Amended and Restated Incentive Compensation Plan (1997)




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. 



               


	 
	 
	
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          		    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.” 



               


	 
	 
	
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          		    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


	 
	 
	
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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 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. 



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. 


	 
	 
	
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        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”). 



               


	 
	 
	
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          		    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. 


	 
	 
	
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        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. 


	 
	 
	
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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. 


	 
	 
	
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