any extraordinary
revenue or any extraordinary expense from the definition of “Pre-tax Income.”

    2

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

   

    U.        Profit Center Achievement Percentage Levels. The percentages
established annually by the Committee to be used, as provided in Section 6.3, in
computing a part of an Annual Incentive Compensation Award, based upon
achievement of a Profit Center Performance Goal.

    V.        Profit Center Performance Goals. The goals defined in Section
6.1.B.

    W.        Salary. The Participant’s base annual salary as set by either the
Compensation Committee of the Board or the CEO.

    X.        Service Center. The Finance, Development & Technology Service
Center, the Legal Service Center, the Corporate Communications Service Center,
and any other service center designated by the CEO.

    Y.        Service Center Achievement Percentage Levels. The percentages
established annually by the Committee to be used, as provided in Section 6.4, in
computing a part of an Annual Incentive Compensation Award based upon
achievement of a Service Center Performance Goal.

    Z.        Service Center Performance Goals. The goals defined in Section
6.1.C.

    AA.        Term. This Plan shall continue, Plan Year to Plan Year, until
amended or terminated by the Board of Directors upon recommendation of the
Compensation Committee, or such earlier date as may be determined under Section
9.2.

        2.2 Construction. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary.

ARTICLE 3

ADMINISTRATION

        3.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board (hereinafter the “Committee”).

        3.2 Committee’s Power and Authority. The Committee shall have full and
complete authority and power, subject only to the direction of the Board, to
administer the Plan in accordance with its terms and carry out the provisions of
the Plan. The Committee shall interpret the Plan and shall determine all
questions, factual, legal or otherwise, arising in the administration,
interpretation and application of the Plan, including but not limited to
questions of eligibility and the status and rights of Participants,
Beneficiaries and other persons. The Committee shall have any and all power and
authority (including discretion with respect to the exercise of such power and
authority) which shall be necessary, properly advisable, desirable, or
convenient to enable it to carry out its duties under the Plan. By way of
illustration and not limitation, the Committee is empowered and authorized to
make rules and regulations in respect to the Plan not

    3

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

   

inconsistent with the Plan; to determine, consistently therewith, all questions
that may arise as to the eligibility, benefits, status and right of any person
claiming benefits under the Plan; to determine whether a Participant was
terminated for just cause; and subject to and consistent with, any applicable
laws, to make factual determinations, to construe and interpret the Plan and
correct any defect, supply any omissions or reconcile any inconsistencies in the
Plan. Any such determination by the Committee shall presumptively be conclusive
and binding on all persons. The regularly kept records of the Company shall be
conclusive and binding upon all persons with respect to a Participant’s date and
length of employment, time and amount of salary and the manner of payment
thereof, type and length of any absence from work and all other matters
contained therein relating to employment. All rules and determinations of the
Committee shall be uniformly and consistently applied to all persons in similar
circumstances.

        3.3 Committee’s Annual Review. The Committee shall review the operation
of the Plan to determine its effectiveness in promoting its operating results
and the shareholders’ investment; further, the Committee shall report annually
to the Board on its findings and make such recommendations as the Committee
deems appropriate.

ARTICLE 4

EFFECTIVE DATE AND TERMINATION

        The Plan shall be effective as of January 1, 1997. The Plan shall
terminate on December 31, 2003, except with respect to the payment of any
Incentive Compensation Awards which may become due and payable thereafter, or
unless terminated earlier by action of the Board under Section 9.2.

ARTICLE 5

ELIGIBILITY AND PARTICIPATION

        5.1 Eligibility. All Company officers and other key management employees
who are employed by the Company on the date of the adoption of this Plan and who
are specifically designated by the Committee as Participants shall be
Participants in the Plan as of January 1, 1997. In addition, any officers and
other key management employees who are subsequently designated by the Committee
as participants shall become Participants in the Plan on the date established by
the Committee for such participation. Once an employee becomes a Participant, he
will remain a Participant until the earliest of: [i] termination of this Plan;
[ii] termination of his active service with the Company; or [iii] termination of
his status as a Participant by decision of the Committee, provided, however,
that a Participant will be terminated from participation in the Plan only at the
beginning of a Plan Year.

    4

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

   

        5.2 Classifications of Participants. The Committee shall, from time to
time, establish Participation Classifications which will determine the
Participants’ Performance Goals. Simultaneous with the Committee’s designation
of an employee as a Participant, the Committee shall designate in which
classifications of Participants the employee shall participate. The Committee
may change the Class designation of a Participant as of the beginning of any
Plan Year.

ARTICLE 6

ANNUAL INCENTIVE COMPENSATION AWARDS

        6.1 Performance Goals. Annual Incentive Compensation Awards to each
Participant shall be determined on the basis of the achievement of the following
Performance Goals:

    A.        The Company achieves certain Pre-tax Income for the applicable
year: the “Threshold Company Goal” (90% of the Pre-tax Income target set in the
applicable Budget); the “Target Company Goal” (100% of the Pre-tax Income target
set in the applicable Budget); and the Maximum Company Goal” (120% of the
Pre-tax Income target set in the applicable Budget) (the “Company Performance
Goal[s]”). The Committee shall establish annually the percentage of the Annual
Incentive Compensation Award to each Participant which is awarded to each
Participant based upon the Company Performance Goals (the “Company Performance
Goals Percentage”).

    B.        In the case of Classes to which Participants working in Profit
Centers are assigned, the Profit Center achieves certain pre-tax net income
levels for the applicable year: the “Threshold Profit Center Goal” (90% of the
pre-tax net income set in the Profit Center’s applicable Budget); the “Target
Profit Center Goal” (100% of the pre-tax net income set in the Profit Center’s
applicable Budget); and the “Maximum Profit Center Goal” (120% of the pre-tax
net income set in the Profit Center’s applicable Budget) (the “Profit Center
Performance Goal[s]”). The Committee shall establish annually the percentage of
the Annual Incentive Compensation Award which is awarded to each Participant
based upon the Profit Center Performance Goals (the “Profit Center Performance
Goals Percentage”).

    C.        In the case of Classes to which Participants working in Service
Centers are assigned, such Service Center meets certain objective financial and
other criteria established by the CEO and the Senior Vice President of that
Service Center for the applicable year: the “Threshold Service Center Goal” (90%
of the Service Center’s established criteria); the “Target Service Center Goal”
(100% of the Service Center’s established criteria); and the “Maximum Service
Center Goal” (120% of the Service Center’s established criteria) (the “Service
Center Performance Goal[s]”). Achievement of the Service Center Performance
Goals shall be determined in the CEO’s sole discretion. The Committee shall
establish annually the percentage of the Annual Incentive Compensation Award
which is awarded to each Participant based upon the Service Center Performance
Goals (the “Service Center Performance Goals Percentage”).

    5

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

   

    D.        The Participant achieves certain performance standards particular
to his or her position in the Company for the applicable year: the “Threshold
Discretionary Goal” (90% of the Participant’s performance standards); the
“Target Discretionary Goal” (100% of the Participant’s performance standards);
and the “Maximum Discretionary Goal” (120% of the Participant’s performance
standards) (the “Discretionary Performance Goal[s]”). Achievement of the
Discretionary Performance Goals shall be determined in the sole discretion of
the CEO. The Committee shall establish annually the percentage of the Annual
Incentive Compensation Award which is awarded based upon the Discretionary
Performance Goals (the “Discretionary Performance Goals Percentage”).

        6.2 Computation of Award Based Upon Company Performance Goals. For each
Plan Year for which the Company achieves the “Threshold Company Goal”, each
Participant shall be awarded an Annual Incentive Compensation Award which shall
be computed by multiplying: (i) the Participant’s Salary for the Plan Year; by
(ii) the Participation Percentage, as established annually by the Committee for
the Participant’s Class; by (iii) the Company Performance Goals Percentage, as
established annually by the Committee for the Participant’s Class; by (iv) the
applicable Company Achievement Percentage Level as established annually by the
Committee.

        6.3 Computation of Award based on Profit Center Performance Goals. For
each Plan Year for which the Company achieves at least the Threshold Company
Performance Goal and the Profit Center in which that Participant works achieves
at least its Threshold Profit Center Performance Goal, each Participant of a
Profit Center Class shall be awarded an Annual Incentive Compensation Award
which shall be computed by multiplying: (i) the Participant’s Salary for the
Plan Year; by (ii) the Participation Percentage, as established annually by the
Committee for the Participant’s class; by (iii) the Profit Center Performance
Goals Percentage as established annually by the Committee for the Participant’s
Class; (iv) by the applicable Profit Center Achievement Percentage Level as
established annually by the Committee.

        6.4 Computation of Award based on Service Center Performance Goals. For
each Plan Year for which the Company achieves at least the Threshold Company
Performance Goal and the Service Center in which that Participant works achieves
at least its Threshold Service Center Performance Goal, each Participant in a
Service Center Class shall be awarded an Annual Incentive Compensation Award
which shall be computed by multiplying: (i) the Participant’s Salary for the
Plan Year; by (ii) the Participation Percentage, as established annually by the
Committee for the Participant’s Class; by (iii) the Service Center Performance
Goals Percentage as established annually by the Committee for the Participant’s
Class; by (iv) the applicable Service Center Achievement Percentage Level as
established annually by the Committee.

        6.5 Computation of Award based on Discretionary Performance Goals. For
each Plan Year for which the Company achieves at least the Threshold Company
Performance Goal and that Participant achieves at least his/her Threshold
Discretionary Performance Goal, a Participant may be awarded an Annual Incentive
Compensation Award which shall be computed by multiplying: (i) the Participant’s
Salary for the Plan Year; by (ii) the Participation Percentage as established
annually by the Committee; by (iii) the Discretionary Performance Goals
Percentage for the Participant’s Class as established annually by the Committee;
by (iv) the applicable Discretionary Achievement Percentage Level as established
annually by the Committee. The CEO, in his/her sole discretion, shall determine
whether a Participant has met Discretionary Performance Goals.

    6

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

   

        6.6 Adjustments to Annual Incentive Compensation Award. An Annual
Incentive Compensation Award shall be adjusted by any one or more of the
following adjustments:

    A.        In the event a Participant shall, during a Plan Year, die, retire,
go on a leave of absence with the Company’s consent, terminate employment due to
Disability, or be terminated without just cause, the Annual Incentive
Compensation Award for that Participant for such Plan Year shall be reduced, pro
rata, based on the number of days in such Plan Year during which he was not a
Participant.

    B.        In the event that during a Plan Year a Participant shall be
discharged for just cause or shall voluntarily resign for any reason other than
Disability, the Annual Incentive Compensation Award for that Participant shall
be reduced to zero, and no Annual Incentive Compensation Award shall be payable
to that Participant for such Plan Year.

ARTICLE 7

PAYMENT OF BENEFITS

        7.1 Method of Payments. As soon as the Committee has determined the
amount of all of the Annual Incentive Compensation Awards at the end of a Plan
Year, the Committee shall instruct the Company to pay each award in cash in one
lump sum.

ARTICLE 8

DESIGNATION OF BENEFICIARIES

        A Participant may file with the Committee a designation of a Beneficiary
or Beneficiaries in writing, which designation may be changed or revoked by the
Participant’s sole action, provided that the change or revocation is filed with
the Committee in writing. If a Participant dies, any benefit which the
Participant is entitled to receive under the Plan shall be delivered to the
Beneficiary or Beneficiaries so designated, or if no Beneficiary has been
designated or survives the Participant, shall be delivered to the Executor or
Administrator of the Participant’s estate.

    7

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

   

ARTICLE 9

MISCELLANEOUS PROVISIONS

        9.1 Other Plans. Any payment made under the provisions of this Plan
shall be includable in or excludable from a Participant’s compensation for
purposes of any other qualified or nonqualified benefit plan in which the
Participant may be eligible to participate by reference to the terms of such
other plan.

        9.2 Plan Amendment and Terminations. The Company, acting through the
Committee or the Board, reserves the right to amend and/or to terminate the Plan
for any reason and at any time. Any amendment or termination of this Plan shall
not affect the right of any Participant or his Beneficiary to receive an
Incentive Compensation Award after it has been earned.

        9.3 Right to Transfer, Alienate and Attach. Except to the extent that a
Participant may designate a Beneficiary under the provisions contained in
Article 8, the right of any Participant or any beneficiary to any benefit or to
any payment hereunder shall not be subject in any manner to attachment or other
legal process for the debts of such Participant or Beneficiary; and any such
benefit or payment shall not be subject to anticipation, alienation, sale,
transfer, assignment or encumbrance, except to the extent that the right to such
benefit is transferable by the Participant by will or the laws of descent and
distribution.

        9.4 Indemnification. No member of the Board or of the Committee and no
officer or employee of the Company shall be liable to any person for any action
taken in connection with the administration of this Plan unless attributable to
his own fraud or willful misconduct; nor shall the Company be liable to any
person for any such action unless attributable to fraud or willful misconduct on
the part of a director, officer or employee of the Company.

        9.5 Non-Guarantee of Employment. Neither the existence of this Plan nor
any award or benefit granted pursuant to it shall create any right to continued
employment of any Participant by the Company. No Participant shall, under any
circumstances, have any interest whatsoever, vested or contingent, in any
particular property or asset of the Company by virtue of any award, unpaid bonus
or other accrued benefit under the Plan.

        9.6 Source of Payment. No special or separate fund shall be established
or other segregation of assets made with respect to any immediate or deferred
payment under the Plan. All payment of awards shall be made from the general
funds of the Company. To the extent that a Participant or his Beneficiary
acquires a right to receive payments under this Plan, such right shall be no
greater than that of any unsecured general creditor of the Company.

        9.7 Withholding Taxes. The Company shall have the right to deduct from
all payments made to the Participant, whether pursuant to this Plan or
otherwise, amounts required by federal, state or local law to be withheld with
respect to any payments made pursuant to this Plan.

    8

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