Document:

exh_4-5.htm

    Exhibit 4.5

    UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     

    TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART,
TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON
THE REVERSE HEREOF.

     

    THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES
FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED (X) PRIOR TO THE DATE SIX MONTHS AFTER THE DATE OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 OF THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH  TRANSFER, IN EITHER CASE, OTHER THAN (1) TO
THE  COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION (AS DEFINED UNDER REGULATION S UNDER
THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR
(6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES.  AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS
SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM
THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS.  THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) PURCHASING FROM A
PERSON NOT PARTICIPATING IN THE INITIAL DISTRIBUTION OF THIS SECURITY (OR ANY
PREDECESSOR SECURITY), THAT IT IS AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.

     

    UNTIL
THE EXPIRATION OF THE "40 DAY DISTRIBUTION COMPLIANCE PERIOD" (WITHIN THE
MEANING OF RULE 903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT), BENEFICIAL
OWNERSHIP INTERESTS IN THIS SECURITY MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED
THROUGH EUROCLEAR BANK S.A./N.A., AS OPERATOR OR THE EUROCLEAR SYSTEM, OR
CLEARSTREAM BANKING, SOCIÉTÉ ANONYME. THIS LEGEND WILL BE REMOVED UPON THE
EXPIRATION OF SUCH 40 DAY DISTRIBUTION COMPLIANCE PERIOD.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    
      	
              No.
      3

            	
              Up
      to $5,000,000

            

    

     

     

     

    5.750%
Senior Note due 2018

     

    
      	 
    	
              CUSIP: U65584
    AA9

            
	 
    	
              ISIN:
    USU65584AA99

            

    

     

    
 

    NORFOLK
SOUTHERN CORPORATION, a Virginia corporation, promises to pay to Cede & Co.,
or registered assigns, the principal sum as set forth on the Schedule of
Increases or Decreases annexed hereto on April 1, 2018.

     

    Interest
Payment Dates:  April 1 and October 1, commencing on October 1,
2008.

     

    Record
Dates:  March 15 and September 15.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Additional
provisions of this Security are set forth on the other side of this
Security.

     

    IN
WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.

     

    
      	 
    	
              NORFOLK
      SOUTHERN CORPORATION,

            
	 
    	 
    
	 
    	
              By

            	
                    /s/
      William J. Romig

            
	 
    	 
    	
              Name:
      William J. Romig

            
	 
    	 
    	
              Title:
      Vice President and Treasurer

            

    

    TRUSTEE'S
CERTIFICATE OF

           AUTHENTICATION

     

    Dated:
April 4, 2008

     

    U.S.
BANK TRUST NATIONAL ASSOCIATION,

     

    as
Trustee, certifies

    that
this is one of

    the
Securities referred

    to
in the Indenture.

     

    By:___/s/ Patrick J.
Crowley____

    Authorized Signatory

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    REVERSE
SIDE OF NOTE

     

    5.750%
Senior Note due 2018

     

    
      	
              1.  

            	
              Interest

            

    

     

    (a)    NORFOLK SOUTHERN CORPORATION, a Virginia
corporation (such corporation, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown
above.  The Company will pay interest semiannually on April 1 and
October 1 of each year, commencing October 1, 2008.  Interest on the
Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from April 4,
2008.  Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.  The Company shall pay interest on overdue
principal at the rate per annum borne by the
Securities, and it shall pay interest on overdue installments of interest at the
rate per annum borne by the Securities to the extent lawful.

     

     

    (b)  Special
Interest.  The
holder of this Security is entitled to the benefits of a Exchange and Registration Rights Agreement,
dated as of April 1, 2008, among the Company and the Initial Purchasers named
therein (the "Registration Agreement").  Capitalized terms used in
this paragraph (b) but not defined herein have the meanings assigned
to them in the Registration
Agreement.  In the event that (i) the Exchange Offer Registration
Statement is not filed with the Commission on or prior to the date which is 180
days following the date of the original issuance of the Securities, (ii) the
Exchange Offer Registration Statement is not
declared effective within 270 days after the original issuance of the
Securities, (iii) if the Exchange Offer Registration Statement is declared
effective, the Registered Exchange Offer is not consummated on or prior
to 300 days after the date of the
original issuance of Securities, (iv) if the Company is required to file the
Shelf Registration Statement in accordance with the Registration Agreement, the
Company does not so file the Shelf Registration Statement on or prior to the 45th day after the Company's
obligation to file such Shelf Registration Statement arises, (v) if the Company
is required to file the Shelf Registration Statement in accordance with the
Registration Agreement, the Shelf Registration Statement has not been declared effective by the SEC
on or prior to 90 days after the filing obligation arises, or
(vi)  any Suspension Periods exceed, in the aggregate, 45 days during
any 365-day period (each such event referred to in clauses (i) through (v), a
"Registration Default"), the Company shall be
obligated to pay Additional Interest from and including the date on which the
first such Registration Default shall occur to but excluding the date on which
all Registration Defaults have been cured, at a rate of 0.25% per annum on the applicable principal
amount of Securities held by such Holder for the first 90 day period immediately
following the occurrence of a Registration Default, and such rate will increase
by an additional 0.25% with respect to each subsequent 90-day period until all Registration
Defaults have been cured, provided that the maximum additional rate may in
no event exceed 0.50% per annum.

     

    
      	
              2.  

            	
              Method of
      Payment

            

    

     

    The
Company will pay interest on the Securities (except defaulted interest) to the
Persons who are registered Holders at the close of business on the March 15 or
September 15 next preceding the interest payment date even if Securities are
canceled after the record date and on or before the interest payment
date.  Holders must surrender Securities to a Paying Agent to collect
principal payments.  The Company will pay principal and interest in
money of the United States of America that at the time of payment is legal
tender for payment of public and private debts.  Payments in respect
of the Securities represented by a Global Security (including principal and
interest) will be made by wire transfer of immediately available funds to the
accounts specified by the Depository.  The Company will make all
payments in respect of a Definitive Security (including principal and interest),
by mailing a check to the registered address of each Holder thereof; provided, however, that
payments on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).

     

    
      	
              3.  

            	
              Paying Agent and
      Registrar

            

    

     

    Initially,
U.S. Bank Trust National Association, a national banking association (the
"Trustee"), will act as Paying Agent and Registrar.  The Company may
appoint and change any Paying Agent, Registrar or co registrar without
notice.  The Company or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.

     

    
      	
              4.  

            	
              Indenture

            

    

     

    The
Company issued the Securities under an Indenture, dated as of April 4, 2008 (the
"Indenture"), between the Company and the Trustee.  The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§
77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA").  Terms defined in the Indenture and not defined in the
Securities have the meanings ascribed thereto in the Indenture.  The
Securities are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of those terms.

     

    The
Securities are unsubordinated, unsecured obligations of the
Company.  This Security is one of the Original Securities referred to
in the Indenture issued in an aggregate principal amount of
$600,000,000.  The Securities include the Original Securities, an
unlimited aggregate principal amount of additional Initial Securities that may
be issued under the Indenture, and any Exchange Securities issued in exchange
for Initial Securities.  The Original Securities, such additional
Initial Securities and the Exchange Securities are treated as a single class of
securities under the Indenture.  The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, create or incur Liens or Funded Debt. The Indenture also
imposes limitations on the ability of the Company to consolidate or merge with
or into any other Person or sell, transfer, assign, lease, convey or otherwise
dispose of all or substantially all of the property of the Company.

     

     

    
      	
              5.  

            	
              Optional
      Redemption

            

    

     

    The
Securities will be redeemable as a whole or in part, at the option of the
Company at any time, at a redemption price equal to the greater of (i) 100% of
the principal amount of such Securities and (ii) the sum of the present values
of the remaining scheduled payments of principal and interest thereon (exclusive
of interest accrued to the date of redemption) discounted to the redemption date
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 35 basis points, plus in each case accrued
interest thereon to the date of redemption.

     

    "Treasury
Rate" means, with respect to any redemption date, the rate per annum equal to
the semiannual equivalent yield to maturity or interpolated (on a day count
basis) of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.

     

    "Comparable
Treasury Issue" means the United States Treasury security or securities selected
by an Independent Investment Banker as having an actual or interpolated maturity
comparable to the remaining term of the Securities to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of a comparable
maturity to the remaining term of such Securities.

     

    "Independent
Investment Banker" means one of the Reference Treasury Dealers appointed by the
Trustee after consultation with the Company.

     

    "Comparable
Treasury Price" means, with respect to any redemption date, (A) the average of
the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.

     

    "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m. New York time on the third
Business Day preceding such redemption date.

     

    "Reference
Treasury Dealer" means each of Barclays Capital Inc., Deutsche Bank Securities
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and one other
broker-dealer appointed by the Company; or their respective affiliates which are
primary U.S. Government securities dealers, and their respective successors;
provided, however, that if any of the foregoing or their affiliates shall cease
to be a primary U.S. Government securities dealer in The City of New York (a
"Primary Treasury Dealer") or otherwise fails to provide a Reference Treasury
Dealer Quotation, the Company shall substitute therefor another Primary Treasury
Dealer.

     

    
      	
              6.  

            	
              Sinking
      Fund

            

    

     

    The
Securities are not subject to any sinking fund.

     

    
      	
              7.  

            	
              Notice of
      Redemption

            

    

     

    Notice
of redemption will be mailed by first-class mail at least 30 days but not more
than 60 days before the redemption date to each Holder of Securities to be
redeemed at his or her registered address.  Securities in
denominations larger than $2,000 may be redeemed in part but only in whole
multiples of $1,000.  If money sufficient to pay the redemption price
of and accrued interest on all Securities (or portions thereof) to be redeemed
on the redemption date is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after such
date interest ceases to accrue on such Securities (or such portions thereof)
called for redemption.

     

    
      	
              8.  

            	
              Repurchase of
      Securities at the Option of Holders upon Change of
      Control

            

    

     

    If
a Change of Control Repurchase Event occurs with respect to the Securities,
unless the Company has exercised its right to redeem the Securities as described
above, the Company will make an offer to each Holder of the Securities to
repurchase all or any part (in integral multiples of $1,000) of that Holder's
Securities at a repurchase price (the "Repurchase Price") in cash equal to 101%
of the aggregate principal amount of such Securities repurchased plus any
accrued and unpaid interest on the Securities repurchased to, but not including,
the Repurchase Date. A "Change of Control Repurchase Event" means the occurrence
of both a Change of Control and a Below Investment Grade Ratings Event with
respect to the Securities, each of which is defined in the Indenture. Within 30
days following a Change of Control Repurchase Event or, at the Company's option,
prior to a Change of Control, but after the public announcement of a Change of
Control, the Company will mail, or cause to be mailed, a notice to each Holder
of the Securities, with a copy to the Trustee, describing the transaction or
transactions that constitute or may constitute the Change of Control Repurchase
Event and offering to repurchase the Securities on the payment date specified in
the notice (such offer the "Repurchase Offer" and such date the "Repurchase
Date"), which Repurchase Date will be no earlier than 30 days and no later than
60 days from the date such notice is mailed. The notice shall, if mailed prior
to the date of consummation of the Change of Control, state that the Repurchase
Offer is conditioned on a Change of Control Repurchase Event occurring on or
prior to the Repurchase Date.

     

    The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act,
and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with the repurchase of the
Securities as a result of a Change of Control Repurchase Event. To the extent
that the provisions of any securities laws or regulations conflict with the
Change of Control Repurchase Event provisions of the Securities, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the Change of Control Repurchase
Event provisions of the Securities by virtue of such conflict.

     

    On
the Repurchase Date following a Change of Control Repurchase Event, the Company
will, to the extent lawful:

     

    (1)   
accept for payment all Securities or
portions of Securities properly tendered pursuant to the Repurchase
Offer;

     

    (2)   
deposit with the Trustee or with such
paying agent as the Trustee
may designate (the "Paying Agent") an amount equal to the aggregate Repurchase
Price for all Securities or portions of Securities properly tendered;
and

     

    (3)  deliver, or cause to be delivered, to
the Trustee the Securities properly accepted, together with an Officers'
Certificate stating the aggregate principal amount of Securities being
repurchased by the Company pursuant to the Repurchase Offer and that all
conditions precedent to the repurchase by the Company of Securities pursuant
to the Repurchase offer have been complied
with.

     

    The
Trustee will promptly mail, or cause the Paying Agent promptly to mail, to each
Holder of Securities, or portions of Securities, properly tendered the
Repurchase Price for such Securities, or portions of Securities, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book-entry)
to each Holder a new Security equal in principal amount to any unpurchased
portion of any Securities surrendered, as applicable; provided that each new
Security will be in a principal amount of an integral multiple of
$1,000.

     

    The
Company will not be required to make a Repurchase Offer upon a Change of Control
Repurchase Event if a third party makes such an offer in the manner, at the
times and otherwise in compliance with the requirements for such an offer made
by the Company and such third party purchases all Securities or portions of
Securities properly tendered and not withdrawn under its offer.

     

    The
Company may not have sufficient funds to repurchase all Securities or portions
of Securities properly tendered upon a Change of Control Repurchase
Event.

     

    
      	
              9.  

            	
              Denominations;
      Transfer; Exchange

            

    

     

    The
Securities are in registered form without coupons in denominations of $2,000 and
whole multiples of $1,000.  A Holder may transfer or exchange
Securities in accordance with the Indenture.  Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture.  The Registrar
need not register the transfer of or exchange any Securities selected for
redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or to transfer or exchange any
Securities for a period of 15 days prior to a selection of Securities to be
redeemed or 15 days before an Interest Payment Date.

     

    
      	
              10.  

            	
              Persons Deemed
      Owners

            

    

     

    The
registered Holder of this Security may be treated as the owner of it for all
purposes.

     

    
      	
              11.  

            	
              Unclaimed
      Money

            

    

     

    If
money for the payment of principal or interest remains unclaimed for two years,
the Trustee or Paying Agent shall pay the money back to the Company at its
written request unless an abandoned property law designates another
Person.  After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.

     

    
      	
              12.  

            	
              Discharge

            

    

     

    Subject
to certain conditions, the Company at any time may terminate its obligations
under the Securities and the Indenture if the Company deposits with the Trustee
money or U.S. Government Obligations for the payment of principal and interest
on the Securities to redemption or maturity, as the case may be.

     

    
      	
              13.  

            	
              Amendment,
      Waiver

            

    

     

    The
Indenture contains provisions permitting the Company and the Trustee, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities affected, to execute supplemental indentures for the
purpose of adding any provisions to the Indenture or of modifying in any manner
the rights of the Holders of the Security; provided, however, that no such
supplemental indenture shall (i) change the Stated Maturity of the principal of,
or any installment of principal of or interest on, any Security, or reduce the
principal amount thereof or any premium payable upon the redemption thereof or
the rate of interest thereon, or reduce the amount of principal of an OID
Security that would be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 6.02 of the Indenture, or change any Place
of Payment where, or the coin or currency in which, any Security (or premium, if
any, thereon) or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the redemption
date); or (ii) reduce the percentage in principal amount of the Outstanding
Securities, the Holders of which are required to consent to any such
supplemental indenture or to any waiver of compliance with certain provisions or
certain defaults thereunder and their consequences provided for in the
Indenture; or (iii) modify any of the provisions of the Indenture relating to
supplemental indentures that require consent of Holders, the waiver of past
defaults or the waiver of certain covenants, except to increase any such
percentage or to provide that certain other provisions of the Indenture cannot
be modified or waived, without the consent of the Holders of each Outstanding
Security affected thereby, provided, however, that the consent of the Holders
shall not be required with respect to changes in the references to "the Trustee"
in Sections 9.02 and 4.09 of the Indenture or with respect to the deletion of
this proviso from the Indenture, in accordance with Sections 7.08 and 9.01(b) of
the Indenture.  The Indenture also contains provisions permitting the
Holders of not less than a majority in principal amount of the Outstanding
Securities affected thereby, on behalf of all of the Holders of the Securities,
to waive any past Default under the Indenture with respect to the Securities,
and its consequences, except a Default in the payment of the principal of, or
premium, if any, or interest on any Security or a Default in respect of a
covenant or provision of the Indenture which cannot be modified or amended
without the consent of the Holder of each Outstanding Security
affected.  Any such consent or waiver by the registered Holder of this
Security (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this Security
and of any Security issued in exchange therefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.

     

    
      	
              14.  

            	
              Defaults and
      Remedies

            

    

     

    If
an Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in aggregate principal amount of the Securities then outstanding,
subject to certain limitations, may declare all the Securities to be immediately
due and payable.  Certain events of bankruptcy or insolvency are
Events of Default and shall result in the Securities being immediately due and
payable upon the occurrence of such Events of Default without any further act of
the Trustee or any Holder.

     

    Holders
of Securities may not enforce the Indenture or the Securities except as provided
in the Indenture.  The Trustee may refuse to enforce the Indenture or
the Securities unless it receives indemnity or security satisfactory to
it.  Subject to certain limitations, Holders of a majority in
aggregate principal amount of the Securities then outstanding may direct the
Trustee in its exercise of any trust or power under the
Indenture.  The Holders of a majority in aggregate principal amount of
the Securities then outstanding, by written notice to the Company and the
Trustee, may rescind any declaration of acceleration and its consequences if the
rescission would not conflict with any judgment or decree, and if all existing
Events of Default have been cured or waived except nonpayment of principal,
premium or interest that has become due solely because of the
acceleration.

     

    
      	
              15.  

            	
              Trustee Dealings with
      the Company

            

    

     

    Subject
to certain limitations imposed by the TIA,  the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not
Trustee.

     

    
      	
              16.  

            	
              No Recourse Against
      Others

            

    

     

    A
director, officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation.  By accepting a Security, each
Securityholder waives and releases all such liability.  The waiver and
release are part of the consideration for the issue of the
Securities.

     

    
      	
              17.  

            	
              Successors

            

    

     

    Subject
to certain exceptions set forth in the Indenture, when a successor assumes all
the obligations of its predecessor under the Securities and the Indenture in
accordance with the terms of the Indenture, the predecessor will be released
from those obligations.

     

    
      	
              18.  

            	
              Authentication

            

    

     

    This
Security shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the
other side of this Security.

     

    
      	
              19.  

            	
              Abbreviations

            

    

     

    Customary
abbreviations may be used in the name of a Securityholder or an assignee, such
as TEN COM (=tenants in common), TENENT (=tenants by the entireties), JT TEN
(=joint tenants with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

     

    
      	
              20.  

            	
              Governing
      Law

            

    

     

    THIS
SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW.

     

    
      	
              21.  

            	
              CUSIP
      Numbers

            

    

     

    Pursuant
to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company has caused CUSIP numbers to be printed on
the Securities and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Holders.  No representation is made as
to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

     

    The
Company will furnish to any Holder upon written request and without charge to
the Holder a copy of the Indenture which has in it the text of this
Security.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ASSIGNMENT
FORM

     

    To
assign this Security, fill in the form below:

     

    I
or we assign and transfer this Security to

     

    (Print
or type assignee's name, address and zip code)

     

    (Insert
assignee's soc. sec. or tax I.D. No.)

     

    and
irrevocably
appoint                          as
agent to transfer this Security on the books of the Company.  The
agent may substitute another to act for him.

     

    ____________________________________________________________

     

    Date:
________________ Your Signature: _____________________

     

    ____________________________________________________________

     

    Sign
exactly as your name appears on the other side of this Security.

     

    In
connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(d)(1)(i) under the Securities Act after the later of the date of original
issuance of such Securities and the last date, if any, on which such Securities
were owned by the Company or any Affiliate of the Company, the undersigned
confirms that such Securities are being transferred in accordance with its
terms:

     

    CHECK
ONE BOX BELOW

     

    
      	
              (1)

            	
              □

            	
              to
      the Company; or

              
              

            
	
              (2)

            	
              □

            	
              pursuant
      to an effective registration statement under the Securities Act of 1933;
      or

              
              

            
	
              (3)

            	
              □

            	
              inside
      the United States to a "qualified institutional buyer" (as defined in Rule
      144A under the Securities Act of 1933) that purchases for its own account
      or for the account of a qualified institutional buyer to whom notice is
      given that such transfer is being made in reliance on Rule 144A, in each
      case pursuant to and in compliance with Rule 144A under the Securities Act
      of 1933; or

              
              

            
	
              (4)

            	
              □

            	
              outside
      the United States in an offshore transaction within the meaning of
      Regulation S under the Securities Act in compliance with Rule 904 under
      the Securities Act of 1933; or

              
              

            
	
              (5)

            	
              □

            	
              to
      an institutional "accredited investor" (as defined in Rule 501(a)(1), (2),
      (3) or (7) under the Securities Act of 1933) that has furnished to the
      Trustee a signed letter containing certain representations and agreements
      (the form of which letter can be obtained from the Trustee or the
      Company); or

              
              

            
	
              (6)

            	
              □

            	
              pursuant
      to another available exemption from registration provided by Rule 144
      under the Securities Act of 1933.

            

    

    

    Unless
one of the boxes is checked, the Trustee will refuse to register any of the
Securities evidenced by this certificate in the name of any person other than
the registered holder thereof; provided, however, that if box  (5) or
(6) is checked, the Trustee may require, prior to registering any such transfer
of the Securities, such legal opinions, certifications and other information as
the Company has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933.

     

    
      	 
    	
              ____________________________

            
	 
    	
              Your
      Signature

            

    

    Signature
Guarantee:

    
      	
              Date:
      ________________________

            	
              ____________________________

            
	
              Signature
      must be guaranteed by a participant in a recognized signature guaranty
      medallion program or other signature guarantor acceptable to the
      Trustee

            	
              Signature
      of

              Signature
      Guarantee

            

    

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

     

    TO
BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.

     

    The
undersigned represents and warrants that it is purchasing this Security for its
own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

     

    
      	
              Dated:
      ________________________

            	
              _______________________________

            
	
              Signature
      must be guaranteed by a participant in a recognized signature guaranty
      medallion program or other signature guarantor acceptable to the
      Trustee

            	
              NOTICE:         To
      be executed by

              an executive
    officer

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
OF INCREASES OR DECREASES IN GLOBAL SECURITY

     

    The
initial principal amount of this Global Security is
$[  ].  The following increases or decreases in this Global
Security have been made:

     

    
      	
              Date
      of Exchange

            	
              Amount
      of decrease in Principal Amount of this Global Security

            	
              Amount
      of increase in Principal Amount of this Global Security

            	
              Principal
      amount of this Global Security following such decrease or
      increase

            	
              Signature
      of authorized signatory of Trustee or Securities
  Custodian

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    OPTION
OF HOLDER TO ELECT PURCHASE

     

    If
you want to elect to have this Security purchased by the Company pursuant to
Section 4.12 (Change of Control) of the Indenture, check the box:

     

    /    /

     

    If
you want to elect to have only part of this Security purchased by the Company
pursuant to Section 4.12 of the Indenture, state the amount:

     

    $

     

    
      	
              Date:
      __________________

            	
              Your
      Signature: ______________________

            

    

    (Sign
exactly as your name appears on the other side of the Security)

     

    
      	
              Signature
      Guarantee:

            	
               

            	 
	 
    	
              Signature
      must be guaranteed by a participant in a recognized signature guaranty
      medallion program or other signature guarantor acceptable to the
      Trustee.cd10-1.htm

     

    Exhibit
10.1

     

     

    TRANSITION AND SEPARATION
AGREEMENT

    

    

    This TRANSITION AND SEPARATION
AGREEMENT (“Agreement”), dated April 7, 2008, is entered into by and between
CHURCHILL DOWNS INCORPORATED and C. KENNETH DUNN  (“Ken”) (together
the “Parties”).

    

    WHEREAS, Ken is employed by Churchill
Downs Incorporated and certain of its subsidiaries (collectively, “Churchill
Downs”) on an at-will basis.

    

    WHEREAS, the Parties have decided
mutually to terminate Ken's at-will employment relationship with Churchill Downs
as of close of business on August
1, 2008, and that
such termination shall constitute a "Job Elimination" as defined in the
Churchill Downs Executive Severance Policy (the actual termination date
hereinafter referred to as the "Separation Date").

    

    WHEREAS, the Parties desire to finalize
their arrangements for Ken's employment transition and to resolve, fully and
finally, all outstanding matters between them.

    

    NOW THEREFORE, in consideration of the
mutual covenants and agreements set forth hereinafter, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties intending to be legally bound, hereby agree as
follows:

    

    PARAGRAPH
1.                EMPLOYMENT
TRANSITION AND SEPARATION.

    

    Ken acknowledges and represents that as
of the date of this Agreement, he has fully complied with all policies and
procedures and codes of conduct of Churchill Downs.  Pursuant to this
Agreement, Ken's separation from Churchill Downs shall be effective as of the
Separation Date. The period between the date of this Agreement and the
Separation Date shall be the "Transition Period."  During the
Transition Period, Ken will perform such duties as defined by the Executive Vice
President of Racing Operations for Churchill Downs Incorporated. During the
Transition Period, Ken agrees that he will fully comply with all policies and
procedures and codes of conduct of Churchill Downs, will perform his employment
duties in good faith, using his best efforts and to the reasonable satisfaction
of the Executive Vice President of Racing Operations for Churchill Downs
Incorporated; Ken's employment duties will be generally consistent with the
employment duties for which Ken is presently responsible.  Any
material breach of this section or of Ken's obligations to Churchill Downs will
be considered a material breach of this Agreement and Ken will not be entitled
to any part of the Completion Bonus, the benefits set forth in Paragraph 2 below
or the pro-rated  Incentive
Compensation Plan  (ICP) bonus 

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    set forth in Paragraph 3(c)
below.  In the
event of any material breach of this section or Ken's obligations to Churchill
Downs, Churchill Downs agrees to provide written notice of such material breach
to Ken, and Ken will have a period of five (5) business days from receipt of
such notice within which to cure any such material breach, if such breach is
curable, as determined by Churchill Downs.  In consideration of
Ken’s compliance with the obligations set forth in this Paragraph 1 and his full
waiver and release of all claims set forth in the attached Waiver and General
Release (the "Release") and the other agreements and covenants contained herein,
Churchill Downs will pay to Ken,
in a lump sum payment, THREE HUNDRED TEN THOUSAND and 00/100s DOLLARS
($310,000.00) (the
“Completion Bonus” amount) less deductions required by law or otherwise
authorized by Ken.  Such payment will be made on the same
terms as the Severance
Amount set forth in Paragraph 2(a) of this Agreement.

    

    PARAGRAPH
2.        SEVERANCE PACKAGE.

    

    For and in consideration of the
promises by Ken in this Agreement and the Release attached hereto, the
sufficiency of which Churchill Downs hereby acknowledges, and in lieu of any
compensation and benefits to which Ken may otherwise claim to be entitled based
upon his employment with Churchill Downs, including, but not limited to any
benefits pursuant to the Churchill Downs Executive Severance Policy, Churchill
Downs agrees that it will do the following for Ken, to which he is not otherwise
entitled:

    

    (a)           Churchill
Downs will pay to Ken the gross amount of ONE HUNDRED TWENTY-FIVE THOUSAND
ONE-HUNDRED SEVENTEEN and 00/100s DOLLARS ($125,117.00) (an amount equal to
twenty-six (26) weeks salary) (“the Severance Amount”).  The
payment of the Severance Amount will be made in a lump sum payment, less
deductions required by law or otherwise authorized by Ken, by mailing same to
him at his home address within ten (10) days following the effective date of the
Release and following receipt by Churchill Downs of the Agreement and the
Release, both fully executed by Ken, it being understood that no payment under
this Paragraph 2(a) will be made to Ken until the expiration of the seven (7)
day revocation period set forth in Section 2.b. of the Release.

    

    (b)           Churchill Downs will pay the monthly
premium for Ken for
his current group health care plan,
including the group dental plan, on the same terms and conditions as such health
care plan, including the group dental plan, are currently provided from the effective date of
the Release through February 28, 2010, (or until Ken becomes covered under
another health care plan, whichever first occurs) provided Ken makes a timely COBRA continuation
election following the effective date of his separation of employment with Churchill
Downs.  Such COBRA continuation coverage will be offered to
Ken on the same basis as
such coverage is offered to any other eligible employee. The 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    coverage afforded Ken under COBRA will
be on the same basis as such coverage is afforded to other employees under COBRA
pursuant to the health insurance plan of Churchill Downs.

    

    (c)           In lieu of any outplacement services,
Churchill Downs will
pay to Ken the gross amount
of EIGHT THOUSAND AND 00/100s DOLLARS ($8,000.00), which amount will be made on
the same terms as the Severance Amount set forth in Paragraph 2(a) of this
Agreement.

    

    (d)           As of the Separation Date, the Parties
acknowledge that Ken shall be entitled to 5,480 shares of Churchill Downs common
stock pursuant to his Restricted Stock Agreement, dated November 9, 2005, and
Restricted Stock Agreement, dated November 26, 2004, which shares will be
delivered on the same terms
as the Severance
Amount set forth in Paragraph 2(a) of this Agreement.

    

    PARAGRAPH
3.       OTHER PAYMENTS.

    

    (a)           Between
the execution date of this Agreement and Ken’s last day of employment, Ken will
be paid at his current salary and on the same basis as he is presently being
paid.

    

    (b)           Ken will be paid for all accrued but
unused PTO days within ten (10) days following the Separation Date.

    

    (c)           Ken will be paid a pro-rated Incentive
Compensation Plan (ICP) bonus at the Target Discretionary Goal (as defined in
the ICP) for the period January 1, 2008 through August 1, 2008.  The
pro-rated ICP bonus will be  FIFTY-EIGHT THOUSAND THREE HUNDRED
EIGHTY-EIGHT AND 00/100s DOLLARS ($58,388.00). Such payment will be made on the same
terms as the Severance
Amount set forth in Paragraph 2(a) of this Agreement.

    

    (d)           Pursuant to Paragraph 13, any amounts
payable to Ken pursuant to Ken's Deferred Compensation Account, Post 2004 shall
be delayed for a period of six months from the Separation Date pursuant to the
terms of Churchill Downs
Incorporated Deferred Compensation Plan (As Amended and Restated Effective
November 14, 2007).

    

    (e)           As of the Separation Date, Ken shall no
longer be provided with use of his Churchill Downs provided automobile or any
automobile allowance, and shall no longer be eligible for reimbursement received
from Churchill Downs for club dues or professional
memberships.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    PARAGRAPH
4.          RELEASE; OTHER
OBLIGATIONS.

    

    In
consideration of the promises made by Churchill Downs in Paragraph 1 of this
Agreement, the sufficiency of which Ken hereby acknowledges, Ken agrees as
follows:

    

    (a)           Ken
understands and agrees that he will sign the attached Release no earlier than
the Separation Date and that he may review and consider the Release in
accordance with the terms and conditions specified therein.

    

    (b)           Ken
agrees to return to Churchill Downs all property of Churchill Downs in his
possession, including but not limited to, Churchill Downs credit cards, cellular
telephone, keys for any facility of any of the Released Parties, facility access
cards, leased vehicle, all records, electronic files, documents, computers,
software, computer discs, financial information, information regarding the
business of Churchill Downs, and any other similar proprietary and confidential
information, or any other property of the Released Parties (as defined in the
Release) in his possession or control as a result of his employment with
Churchill Downs, and Ken represents that he has delivered all of said property
to Churchill Downs as of the Separation Date.

    

    (c)           Ken
also agrees that he will not assist or participate in any way in any claim
brought by any current or former employee of the Released Parties, except as
required by law.

    

    (d)           Each party (meaning, in the case of
Churchill Downs, its current officers) further agrees not to make any negative or
derogatory statements to any persons regarding the other party hereto, Ken’s employment with Churchill Downs or
his separation from employment with
Churchill Downs.  Each party (meaning, in the case of
Churchill Downs, its current officers) agrees not to do or say anything that a
reasonable person would expect to diminish or constrain the good will and good
reputation of the other party hereto.  Ken understands and acknowledges that
his agreement under the two
immediately preceding
sentences of this Paragraph 4(d) extends to the Released
Parties. Churchill Downs and
Ken will mutually agree to the content of
any press release or public communication
(other than the Form 8-K) regarding the separation of employment of Ken with
Churchill Downs.

    

    (e)           The
Parties further understand that it shall be an unlawful practice, judicially
enforceable, for a party to this Agreement to violate the terms hereof, and that
this document may be used in evidence by either party in any action for
enforcement of any provision of this Agreement.  If suit is brought by
Ken or Churchill 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Downs
for breach of the Agreement or to enforce the terms of the Agreement, it is
hereby expressly agreed the unsuccessful party shall be liable for damages,
court costs and reasonable attorney’s fees incurred by the prevailing party in
the successful enforcement, in whole or in part, of this Agreement.

    

    (f)           It
is understood that Paragraphs 4(c) and 4(d) are material elements of
this Agreement and are material consideration for Ken and Churchill Downs to
enter into this Agreement.  Ken acknowledges that a breach of Paragraph 4(c)
or 4(d) will result in irreparable injury to Churchill Downs and Churchill Downs
acknowledges that a breach of 4(d) will result in irreparable injury to
Ken.  Therefore, Ken and Churchill Downs each consents and agrees
that, for any violation of Paragraph 4(c) or 4(d) of this Agreement, the rights
of Ken or Churchill Downs under the terms of this Agreement may be specifically
enforced with injunctive relief.  This remedy shall be in addition to
the right of Ken or Churchill Downs to pursue any other available legal and
equitable remedies, including the recovery of damages.

    

    
      PARAGRAPH
5.    
COVENANT
NOT TO DISCLOSE COMPANY 

      CONFIDENTIAL
INFORMATION.

    

    

    Ken acknowledges that by reason of his
employment with Churchill Downs, he was provided with or has otherwise become
aware of (i) information relating to those who do business with Churchill Downs
and the nature of their business, and the business and operations of Churchill
Downs generally; (ii) administrative and corporate matters of every kind and
character of Churchill Downs; and (iii) administrative and corporate matters
between Churchill Downs and its customers, vendors and others, which constitute
trade secrets, or confidential or proprietary information (hereafter
collectively referred to as “Confidential Information”) and the sole and
exclusive property of Churchill Downs, and that the disclosure or use hereof by
Ken to the detriment of Churchill Downs would be unfair and injurious to
Churchill Downs and would merit injunctive relief.

    

    Accordingly, all Confidential
Information of Churchill Downs not otherwise publicly available, including but
not limited to, customer names and addresses; employee names and addresses;
lists or compilations of customers of Churchill Downs of any kind made by Ken or
provided to Ken during his employment with Churchill Downs; information of any
kind and in whatever form recorded regarding the operations of Churchill Downs
not generally known by or available to the public; transactions or business
dealings between Churchill Downs and persons or entities with which Churchill
Downs had or has business dealings; administrative and corporate information;
Board of Directors information; matters relating to Churchill Downs’s
information regarding short-term and long-term business plans and goals and
strategies; information regarding personnel and management salaries and pay
practices; corporate profitability, purchases 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    and
sales; and procedural manuals which became known to Ken during his employment
with Churchill Downs, and whether such Confidential Information came to be known
by Ken orally, visually or in writing, shall remain the sole and exclusive
Confidential Information of Churchill Downs.  Except as authorized by
Churchill Downs, Ken agrees not to use, at any time subsequent to his separation
from employment, any such Confidential Information for any purpose whatsoever
and Ken further agrees not to, and shall not, disclose any such Confidential
Information to any party who is not a party to this
Agreement.  Subject to Paragraph 6 below, Churchill Downs acknowledges that the
foregoing is not intended to prohibit Ken from obtaining employment or otherwise
working in the industry so long as Confidential Information is not disclosed in
violation of this Agreement.

    

    PARAGRAPH
6.           NON-COMPETITION

    

    Due to Ken’s specific knowledge of the
business and proprietary and confidential information of Churchill Downs, Ken
agrees that for a period of two (2)  years beginning with the day
following his last day of employment with Churchill Downs (the “Non-Competition
Period”), Ken will not, either directly or indirectly, provide services in any
form as an employee, independent contractor, consultant, advisor, or in any
other capacity, or provide capital or financial assistance of any kind, to the
following businesses and organizations: Gulfstream Park Racing & Casino,
Hallandale, Florida; Hawthorne Race Course, Chicago, Illinois; Florida Horsemen’s
Benevolent & Protective
Association Inc.; The
Horsemen’s Group; National
HBPA; and any group
representing horsemen’s interests at a particular track (the "Restricted
Businesses").  Ken further agrees that for the duration of the
Non-Competition Period, he will inform Churchill Downs in writing of his
accepting employment with, or becoming an independent contractor, consultant,
advisor or investor of, any of the Restricted Businesses and, under such
circumstances, Ken hereby expressly authorizes Churchill Downs to present a copy
of this Agreement to any such entity.

    

                          Ken further agrees that for the duration
of the Non-Competition Period he will not, either directly or indirectly, on his
own behalf or in the service or on behalf of others, solicit, divert or hire
away, or attempt to solicit, divert or hire away, any person employed by
Churchill Downs on or at any time after the last day of Ken’s employment with
Churchill Downs, to any business that either currently or at any time during the
Non-Competition Period engages in any business activity which is the same as or
competitive with any activity engaged in by Churchill Downs on or prior to the
termination of Ken’s employment with Churchill Downs.  The foregoing is not intended to
preclude any company from hiring any employee or former employee of Churchill
Downs so long as such hiring is not the result of a violation by Ken of the
agreement not to solicit set forth herein.

    
 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

                          Ken hereby acknowledges and agrees that
the nature and extent of the restrictions upon him are reasonable in time, scope
and territory, that such restrictions are designed to eliminate competition
which would be unfair to Churchill Downs, that such restrictions are required to
protect the legitimate interests of the Churchill Downs, and that such
restrictions do not confer a benefit upon Churchill Downs disproportionate to
any detriment to Ken. Ken represents, stipulates and acknowledges that his
experience and capabilities are such that the provisions of this
Paragraph 6 will not
prevent him from earning a livelihood.

    

    PARAGRAPH
7.           SEVERANCE
FROM EMPLOYMENT.

    

    Ken acknowledges and agrees that his
employment with Churchill Downs will be permanently, completely and
unequivocally severed as of close of business on  August 1,
2008.  Ken also acknowledges and agrees that neither Churchill Downs
nor the Released Parties has any obligation, contractual or otherwise, to
rehire, recall, reemploy, or consider Ken for employment in the future subject
to applicable law.  Ken agrees and acknowledges that execution of this
Agreement shall constitute a legitimate, non-discriminatory reason for the
refusal to hire him for employment in the future.  The Parties acknowledge and agree that
the Agreement and obligations of Ken hereunder are expressly conditioned upon
the complete and timely payment by Churchill Downs to Ken of all amounts due as
provided herein.

    

    PARAGRAPH 8.           
EQUITABLE
RELIEF.

    

    Ken and Churchill Downs each acknowledges,
stipulates and agrees that irreparable injury will result to the other in the event of a breach of any of the
covenants or agreements contained in this Agreement by Ken or Churchill
Downs.  Therefore, Ken and Churchill Downs each agrees that in
the event of any breach by the other of any of the covenants or agreements
contained in this Agreement, the non-breaching party shall be entitled, in
addition to any other remedies available to either party, to equitable relief in the form
of an injunction or otherwise to restrain any such
breach.  Nothing contained in this Agreement shall in any way be
construed as limiting the remedies of Ken or Churchill Downs in any way, but
rather, the remedies of Ken and Churchill Downs, both in law and in
equity, shall be cumulative.

    

    PARAGRAPH
9.         CHOICE OF
LAW.

    

    This Agreement will be interpreted and
enforced in accordance with the laws of the State of Florida.  Ken
agrees to waive any argument of lack of personal jurisdiction or forum non
conveniens with respect to any claim or controversy arising out of 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    or
relating to this Agreement, his employment, terms and conditions of employment,
separation from employment with Churchill Downs, and any other event,
transaction, contact or communication involving Ken and Churchill
Downs.  Ken consents to the exclusive jurisdiction of courts located
in or for Dade County, Florida with respect to all matters relating to this
Agreement.  If any court holds any provision of this Agreement or the
application of the provision to any person or circumstance invalid, the
remaining provisions of this Agreement, and the application of the provision to
persons or circumstances other than those to which it is held invalid, shall not
be affected.

    

    PARAGRAPH 10.        NON-ADMISSION
STATEMENT.

    

    Ken,
Churchill Downs and the Released Parties agree that this Agreement does not
constitute an admission of any liability, violation of law or wrongdoing of any
kind or nature whatsoever on the part of Churchill Downs or the Released Parties,
but is simply a means of resolving uncertain disputes and claims between the
parties.

    

    PARAGRAPH
11.        BINDING
EFFECT.

    

    The rights and obligations of Churchill
Downs under this Agreement shall inure to the benefit of Churchill Downs, and
the successors and assigns of Churchill Downs, and shall be binding upon the
successors and assigns of Churchill Downs and Ken.  This Agreement,
being personal to Ken, cannot be assigned by Ken, however, the obligations of Churchill
Downs shall not terminate in the event of Ken's death.

    

    PARAGRAPH
12.        ENTIRE
AGREEMENT.

    

    This TRANSITION AND SEPARATION
AGREEMENT sets forth the entire agreement between Ken and Churchill Downs and
supersedes any and all prior and contemporaneous oral or written agreements or
understandings between the Parties.  No representation, promise,
inducement or statement of intention has been made by any party or attorney that
is not embodied in this Agreement.  No party shall be bound by or
liable for any alleged representation, promise, inducement, or statement of
intention not contained in this Agreement.  This Agreement cannot be
amended, modified or supplemented in any respect except by a subsequent written
agreement signed by all Parties.

    

    PARAGRAPH
13.        SECTION 409A.

    

    It is intended that this Agreement
shall comply with the provisions of section 409A of the Internal Revenue Code of
1986, as amended (the "Code") and the Treasury Regulations relating thereto so
as not to subject Ken to the payment of additional taxes and interest under
section 409A of the Code.  In furtherance of this intent, this

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Agreement
shall be interpreted, operated, and administered in a manner consistent with
these intentions, and to the extent that any regulations or other guidance
issued under section 409A of the Code would result in Ken being subject to
payment of additional income taxes or interest under section 409A of the Code,
Ken and Churchill Downs agree to amend this Agreement in order to avoid the
application of such taxes or interest under section 409A of the
Code.  Notwithstanding anything herein to the contrary, unless termination of Ken
from his employment constitutes a "separation from service"
under Section 409A of the Code any amounts payable
hereunder that is subject to Section 409A of the Code may not be made
earlier than the date which is 6
months after the date of separation from service (or, if earlier, Ken's date of
death).

    

    PARAGRAPH
14.        KNOWING AND VOLUNTARY WAIVER
OF RIGHTS.

    

    Ken acknowledges that he has read and
fully understands all of the provisions of this Agreement, that he fully
understands the terms, conditions and significance of this Agreement, that he
has had ample time to consider this Agreement, that he has had a full
opportunity to review this Agreement with an attorney, and that he has executed
this Agreement, voluntarily, knowingly and with such advice from his attorney as
he deemed appropriate.

    

    

    
      
        
          

        

    

    

    

    

    
      

     

    
      
        	
                DATE:

              	
                April
      7, 2008

              
	 
    	 
    
	 
    	 
    
	
                STATE
      OF FLORIDA

              	
                )

              
	 
    	
                )  SS:

              
	
                COUNTY
      OF Miami Dade

              	
                )

              

      

    

     

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
 

    Subscribed and sworn to before me by
Ken on April 7, 2008.

     

    
      
        
          

          
            	
                    

                  	
                    

                  
	
                     

                  

          

        

         

         

        
          

          
            	
                     

                  	
                    CHURCHILL
      DOWNS INCORPORATED

                     

                     

                    

                  

          

        

      

      
      

      

    

    

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    ATTACHMENT
A

    

    WAIVER AND GENERAL
RELEASE

    

     

    1.           WAIVER AND RELEASE OF ALL
CLAIMS.  In consideration of the Completion Bonus and the
Severance Amount made pursuant to Paragraphs 1 and 2 of the Transition and
Separation Agreement (the "Agreement"), dated April __, 2008, by and between, C.
Kenneth Dunn ("Ken") and CHURCHILL DOWNS INCORPORATED (“Churchill Downs”), the
sufficiency of which Ken hereby acknowledges, Ken agrees as
follows:

    

    a.           Ken
agrees to, and does hereby, release Churchill Downs from any and all legal and
equitable claims which he has, or may have, arising out of his employment, terms
and conditions of employment, or separation from employment with Churchill
Downs, as of the date of the Agreement, excluding matters arising under the
Agreement.  Specifically, Ken hereby forever releases, acquits, holds
harmless, and discharges Churchill Downs and any parent, subsidiaries, divisions
and related corporations, partnerships, limited liability companies, insurers,
successors and predecessor entities and each of their respective current or
former directors, officers, shareholders, assigns, successors, attorneys,
agents, representatives and employees, and former employees (collectively, with
Churchill Downs, the “Released Parties”), from any and all claims, demands,
actions and causes of action, obligations, damages, costs or expenses (including
attorneys’ fees), known or unknown, contingent or otherwise, and whether
specifically mentioned herein or not, that Ken now has or has had or which may
exist or which might be claimed to exist at or prior to the date of this
Agreement, including, but not limited to, any and all claims or suits against
the Released Parties, including claims arising out of Ken’s employment, terms
and conditions of employment, or separation from employment with Churchill Downs
(the "Release").

    

    b.           This Release includes, but is not
limited to, the release of any and all claims or charges of discrimination,
harassment, or retaliation filed, or which could have been filed against the
Released Parties by Ken with the federal courts, Kentucky state courts, other
state courts, the Equal Employment Opportunity Commission, the United States
Department of Labor, the Kentucky Labor Cabinet, the Kentucky Commission on
Human Rights, or any other state or local civil rights agency; claims or suits
under the following statutes, all as amended, the Fair Labor Standards Act of
1938; Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991;
the Civil Rights Act of 1866; the National Labor Relations Act, as amended; the
Age Discrimination in Employment Act of 1967 ("ADEA"), as amended by the Older
Workers Benefit Protection Act; the Americans with Disabilities Act; the Family
and Medical Leave Act of 1993; the Employee 

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Retirement Income Security Act of 1974;
the Federal Rehabilitation Act of 1973; the Whistleblower Protection Act; the
Kentucky Equal Opportunities Act, the Kentucky Workers Compensation Act, the
Kentucky Wages and Hours Act, Kentucky Labor and Human Rights Statute, KRS
Chapter 336, the Florida
Civil Rights Act of 1991, Section 760, Florida Statutes; Florida’s
Whistleblower’s Act, Section 448, Florida Statutes, the Florida Worker’s
Compensation Act, Section 440, Florida Statutes, any city, county or metro government
civil rights ordinance; and any other claims or demands arising under either
express or implied contract, breach of contract, tort, public policy, the common
law, or any federal, state or local statute, ordinance, regulation or
constitutional provision, or other liabilities, suits, debts, claims for back
pay, front pay, severance pay, compensatory or punitive damages, costs,
reinstatement, attorneys’ fees, commissions, bonuses, vacation pay, pension
benefits or payment or reimbursement under any health insurance or other
employee benefit plan (nothing contained herein is intended to constitute a
waiver of Ken’s vested benefits under any retirement plan or his right to apply
for unemployment benefits), or any other controversies of every kind and
description, known or unknown, contingent or otherwise, and whether specifically
mentioned herein or not, that Ken now has or has had, or which may exist or
might be claimed to exist at or prior to the date of this
Release.

     

    c.           Ken agrees, represents and warrants that
he is not aware of any person other than Ken who is authorized or entitled to assert
any claim based on or arising out of any alleged discriminatory, unlawful,
wrongful, tortious, or other conduct against Ken by the Released Parties including, but
not limited to, any and all claims for attorneys’ fees or damages resulting as a
consequence thereof, based upon or seeking relief on
account of actions or failures to act by the Released Parties which may have
occurred or failed to occur prior to Ken’s execution of this Release. Ken further represents and warrants that
he has not assigned and shall never assign
any such claim, and in the event any individual or agency of any kind shall make
or file, on behalf of Ken, any claim, charge, demand or suit
against the Released Parties on account of, by reason of, or arising out of
Ken’s employment, terms and conditions of
employment, or separation from employment with Churchill Downs, or any
other event, contact, communication or
transaction involving the
Released Parties, Ken hereby agrees to cooperate with the Released
Parties and take all action necessary, appropriate or desirable, and execute any
and all documents and papers necessary, appropriate or desirable, in the sole
discretion of the Released Parties, in seeking the dismissal of any such claim,
charge, demand or suit against the Released Parties.

     

    2.           WAIVER OF CLAIMS UNDER
ADEA.  Ken understands that as part of this Release he is
waiving his rights to pursue a claim against Churchill Downs for age
discrimination under the ADEA and thus acknowledges and agrees
that:

     

    a.      Ken has
been informed and understands and agrees that he has twenty-one (21) calendar
days after receipt of this Release to consider whether to sign it;

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    b.      Ken has
been informed and understands and agrees that he may change his mind and revoke
this Release at any time during the seven (7) calendar days after this Release
is signed, in which case none of the provisions of the Release or the Agreement
will have any effect.  Ken acknowledges and agrees that if he wishes
to revoke this Release, he must do so in writing, and that such revocation must
be signed by Ken and received by Charles G. Kenyon, Vice President of Human
Resources, Churchill Downs Incorporated no later than the seventh (7th) day
after Ken has signed the Release.  Ken acknowledges and agrees that,
in the event Ken revokes the Release, he shall have no right to receive the
Completion Bonus and the benefits payable pursuant to Paragraph 2 of the
Agreement provided therein.

     

    c.      Ken
agrees that prior to signing this
Release, he read and understood each and every provision of this
Release;

     

    d.      
Ken agrees that prior to signing this
Release, he had the opportunity to consult with an attorney of his choosing
regarding the effect of each and every provision of this Release.

     

    e.      Ken
acknowledges and agrees that he knowingly and voluntarily entered into this
Release with complete understanding of all relevant facts, and that he was
neither fraudulently induced nor coerced to enter into this
Release.

     

    f.      Ken
understands that he is not waiving, releasing or otherwise discharging any
claims under the ADEA that may arise after the date he signs this
Release.

     

    g.      Ken
acknowledges and agrees that the Completion Bonus and the benefits payable
pursuant to Paragraph 2 of the Agreement constitutes
consideration beyond that which he is otherwise entitled to receive and is
offered solely in exchange for his release and waiver of all claims as set forth
herein.

     

    3.      ACKNOWLEDGMENT.  Except
for the benefits set forth in Paragraphs 1-3 of the Agreement, Ken understands
and agrees that he shall not be entitled to receive any other compensation or
benefits of any sort from Churchill Downs or any of its officers, directors,
employees, agents, insurance companies, subsidiaries, successors or assigns at
any time.

     

    

     

    The
remainder of the page purposefully left blank. Please see signatures on next
page.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

     

    
      

      
        	 
      	 
      
	 
      	
                C. Kenneth Dunn

              
	 
      	 
      
	 
      	 
      
	 
      	
                Date

              

      

       

      
 

      
        	
                STATE
      OF FLORIDA

              	
                )

              	 
      
	 
      	
                )

              	
                SS:

              
	
                COUNTY
      OF _______________

              	
                )

              	 
      

      

       

    

     

    
      Subscribed and sworn to before me by
Ken on __________, 2008.

      

       

      
 

      
        	 
    	 
    
	 
    	
                Notary Public,

              	 
    
	 
    	 
    	 
    
	 
    	 
    	 
    
	 
    	
                My
      Commission Expires:

              	 
    
	 
    	 
    	 
    
	 
    	 
    	 
    
	 
    	
                CHURCHILL
      DOWNS INCORPORATED

              
	 
    	 
    	 
    
	 
    	
                DATE:

              	 
    
	 
    	 
    	 
    
	 
    	
                By:

              	 
    

      

      

    

     

     

     

     

    14

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