Document:

Robert Evans Employment Agreement

    EMPLOYMENT
      AGREEMENT

     

    EMPLOYMENT
      AGREEMENT (this “Agreement”),
      dated
      as of July 18, 2006 (the “Effective
      Date”),
      by
      and between Churchill Downs Incorporated, a Kentucky corporation (the
“Company”),
      and
      Robert L. Evans (“Executive”).

     

    WHEREAS,
      the Company desires to employ Executive and to enter into an agreement embodying
      the terms of such employment, and considers it to be in its best interests
      and
      in the best interests of its stockholders to employ Executive during the
      Employment Term (as defined in Section 1 below);

     

    WHEREAS,
      Executive desires to accept such employment with the Company and to enter into
      this Agreement; and

     

    WHEREAS,
      Executive is willing to accept employment on the terms hereinafter set forth
      in
      this Agreement.

     

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

     

    1. Term
      of Employment.
      Unless
      terminated earlier in accordance with the provisions of Section 7, Executive’s
      employment under this Agreement shall be effective for a term commencing on
      August 14, 2006 (the “Start
      Date”)
      and
      ending on the three (3) year anniversary of the Start Date (the “Employment
      Term”).
      Thereafter, the Employment Term shall be automatically extended for subsequent
      one (1)-year periods unless written notice to the contrary is given by either
      the Company or Executive within ninety (90) days prior to the expiration of
      the
      Employment Term or the expiration of any subsequent one (1)-year extension
      thereof. Notwithstanding this Section 1, the equity grants made pursuant to
      Section 5 of this Agreement shall be made as of the Effective Date.

     

    2. Position
      and Duties.

     

    (a) As
      of the
      Start Date, Executive shall serve as the Chief Executive Officer and President
      of the Company. In such position, Executive shall report directly to the Board
      (as defined in Section 10(c)) and have such authority, responsibilities, and
      duties customarily exercised by a person holding such position. The Company
      shall cause Executive to be appointed to the Board as of the Start Date and,
      during the Employment Term, to be nominated for election as a member of the
      Board as needed to maintain Executive’s position on the Board.

     

    (b) During
      the Employment Term, Executive will devote substantially all of his business
      time and best efforts to the performance of his duties. Executive
      may:

     

    (i) in
      addition to being a director of the Company and with the prior written approval
      of the Chairman of the Board, serve as a director or trustee of: (x) up to
      three
      (3) corporate or charitable entities and (y) trade or other associations related
      to the Company’s industry; and

     

    (ii) manage
      his personal investments; 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

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    to
      the
      extent that such activities do not materially inhibit or materially interfere
      with the performance of Executive’s duties under this Agreement.

     

    3. Base
      Salary.
      During
      the Employment Term, the Company shall pay Executive a base salary (the
“Base
      Salary”)
      at the
      annual rate of $450,000.00, payable in regular installments in accordance with
      the Company’s usual payroll practices. The Base Salary includes fees otherwise
      payable for his services for the Board. The Board shall review and may consider
      for increase (but not decrease) at any time Executive’s Base Salary in its sole
      discretion based on Executive’s performance.

     

    4. Incentive
      Compensation.
      Executive shall be eligible to participate in any annual or long-term, cash
      or
      equity based, incentive plan or other arrangements of the Company, as they
      exist
      from time-to-time. Executive shall first be eligible to participate in an annual
      performance bonus plan for the performance period commencing January 1, 2007,
      with a target bonus for such period at 75% of Base Salary. The Board shall
      determine Executive’s annual incentive plan participation for subsequent
      years.

     

    5. Equity
      Grants.

     

    (a) Restricted
      Stock Units.
      In
      accordance with the terms of that certain Restricted Stock Units Agreement
      between the Company and Executive of even date herewith, as of the Effective
      Date, the Company shall grant Executive 65,000 Restricted Stock Units (as
      defined in Section 10(r)). The Restricted Stock Units shall vest as
      follows:

     

    
      	
              Vesting
                Date

               

            	
              Number
                of Units to Vest

               

            
	
              September
                30, 2006

            	
              1,625

            
	
              December
                31,2006

            	
              3,250

            
	
              March
                31, 2007

            	
              3,250

            
	
              June
                30, 2007

            	
              3,250

            
	
              September
                30, 2007

            	
              3,250

            
	
              December
                31, 2007

            	
              3,250

            
	
              March
                31, 2008

            	
              3,250

            
	
              June
                30, 2008

            	
              3,250

            
	
              September
                30, 2008

            	
              3,250

            
	
              December
                31, 2008

            	
              3,250

            
	
              March
                31, 2009

            	
              3,250

            
	
              June
                30, 2009

            	
              3,250

            
	
              September
                30, 2009

            	
              3,250

            
	
              December
                31, 2009

            	
              3,250

            
	
              March
                31, 2010

            	
              3,250

            
	
              June
                30, 2010

            	
              3,250

            
	
              September
                30, 2010

            	
              3,250

            
	
              December
                31, 2010

            	
              3,250

            
	
              March
                31, 2011

            	
              3,250

            
	
              June
                30, 2011

            	
              3,250

            
	
              August
                14, 2011

            	
              1,625

            

    

    
       

      
        
          
          

        

        
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    (b) Restricted
      Shares.
      

     

    (i) In
      accordance with the terms of that certain Restricted Stock Agreement between
      the
      Company and Executive of even date herewith, as of the Effective Date and
      subject to shareholder approval, the Company shall grant Executive 90,000
      Restricted Shares of Common Stock which shall vest as follows upon the Fair
      Market Value (as defined in Section 10(m)) of a share of the Common Stock (as
      defined in Section 10(g)) reaching the following prices for ***
      (**)
      consecutive trading days on and after the Start Date; provided, however, that
      such ** (**)-trading day period occurs prior to a Termination of Employment
      (as
      defined in Section 10(u)), but subject to Section 7(b)
      below:

     

    
      	
              **
                Day Fair Market Value

              at
                or Above

               

            	
              Shares
                Vesting

               

            
	
              $**.**

               

            	
              22,500

               

            
	
              $**.**

               

            	
              22,500

               

            
	
              $**.**
                

               

            	
              22,500

               

            
	
              $**.**
                

               

            	
              22,500

               

            

    

    

    (ii) In
      accordance with the terms of that certain Restricted Stock Agreement between
      the
      Company and Executive of even date herewith, as of the Effective Date and
      subject to shareholder approval, the Company shall grant Executive 65,000
      Restricted Shares of Common Stock which shall vest upon the satisfaction of
      the
      requirements described in Subsections (1) and (2) below:

     

    (1) for
      **
      (**) consecutive trading days after the Start Date, the Fair Market Value of
      a
      share of the Common Stock being equal to or greater than *-*, * percent (***%)of
      the Fair Market Value of a share of Common Stock as of the Effective Date (the
      “Share
      Price Requirement”);
      and

     

    (2) for
      the
      applicable number of Restricted Shares per the schedule immediately below,
      the
      later of: (A) the corresponding vesting date as listed on the schedule below,
      or
      (B) the satisfaction of the Share Price Requirement; provided, however, that
      such vesting date or Share Price Requirement occurs prior to a Termination
      of
      Employment, but subject to Section  7(b) below:

     

    
      	
              Vesting
                Date

               

            	
              Shares
                Vesting

               

            
	
              September
                30, 2006

            	
              1,625

            
	
              December
                31, 2006

            	
              3,250

            
	
              March
                31, 2007

            	
              3,250

            
	
              June
                30, 2007

            	
              3,250

            

    

    

    _________________________

    *
      Confidential information omitted and filed separately with the Securities and
      Exchange Commission under a Confidential Treatment Request.

    
       

      
        
          
          

        

        
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              September
                30, 2007

            	
              3,250

            
	
              December
                31, 2007

            	
              3,250

            
	
              March
                31, 2008

            	
              3,250

            
	
              June
                30, 2008

            	
              3,250

            
	
              September
                30, 2008

            	
              3,250

            
	
              December
                31, 2008

            	
              3,250

            
	
              March
                31, 2009

            	
              3,250

            
	
              June
                30, 2009

            	
              3,250

            
	
              September
                30, 2009

            	
              3,250

            
	
              December
                31, 2009

            	
              3,250

            
	
              March
                31, 2010

            	
              3,250

            
	
              June
                30, 2010

            	
              3,250

            
	
              September
                30, 2010

            	
              3,250

            
	
              December
                31, 2010

            	
              3,250

            
	
              March
                31, 2011

            	
              3,250

            
	
              June
                30, 2011

            	
              3,250

            
	
              August
                14, 2011

            	
              1,625

            

    

    

    (c) Stock
      Options.
      In
      accordance with the terms of that certain Stock Option Agreement between the
      Company and Executive of even date herewith, as of the Effective Date and
      subject to shareholder approval, the Company shall grant Executive six (6)-year
      term Options (as defined in Section 10(p)) to purchase 130,000 shares of Common
      Stock with a per share exercise price equal to the Fair Market Value of a share
      of Common Stock as of the date of grant. Such Options shall vest as
      follows:

     

    
      	
              Vesting
                Date

               

            	
              Number
                of Options to Vest

               

            
	
              September
                30, 2006

            	
              5,417

            
	
              December
                31, 2006

            	
              10,833

            
	
              March
                31, 2007

            	
              10,833

            
	
              June
                30, 2007

            	
              10,833

            
	
              September
                30, 2007

            	
              10,833

            
	
              December
                31, 2007

            	
              10,833

            
	
              March
                31, 2008

            	
              10,833

            
	
              June
                30, 2008

            	
              10,833

            
	
              September
                30, 2008

            	
              10,833

            
	
              December
                31, 2008

            	
              10,834

            
	
              March
                31, 2009

            	
              10,834

            
	
              June
                30, 2009

            	
              10,834

            
	
              August
                14, 2009

            	
              5,417

            

    

    

    (d) Change
      in Control.
      In the
      event of a Change in Control during the Employment Term, Executive shall receive
      accelerated vesting of: (i) fifty percent (50%) of the then-unvested Restricted
      Stock Units granted pursuant to Section 5(a) above, (ii) fifty percent (50%)
      of
      the then-unvested Restricted Shares granted pursuant to Subsections 5(b)(i)
      and
      (ii) above, and (iii) fifty percent (50%) of the then-unvested Stock
      Options granted pursuant to Section 5(c) above. The Restricted Stock Units,
      Restricted Shares and Stock Options that are subject to accelerated vesting
      pursuant to this Section 5(d) shall be taken pro-rata from each then-unvested
      tranche of the applicable award, and the remaining portion of each tranche
      shall
      vest according to the original terms of the applicable award agreement, subject
      to potential accelerated vesting pursuant to Section 7(c) below. 

    
       

      
        
          
          

        

        
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    (e) Shareholder
      Approval.
      In the
      event shareholder approval of the awards granted pursuant to Subsection 5(b)(i),
      Subsection 5(b)(ii), and/or Section 5(c) above is not secured at or prior to
      the
      Company’s annual shareholders’ meeting in 2007 (the “2007
      Annual Meeting”),
      then:

     

    (i) the
      Company agrees to use its reasonable efforts to grant Executive a compensation
      arrangement of equivalent value; or

     

    (ii) by
      written notice delivered to the Company within the thirty (30)-day period
      immediately following the 2007 Annual Meeting, Executive may terminate his
      employment with the Company and receive, subject to Section 7(g), (A) a lump-sum
      cash payment equal to $400,000.00 and (B) the Accrued Obligations (as defined
      in
      Section 7(a) below); provided, however, that such notice must provide no less
      than thirty (30) days, but no more than one hundred twenty (120) days, prior
      notice of the effective date of such Termination of Employment and that such
      notice shall relieve the Company of its obligations per Section 5(e)(i)
      above. Notwithstanding the above, as needed to avoid incurring penalties under
      Section 409A of the Code (as defined in Section 10(f)), such payments due under
      this Section 5(e)(ii) shall be subject to a 6-month delay from the
      Termination of Employment. Except as provided herein, Executive shall have
      no
      further rights to any compensation or any other benefits under this Agreement
      due to such Termination of Employment. All other accrued and vested benefits,
      if
      any, due Executive following Termination of Employment pursuant to this
      Section 5(e)(ii) shall be determined in accordance with the plans, policies
      and practices of the Company.

     

    6. Other
      Benefits.

     

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

     

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

     

    (c) Perquisites.
      During
      the Employment Term, Executive shall be provided with the opportunity to receive
      or participate in perquisites on a comparable basis as such perquisites are
      generally provided by the Company from time to time to the Company’s other
      senior executives, subject to the following:

     

    (i) Transportation
      benefit
      -
      Executive will be entitled to transportation, via car service or other
      comparable arrangement in connection with the performance of his duties
      hereunder (including but not limited to transportation between his primary
      residence and the Main Office (as defined in Section 10(o))), which will be
      in
      lieu of the Company’s standard cash automobile subsidy provided to senior
      executives. To the extent this benefit is taxable income to Executive, he will
      receive a Tax Gross-Up Payment (as defined in Section 10(t)); and

    
       

      
        
          
          

        

        
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    (ii) Attorney
      fees
      - The
      Company will pay reasonable attorneys’ fees and related expenses incurred by
      Executive in connection with the negotiation and review of this
      Agreement.

     

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

     

    (d) Reimbursement
      of Business Expenses.
      During
      the Employment Term, all reasonable business expenses incurred by Executive
      in
      the performance of his duties hereunder shall be reimbursed by the Company
      upon
      receipt of documentation of such expenses in a form reasonably acceptable to
      the
      Company, and otherwise in accordance with the Company’s expense reimbursement
      policies. Pursuant to the terms of this Section 6(d), the Company shall pay
      for
      the reasonable expenses of the Executive’s wife when she travels with him on the
      Company’s business.

     

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

     

    (a) For
      Cause by the Company or Voluntary Resignation by Executive Without Good
      Reason.
      If
      Executive is terminated by the Company for Cause (as defined in Section 10(d))
      or if Executive voluntarily resigns without Good Reason (as defined in Section
      10(n)), Executive shall be entitled to receive as soon as reasonably practicable
      after his date of termination or such earlier time as may be required by
      applicable statute or regulation: (i) his earned but unpaid Base Salary through
      the date of termination; (ii) payment in respect of any vacation days accrued
      but unused through the date of termination, to the extent provided by Company
      policy; (iii) reimbursement for all business expenses properly incurred in
      accordance with Company policy prior to the date of termination and not yet
      reimbursed by the Company; and (iv) subject to Section 7(g), any earned but
      unpaid annual bonus in respect of any of the Company’s fiscal years preceding
      the fiscal year in which the termination occurs (provided, however that if
      Executive’s termination is by the Company for Cause and such event(s) and/or
      action(s) that constitute Cause are materially and demonstrably injurious to
      the
      business or reputation of the Company, then no payment will be made pursuant
      to
      this clause (iv)) (the aggregate benefits payable pursuant to clauses (i),
      (ii),
      (iii) and (iv) hereafter referred to as the “Accrued
      Obligations”);
      and
      except as provided herein he shall have no further rights to any compensation
      (including any Base Salary or annual bonus, if any) or any other benefits under
      this Agreement. All equity-based awards shall be treated as set forth under
      the
      terms of the applicable plan or agreement. All other accrued and vested
      benefits, if any, due Executive following Executive’s Termination of Employment
      pursuant to this Section 7(a) shall be determined and paid in accordance with
      the plans, policies, and practices of the Company.

    
       

      
        
          
          

        

        
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    (b) Without
      Cause by the Company or Voluntary Resignation by Executive for Good
      Reason.
      If
      Executive is terminated by the Company other than for Cause, Disability (as
      defined in Section 10(i)) or death, or if Executive voluntarily resigns for
      Good
      Reason, Executive shall receive: (i) the Accrued Obligations; and (ii) subject
      to Section 7(g), (A) Base Salary through the end of the calendar quarter in
      which Termination of Employment under this Section 7(b) occurs, (B) treatment
      of
      all equity-based awards per the terms of the applicable plan or agreement;
      provided, however, that vesting of any equity awards granted pursuant to Section
      5 of this Agreement (including Restricted Shares vesting upon achievement of
      certain stock price targets) shall be calculated through the end of the calendar
      quarter in which Termination of Employment occurs, and (C) the continuation
      of
      medical benefits through the end of the calendar quarter in which Termination
      of
      Employment occurs; provided, however, that such benefit shall be reduced or
      eliminated to the extent Executive receives similar benefits from a subsequent
      employer. Notwithstanding the above, as needed to avoid incurring penalties
      under Section 409A of the Code, such payments due under this Section 7(b)
      shall be subject to a 6-month delay; provided, however, in the 7th month after
      Termination of Employment, a lump-sum catch-up payment shall be made for the
      6-month delay. Except as provided herein, Executive shall have no further rights
      to any compensation (including any Base Salary) or any other benefits under
      this
      Agreement. All other accrued and vested benefits, if any, due Executive
      following Termination of Employment pursuant to this Section 7(b) shall be
      determined in accordance with the plans, policies and practices of the
      Company.

     

    (c) Termination
      following a Change in Control.
      If,
      during the 2-year period following a Change in Control (as defined in Section
      10(e)), Executive is terminated by the Company other than for Cause, Disability
      or death, or if Executive voluntarily resigns for Good Reason, Executive shall
      receive: (i) the Accrued Obligations; (ii) subject to Section 7(g): (A) the
      benefits set forth in Section 7(b); (B) full accelerated vesting of (x) any
      then-unvested Restricted Stock Units granted pursuant to Section 5(a), (y)
      any
      then-unvested Restricted Shares granted pursuant to Subsections 5(b)(i) and
      (ii), and (z) any then-unvested Stock Options granted pursuant to
      Section 5(c); and (C) a Tax Gross-Up Payment for purposes of Code Section
      280G.

     

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

     

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

    
       

      
        
          
          

        

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

     

    (g) Release.
      Notwithstanding any other provision of this Agreement to the contrary, Executive
      acknowledges and agrees that any and all payments to which Executive is entitled
      under this Section 7 which are described as being subject to this Section 7(g)
      are conditioned upon and subject to Executive’s execution of, and not having
      revoked within any applicable revocation period, a general release and waiver,
      in such reasonable and customary form as shall be prepared by the Company,
      of
      all claims Executive may have against the Company and its directors, officers,
      subsidiaries and affiliates, except as to (i) matters covered by provisions
      of
      this Agreement that expressly survive the termination of this Agreement and
      (ii) rights to which Executive is entitled by virtue of his participation
      in the employee benefit plans, policies and arrangements of the
      Company.

     

    8. Covenants.

     

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

    
       

      
        
          
          

        

        
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    (b) Non-Compete.
      During
      the Employment Term and for two (2) years immediately following a Termination
      of
      Employment for any reason, Executive shall not, without the prior written
      consent of the Company, participate or engage in, directly or indirectly (as
      an
      owner, partner, employee, officer, director, independent contractor, consultant,
      advisor or in any other capacity calling for the rendition of services, advice,
      or acts of management, operation or control) any business for a Competitor
      (as
      defined below). The term “Competitor”
shall
      mean any entity whose principal business involves the operation of a pari-mutuel
      or casino gaming business.

     

    (c) Non-Solicit.
      During
      the Employment Term and for two (2) years immediately following a Termination
      of
      Employment for any reason, Executive shall not, without the prior written
      consent of the Company, solicit or induce any then-existing employee of the
      Company or any of its subsidiaries to leave employment with the Company or
      any
      of its subsidiaries or contact any then-existing customer or vendor under
      contract with the Company or any
      of
      its subsidiaries for the purpose of obtaining business similar to that engaged
      in, or received (as appropriate), by the Company.

     

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

     

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

     

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

     

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

    
       

      
        
          
          

        

        
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    9. Miscellaneous.

     

    (a) Resolution
      of Disputes and Reimbursement of Legal Costs.
      Except
      as otherwise provided in Section 8, the Company and Executive agree that any
      controversy or claim arising out of or relating to this Agreement or the breach
      thereof shall be settled by arbitration administered by the American Arbitration
      Association in accordance with its Commercial Arbitration Rules then in effect.
      Venue for any arbitration pursuant to this Agreement will lie in Louisville,
      Kentucky. Any award entered by the arbitrator(s) shall be final, binding and
      nonappealable and judgment may be entered thereon by either party in accordance
      with applicable law in any court of competent jurisdiction. This arbitration
      provision shall be specifically enforceable. Each party shall be responsible
      for
      its own expenses relating to the conduct of the arbitration (including
      reasonable attorneys’ fees and expenses) and shall share the fees of the
      American Arbitration Association and the arbitrator(s), if applicable,
      equally.

     

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

     

    (c) Entire
      Agreement/Amendments.
      This
      Agreement contains the entire understanding of the parties with respect to
      the
      employment of Executive by the Company. There are no restrictions, agreements,
      promises, warranties, covenants or undertakings between the parties with respect
      to the subject matter herein other than those expressly set forth herein.
      Neither this Agreement may be altered, modified, or amended except by written
      instrument signed by the parties hereto. Sections 7 and 8 shall survive the
      termination of Executive’s employment with the Company, except as otherwise
      specifically stated therein.

     

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

     

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

     

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

    
       

      
        
          
          

        

        
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    (g) Successors.
      

     

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

     

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

     

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

     

     

    If
      to the
      Company, to:

     

    Churchill
      Downs Incorporated

    Attn:
      General Counsel

    700
      Central Avenue

    Louisville,
      KY 40208

     

    With
      a
      copy to:

     

    Vedder
      Price Kaufman & Kammholz P.C.

    Attn:
      Michael A. Nemeroff, Esq.

    222
      North
      LaSalle Street

    Chicago,
      IL 60601

    Facsimile:
      (312) 609-5005

     

    If
      to
      Executive, to such address as shall most currently appear on the records of
      the
      Company.

     

     

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

    
       

      
        
          
          

        

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

     

    (k) Code
      Section 409A.
      It is
      intended that any amounts payable under this Agreement and the Company’s and
      Executive’s exercise of authority or discretion hereunder shall comply with Code
      Section 409A (including the Treasury regulations and other published guidance
      relating thereto) so as not to subject Executive to the payment of any interest
      or additional tax imposed under Code Section 409A. To the extent any amount
      payable under this Agreement would trigger the additional tax imposed by Code
      Section 409A, the Agreement shall be modified to avoid such additional
      tax.

     

    10. Definitions.

     

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

     

    (b) “Base
      Salary”
-
      see
      Section 3.

     

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

     

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

     

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

     

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

     

    (iii) the
      willful engaging by Executive in illegal conduct or gross misconduct which
      is
      materially and demonstrably injurious to the business or reputation of the
      Company.

     

    For
      purposes of this definition, no act or failure to act, on the part of Executive,
      shall be considered “willful” unless it is done, or omitted to be done, by
      Executive in bad faith or without reasonable belief that Executive’s action or
      omission was in the best interests of the Company. Any act, or failure to act,
      based upon specific authority given pursuant to a resolution duly adopted by
      the
      Board or upon instructions of the Chairman of the Board or based upon the advice
      of counsel of the Company which Executive honestly believes is within such
      counsel’s competence shall be conclusively presumed to be done, or omitted to be
      done, by Executive in good faith and in the best interests of the Company.
      The
      Company shall give written notice to Executive of the termination for Cause.
      Such notice shall state in detail the particular act or acts or the failure
      or
      failures to act that constitute the grounds on which the Cause termination
      is
      based and such notice shall be given within six (6) months of the occurrence
      of,
      or, if later, the Company’s actual knowledge of, the act or acts or the failure
      or failures to act which constitute the grounds for Cause. Executive shall
      have
      sixty (60) days upon receipt of the notice in which to cure such conduct, to
      the
      extent such cure is possible.

    
       

      
        
          
          

        

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

     

    (i) excluding
      Duchossois Industries, Inc. and its affiliates, the acquisition by any
      individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
      of the Securities Exchange Act of 1934 (the “Exchange
      Act”)
      (a
      "Person")
      of
      beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
      Exchange Act) of more than 50% of either the then outstanding voting securities
      of the Company (the "Outstanding
      Company Common Stock")
      or the
      combined voting power of the then outstanding voting securities of the Company
      entitled to vote generally in the election of directors (the "Outstanding
      Company Voting Securities");
      

     

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

     

    (iii) consummation
      of a reorganization, merger or consolidation or sale or other disposition of
      all
      or substantially all of the assets of the Company or the acquisition of assets
      of another entity (a "Corporate
      Transaction”),
      in
      each case, unless, immediately following such Corporate Transaction, (A) all
      or
      substantially all of the individuals and entities who were the beneficial
      owners, respectively, of the Outstanding Company Common Stock and Outstanding
      Company Voting Securities immediately prior to such Corporate Transaction
      beneficially own, directly or indirectly, more than 60% of, respectively, the
      then-outstanding shares of common stock and the combined voting power of the
      then-outstanding voting securities entitled to vote generally in the election
      of
      directors, as the case may be, of the corporation resulting from such Corporate
      Transaction (including, without limitation, a corporation which as a result
      of
      such transaction owns the Company or all or substantially all of the Company's
      assets either directly or through one or more subsidiaries) in substantially
      the
      same proportions as their ownership, immediately prior to such Corporate
      Transaction, of the Outstanding Company Common Stock and Outstanding Company
      Voting Securities, as the case may be, (B) no Person (excluding any employee
      benefit plan (or related trust) of the Company or such corporation resulting
      from such Corporate Transaction) beneficially owns, directly or indirectly,
      20%
      or more of, respectively, the then-Outstanding Company Common Stock resulting
      from such Corporate Transaction or the Outstanding Company Voting Securities
      resulting from such Corporate Transaction, except to the extent that such
      ownership existed prior to the Corporate Transaction, and (C) at least a
      majority of the members of the Board of Directors of the Company resulting
      from
      such Corporate Transaction were members of the Incumbent Board at the time
      of
      the execution of the initial plan or of the action of the Board providing for
      such Corporate Transaction; or 

    
       

      
        
          
          

        

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

     

    Notwithstanding
      the foregoing, actions taken in compliance with the Stockholder's Agreement,
      dated as of September 8, 2000, among the Company, Duchossois Industries, Inc.
      and subsequent signatories thereto, as amended from time to time, shall not
      be
      deemed a Change in Control. 

     

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

     

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

     

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

     

    (i) “Disability”
means
      the inability of Executive to perform his normal duties as a result of any
      physical or mental injury or ailment for (i) any consecutive ninety (90)-day
      period or (ii) any one hundred eighty (180) days (whether or not consecutive)
      during any three hundred sixty-five (365) calendar day period. 

     

    (j) “Employment
      Term”
-
      see
      Section 1.

     

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

     

    (l) “Executive”
-
      see
      recitals to this Agreement.

     

    (m) “Fair
      Market Value”
means,
      as of any date, (i) the closing price of the Common Stock on such date reported
      on The NASDAQ Stock Market (or, if no sale of the Common Stock was reported
      for
      such date, on the next preceding date on which such a sale of such security
      was
      reported), (ii) if the Common Stock is not listed on The NASDAQ Stock Market,
      but is listed on a national securities exchange, the closing price of the Common
      Stock on such date reported by such exchange, (or, if no sale of the Common
      Stock was reported for such date, on the next preceding date on which such
      a
      sale of such security was reported), (iii) if the Common Stock is not listed
      on
      The NASDAQ Stock Market or any national securities exchange, the average of
      the
      high bid and low asked quotations for the Common Stock on such date in the
      over-the-counter market (or, if no quotation of the Common Stock was reported
      for such date, on the next preceding date on which such quotation of such
      security was reported), or (iv) if there is no public market for the Common
      Stock, the fair market value of the Common Stock determined by the Board in
      good
      faith exercise of its discretion; provided, however, such determination shall
      be
      made in a manner consistent with Code Section 409A and official guidance
      thereunder.

     

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

     

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

    
       

      
        
          
          

        

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

     

    (iii) a
      reduction in Base Salary; 

     

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

     

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

     

    (vi) the
      Company’s notice to Executive of non-renewal of the Agreement.

     

    Prior
      to
      Executive’s right to terminate this Agreement, he shall give written notice to
      the Company of his intention to terminate his employment on account of a Good
      Reason. Such notice shall state in detail the particular act or acts or the
      failure or failures to act that constitute the grounds on which Executive’s Good
      Reason termination is based and such notice shall be given within six (6) months
      of the occurrence of the act or acts or the failure or failures to act which
      constitute the grounds for Good Reason. The Company shall have sixty (60) days
      upon receipt of the notice in which to cure such conduct, to the extent such
      cure is possible.

     

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

     

    (p) “Option”
means
      an option to purchase shares of Common Stock.

     

    (q) “Restricted
      Shares”
see
      Section 5(b). 

     

    (r) “Restricted
      Stock Unit”
means
      the right to receive a share of Common Stock after a Termination of Employment,
      with such right subject to a risk of forfeiture or other restrictions that
      will
      lapse upon the achievement of one or more goals, such as the completion of
      service by Executive or achievement of certain performance objectives. Due
      to
      Code Section 409A, it is expected that any shares of Common Stock received
      per a
      Restricted Stock Unit shall be received six (6) months after a Termination
      of
      Employment.

     

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

     

    (t) “Tax
      Gross-Up Payment”
means
      an amount payable to Executive such that, after payment of Taxes on such amount,
      there remains a balance sufficient to pay the Taxes being
      reimbursed.

    
       

      
        
          
          

        

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

     

    
      [Signature
        page follows.]

    

    
      
         

        
          
            
            

          

          
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    [Signature
      page follows.]

    IN
      WITNESS WHEREOF,
      the
      parties hereto have duly executed this Agreement as of the day and year first
      above written.

     

    
      	 	
              ROBERT
                L. EVANS

               

              /s/
                Robert L. Evans 

               

            
	 	
               

               

              CHURCHILL
                DOWNS INCORPORATED

               

              By: /s/
                Robert L. Fealy

              Robert
                L. Fealy,

              Authorized
                Representative 

              of
                the Board of Directors 

               

            
	 	 

    

    
      
         

        17Robert Evans Restricted Stock Agreement

    CHURCHILL
      DOWNS INCORPORATED

    RESTRICTED
      STOCK AGREEMENt

     

    65,000
      SHARES

     

    THIS
      RESTRICTED STOCK AGREEMENT (the “Agreement”) is made as of the 18th day of July,
      2006 by and between Robert L. Evans (the “Executive”), and Churchill Downs
      Incorporated (the “Company”), a Kentucky corporation with its principal place of
      business at 700 Central Avenue, Louisville, Kentucky 40208. 

     

    WITNESSETH:

     

    WHEREAS,
      the Company has identified the Executive as the successor to the current
      President and Chief Executive Officer who is stepping down from such office
      effective August 14, 2006;

     

    WHEREAS,
      the Company has entered into an employment agreement (the “Employment
      Agreement”) between the Company and the Executive pursuant to which the
      Executive will become the President and Chief Executive Officer of the Company
      effective August 14, 2006 (the “Start Date”);

     

    WHEREAS,
      under the terms of the Employment Agreement, and as a material inducement to
      enter into the Employment Agreement, the Executive is to receive certain grants
      of equity compensation as a consequence of his employment by the Company;

     

    WHEREAS,
      the Compensation Committee (the “Committee”) of the Board of Directors of the
      Company at its meeting on July 12, 2006 authorized and directed the Company
      to
      make an award of stock to the Executive under the terms and conditions set
      forth
      in this Agreement; and

     

    WHEREAS,
      the parties desire to enter into this Agreement to set forth the terms and
      conditions of such award.

     

    NOW,
      THEREFORE, in consideration of the foregoing and the mutual undertakings herein
      contained, and for other good and valuable consideration, the mutuality, receipt
      and sufficiency of which are hereby acknowledged, the parties agree as
      follows:

     

    1. Grant
      of Stock.
      Subject
      to the further terms, conditions and restrictions contained in this Agreement,
      the Company hereby grants to the Executive 65,000 shares (the “Shares”) of the
      Company’s common stock, no par value per share (the “Common Stock”), in
      consideration for services to be performed by the Executive as an employee
      of
      the Company and its subsidiaries. As long as the Shares are subject to the
      Restrictions set forth in Section 4 of this Agreement, such shares shall be
      deemed to be, and are referred to in this Agreement as, the “Restricted
      Shares”.

     

    2. Certificates
      for Shares.
      Certificates evidencing Restricted Shares shall be deposited with the Company
      to
      be held in escrow until such Shares are released to the Executive or forfeited
      in accordance with this Agreement. The Executive shall, simultaneously with
      the
      execution and delivery of this Agreement, execute and deliver to the Company
      a
      stock power in blank with respect to the Restricted Shares. If any Restricted
      Shares are forfeited, the Company shall direct the transfer agent of the Common
      Stock to make the appropriate entries in its records showing the cancellation
      of
      the certificate or certificates for such Restricted Shares.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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      3. Adjustments
        in Restricted Shares.
        

    

    
      	 	
              (a)

            	
              In
                the event of any change in the outstanding Common Stock by reason
                of a
                stock dividend or distribution (or distribution on Common Stock of
                any
                security convertible into securities of the Company), recapitalization,
                merger, consolidation, split-up, combination, subdivision,
                reclassification, exchange of shares or the like, the Committee shall
                make
                equitable adjustments in the Restricted Shares so that the shares
                represent the same percentage of the Company’s equity as was the case
                immediately prior to such change. Any new, additional or different
                securities to which the Executive shall be entitled in respect of
                Restricted Shares by reason of such adjustment shall be deemed to
                be
                Restricted Shares and shall be subject to the same terms, conditions
                and
                restrictions as the Restricted Shares so
                adjusted.

            

    

     

    
      	 	
              (b)

            	
              In
                the event Company merges, consolidates or effects a share exchange
                with
                another entity, or all or a substantial portion of Company’s assets or
                outstanding capital stock are acquired (whether by merger, purchase
                or
                otherwise) by another entity (any such entity being hereafter referred
                to
                as the “Successor”) each of the Restricted Shares shall automatically be
                converted into and replaced by shares of common stock, or such other
                class
                of securities having rights and preferences no less favorable than
                the
                Restricted Shares, of the Successor, and the number of Restricted
                Shares
                shall be correspondingly adjusted, so that Executive shall have the
                right
                to that number of shares of common stock of the Successor that have
                a
                value equal, as of the date of the merger, conversion or acquisition,
                to
                the value, as of the date of the merger, conversion or acquisition,
                of the
                Restricted Shares.

            

    

     

    4. Restrictions.
      During
      applicable periods of restriction determined in accordance with Section 6 of
      this Agreement, Restricted Shares, and all rights with respect to such Shares,
      may not be sold, assigned, transferred, exchanged, pledged, hypothecated or
      otherwise encumbered or disposed of and shall be subject to the risk of
      forfeiture contained in Section 5 of this Agreement (such limitations on
      transferability and risk of forfeiture being herein referred to as the
“Restrictions”), but the Executive shall have all other rights of a stockholder;
provided,
      however, that, until such time as the Restrictions lapse, the Executive shall
      not have the right to vote the Restricted Shares; receive dividends thereon;
      or
      purchase any securities pursuant to that certain Rights Agreement dated as
      of
      March 19, 1998, between the Company and The Fifth Third Bank (as successor
      Rights Agent to Bank of Louisville), as amended, and as the same may be amended,
      modified or supplemented from time to time.

     

    5. Forfeiture
      of Restricted Shares.
      Subject
      to Section 6 below, in the event that the Executive’s employment with the
      Company and its subsidiaries terminates for any reason, such event shall
      constitute an “Event of Forfeiture” and all Shares which at that time are
      Restricted Shares shall thereupon be forfeited by the Executive to the Company
      without payment of any consideration by the Company, and neither the Executive
      nor any heir, personal representative, successor or assign of the Executive
      shall have any right, title or interest in or to such Restricted Shares or
      the
      certificates evidencing the same. 

    
       

      
        
          
          

        

        
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    6. Lapse
      of Restrictions.
      

     

    (a)  The
      Restrictions on the respective Restricted Shares shall lapse upon the
      satisfaction of the requirements described in Subsections (i) and (ii)
      below:

     

    (i) for
      ***
      (**)
      consecutive trading days after the Start Date, the Fair Market Value of a share
      of the Common Stock being equal to or greater than *-*, * percent (***%) of
      the
      Fair Market Value of a share of Common Stock as of July 18, 2006 (the “Share
      Price Requirement”); and

     

    (ii) for
      the
      applicable number of Restricted Shares per the schedule immediately below,
      the
      later of: (A) the corresponding date as listed on the schedule below, or (B)
      the
      satisfaction of the Share Price Requirement; provided, however, that such
      corresponding date or Share Price Requirement occurs prior to a Termination
      of
      Employment, but subject to Section 6(c) below: 

     

    

    
      	
              Date

            	
              #
                of Shares for which Restrictions lapse and
                

              which
                become non-forfeitable

               

            
	
              September
                30, 2006

            	
              1,625

            
	
              December
                31,2006

            	
              3,250

            
	
              March
                31, 2007

            	
              3,250

            
	
              June
                30, 2007

            	
              3,250

            
	
              September
                30, 2007

            	
              3,250

            
	
              December
                31, 2007

            	
              3,250

            
	
              March
                31, 2008

            	
              3,250

            
	
              June
                30, 2008

            	
              3,250

            
	
              September
                30, 2008

            	
              3,250

            
	
              December
                31, 2008

            	
              3,250

            
	
              March
                31, 2009

            	
              3,250

            
	
              June
                30, 2009

            	
              3,250

            
	
              September
                30, 2009

            	
              3,250

            
	
              December
                31, 2009

            	
              3,250

            
	
              March
                31, 2010

            	
              3,250

            
	
              June
                30, 2010

            	
              3,250

            
	
              September
                30, 2010

            	
              3,250

            
	
              December
                31, 2010

            	
              3,250

            
	
              March
                31, 2011

            	
              3,250

            
	
              June
                30, 2011

            	
              3,250

            
	
              August
                14, 2011

            	
              1,625

            

    

    _______________________

    *
      Confidential information omitted and filed separately with the Securities and
      Exchange Commission under a Confidential Treatment Request.

     

    
       

      
        
          
          

        

        
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    (b)  Upon
      the
      lapse of the Restrictions in accordance with this Section, the Company shall,
      as
      soon as practicable thereafter, deliver to the Executive a certificate (without
      any restrictive endorsement referring to such Restrictions) for the Shares
      that
      are no longer subject to such Restrictions.

     

    (c)  In
      the
      event the Executive’s employment is terminated other than for Cause (as defined
      in the Employment Agreement) or if the Executive resigns for Good Reason (as
      defined in the Employment Agreement) for purposes of determining any lapse
      of
      the Restrictions in (a) above and the forfeiture of Shares, if any, under
      Section 5 and Section 6, the Executive’s employment shall be considered to have
      continued through the last day of the calendar quarter in which his Termination
      of Employment occurs. 

     

    (d)  In
      the
      event of a Change in Control during the Employment Term, the Restrictions shall
      immediately lapse on fifty percent (50%) of the Shares then-subject to
      Restrictions. The Shares that are subject to the lapse of Restrictions pursuant
      to this Section 6(d) shall be taken pro-rata from each tranche of the
      then-Restricted Shares, and the remaining portion of each tranche shall be
      subject to the lapse of Restrictions according to Section 6(a) above, subject
      to
      potential accelerated lapsing of Restrictions pursuant to Section 6(e) below.
      

     

    (e)  If,
      during the 2-year period following a Change in Control during the Employment
      Term: (i) the Executive is terminated by the Company other than for Cause,
      death
      or Disability, or (ii) the Executive voluntarily resigns for Good Reason, the
      Restrictions on all then-Restricted Shares shall fully lapse, as of the
      Termination of Employment. 

     

    7. Withholding
      Requirements.
      Whenever Restrictions lapse with respect to Restricted Shares, the Company
      shall
      have the right to (i) withhold from sums due to the Executive; (ii) require
      the
      Executive to remit to the Company; or (iii) retain Shares otherwise deliverable
      to the Executive; in an amount sufficient to satisfy any Federal, state or
      local
      withholding tax requirements prior to making such payments or delivering any
      such Shares to the Executive.

     

    8. Effect
      Upon Employment.
      Nothing
      contained in this Agreement shall confer upon the Executive the right to
      continue in the employment of the Company or its subsidiaries or affect any
      right that the Company or its subsidiaries may have to terminate the employment
      of the Executive.

     

    9. Amendment.
      This
      Agreement may not be amended, modified or supplemented except with the consent
      of the Committee and by a written instrument duly executed by the Executive
      and
      the Company.

     

    10. Binding
      Effect.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their heirs, personal representatives, successors and assigns.
      Executive accepts the award of Shares hereunder subject to all of the terms
      and
      conditions of this Agreement. Executive hereby agrees to accept as binding,
      conclusive and final all reasonable decisions and interpretations of the
      Committee upon any questions arising under this Agreement, including without
      limitation, the interpretation of the Restrictions imposed upon the
      Shares.

    
       

      
        
          
          

        

        
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    11. Notices.
      Notices
      shall be deemed delivered if delivered personally or if sent by registered
      or
      certified mail to the Company at its principal place of business, as set forth
      above, and to Executive at the address as shall most currently appear on the
      records of the Company, or at such other address as either party may hereafter
      designate in writing to the other.

     

    12. Investment
      Representation.
      If the
      Shares awarded to the Executive under this Agreement are not registered under
      the Securities Act of 1933, as amended, pursuant to an effective registration
      statements, the Executive, if the Committee shall reasonably deem it advisable,
      may be required to represent and agree in writing (i) that any Shares acquired
      by the Executive under this Agreement will not be sold except pursuant to an
      effective registration statement under the Securities Act of 1933, as amended,
      or pursuant to an exemption from registration under such Act, and (ii) that
      the
      Executive has acquired such Shares for his own account and not with a view
      to
      the distribution thereof.

     

    13. Compliance
      with Section 16(b).
      This
      Agreement and the grant of Shares hereunder is intended to comply with all
      applicable conditions of Rule 16(b)-3 of the General Rules and Regulations
      under
      the Securities Exchange Act of 1934, as amended. All transactions involving
      the
      Company’s executive officers are subject to such conditions, regardless of
      whether the conditions are expressly set forth in this Agreement. Any provision
      of this Agreement that is contrary to a condition of Rule 16b-3 shall not
      apply.

     

    14. Effective
      Date and Approval.
      It is
      the intent of the parties that the compensation payable to the Executive with
      respect to the Shares constitute qualified performance based compensation under
      Internal Revenue Code §162(m) and regulations issued thereunder. The effective
      date of the award of the Shares is July 18, 2006, and is subject to approval
      by
      stockholders of the Company holding not less than a majority of the shares
      present and voting at the Company’s 2007 Annual Meeting. In the event this award
      of Shares is not approved by stockholders of the Company, this Agreement shall
      be of no effect and the award of Shares hereunder shall be null and void. The
      Company agrees to use its reasonable best efforts to procure shareholder
      approval of the award of the Shares, including, without limitation, placing
      such
      matter on the agenda for the Company’s 2007 annual meeting, including
      appropriate disclosures in the proxy statement for such meeting, recommending
      to
      Company shareholders the approval of such Shares award and soliciting proxies
      for the approval of such Shares award.

     

     

    
       

      
        
          
          

        

        
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    15. Code
      Section 409A.
      It is
      intended that any amounts payable under this Agreement and the Company’s and
      Executive’s exercise of authority or discretion hereunder shall comply with Code
      Section 409A (including the Treasury regulations and other published guidance
      relating thereto) so as not to subject Executive to the payment of any interest
      or additional tax imposed under Code Section 409A. To the extent any amount
      payable under this Agreement would trigger the additional tax imposed by Code
      Section 409A, the Agreement shall be modified to avoid such additional
      tax. 

     

     

    16.  Registration
      of Shares. 
      The Company shall use its reasonable best efforts to file, within 90 days
      following the execution of this Agreement, a registration statement with the
      Securities and Exchange Commission (the "Commission") pursuant to the Securities
      Act of 1933, as amended (the "Act"), covering the Shares, and thereafter to
      cause such registration statement to become effective in accordance with the
      Act
      and the rules and regulations adopted by the Commission thereunder

     

    17. Compliance
      With Other Laws And Regulations.
      The
      rights of the Executive and the obligations of Company under this Agreement
      shall be subject to all applicable federal and state laws, rules and regulations
      and to such approvals by any government or regulatory agency as may be required.
      Company shall not be required to issue or deliver certificates for shares of
      Common Stock before [i] the listing of such shares on any stock exchange or
      over-the-counter market, such as NASDAQ, on which the Common Stock may then
      be
      listed or traded, and [ii] the completion of any registration or qualification
      of any governmental body which Company shall, in it sole discretion, determines
      to be necessary or advisable. The Company agrees to use its best efforts to
      procure any such listing, registration or qualification.

     

    18. Severability.
      The
      invalidity or unenforceability of any provision of the Agreement shall not
      affect the validity or enforceability of the remaining provisions of the
      Agreement, and such invalid or unenforceable provision shall be stricken to
      the
      extent necessary to preserve the validity and enforceability of the Agreement
      with the parties agreeing in such event to make all reasonable efforts to
      replace such invalid or unenforceable provision with a valid provision that
      will
      place the parties in approximately the same economic position as contemplated
      hereunder.

     

    19. Governing
      Law; Jurisdiction.
      This
      Agreement shall be governed by the laws of the Commonwealth of Kentucky. The
      Executive consents to the exclusive jurisdiction of the courts of the
      Commonwealth of Kentucky and of any federal court located in Jefferson County,
      Kentucky in connection with any action or proceeding arising out of or relating
      to this Agreement, any document or instrument delivered pursuant to or in
      connection with this Agreement, or any breach of this Agreement or any such
      document or instrument.

     

    20. Entire
      Agreement.
      This
      Agreement contains the entire agreement between the parties hereto with respect
      to the subject matter hereof.

     

    21. Capitalized
      Terms.
      Capitalized terms not otherwise defined in this Agreement shall have the meaning
      given them in the Employment Agreement.

     

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

     

    

    (Signature
      page follows.)

    
       

      
         

        
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    IN
      WITNESS WHEREOF, the Company and the Executive have executed and delivered
      this
      Agreement as of the date first above written.

     

    

    
      	 	
              ROBERT
                L. EVANS

               

            
	 	
              /s/
                Robert L. Evans   

               

            
	 	 
	 	
              CHURCHILL
                DOWNS INCORPORATED

               

              By:
                 /s/
                Robert L. Fealy   

              Robert
                L. Fealy,

              Authorized
                Representative

              of
                the Board of Directors

            

    

     

    7

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