CHURCHILL DOWNS INCORPORATED
AMENDED AND RESTATED
SUPPLEMENTAL BENEFIT PLAN
This Amended and Restated Supplemental Benefit Plan replaces in its
entirety, as of April 1, 1999, the Churchill Downs Supplemental Benefit Plan
dated as of December, 1998.
Churchill Downs Incorporated ("Churchill Downs") desires to retain the
services of and provide rewards and incentives to members of a select group of
management employees who contribute to the success of the Corporation.
In order to achieve this objective, Churchill Downs has adopted the
following Supplemental Benefit Plan to provide supplemental death, disability,
and retirement benefits for those select management employees who become Members
of the Plan.
ARTICLE 1
TITLE AND EFFECTIVE DATE
1.1 This Plan Shall be known as the Churchill Downs Supplemental Benefit
Plan (hereinafter referred to as the "Plan").
1.2 The Effective Date of this Plan shall be December 1, 1998.
ARTICLE 2
DEFINITIONS
As used herein, the following words and phrases shall have the meanings
specified below unless a different meaning is clearly required by the context:
2.1 The term "Average Monthly Earnings" shall mean the Member's highest
monthly base salary (regardless of whether paid in that month or deferred under
the terms of a deferred compensation plan) determined at any time prior to
death, disability, or retirement, plus 1/12th of the Member's highest incentive
compensation award earned in any year prior to death, disability, or retirement
pursuant to the Churchill Downs Incorporated Incentive Compensation Plan or
similar plan maintained by the Employer. It shall not include compensation
earned pursuant to any stock option plan or any other form of compensation
earned by the Member.
2.2 The term "Board of Directors" shall mean the Board of Directors of
the Employer.
2.3 The term "Committee" shall mean the Compensation Committee or other
Committee appointed by the Board of Directors to administer the plan.
61
2.4 The term "Death Benefit" shall mean the benefit paid to a Member's
Surviving Spouse as provided in Article 6.
2.5 The term "Disability Benefit" shall mean the benefit paid to a
Disabled Member as provided in Article 5.
2.6 The term "Disabled Member" shall mean any Member who is Totally and
Permanently Disabled. If a Member fails to qualify for disability benefits under
the Employer's Long Term Disability Plan, the Board of Directors may, in its
sole discretion, pay a Disability Benefit to a Member.
2.7 The term "Effective Date" shall mean the date the Plan becomes
effective through the terms of a resolution adopted by the Board of Directors.
2.8 The term "Employer" shall mean Churchill Downs, its successors and
assigns, any subsidiary or affiliated organizations authorized by the Board of
Directors of Churchill Downs to participate in this Plan with respect to their
Members, and subject to the provisions of Article 9, any organization into which
the Employer may be merged or consolidated or to which all or substantially all
of its assets may be transferred.
2.9 The term "Member" shall mean an employee who is part of a select
group of management or highly compensated personnel and has become a Member as
provided in Article 3 hereof.
2.10 The term "Monthly Retirement Income" shall mean a monthly income
due a Retired Member under the terms of this Plan which shall commence as of his
Retirement Date and continue for the period provided herein.
2.11 The term "Plan" shall mean the Churchill Downs Supplemental Benefit
Plan.
2.12 The term "Plan Agreement" shall mean the written agreement entered
into by a Member and the Employer evidencing the Member's participation in the
Plan.
2.13 The term "Primary Social Security" shall mean the estimated Primary
Insurance Amount (payable monthly) available to a Member at the later of the
Member's Retirement Date or attainment of age 62 under the Social Security Act
in effect at the Member's Retirement Date. The fact that a Member does not
receive such amount shall be disregarded in computing Monthly Retirement Income
benefits herein.
2.14 The term "Qualified Plan" shall mean the Churchill Downs Pension
Plan.
62
2.15 The term "Retired Member" shall mean any member of the Plan who has
qualified for retirement and has retired, and who is eligible to receive a
Monthly Retirement Income by direction of the Committee.
2.16 The term "Retirement Date" shall mean the first day of the month
coinciding with or immediately following the Member's termination of employment
on or after attainment of age fifty-five (55).
2.17 The term "Surviving Spouse" shall mean the person legally married
to a Member at the time of the death of the Member.
2.18 The term "Total and Permanent Disability" or "Totally and
Permanently Disabled" shall mean eligibility for disability benefits under the
terms of the Employer's Long Term Disability plan in effect at the time the
Member becomes disabled.
2.19 For purposes of converting the amounts described in Sections 4.1D
and 5.1C to an annuity, such conversion shall be computed using an interest rate
assumption equal to the yield of a U.S. Treasury Bond with a term equal to the
Member's life expectancy (rounded to the nearest whole year), such yield and
life expectancy to be determined as of the last day of the calendar quarter
preceding the Member's Retirement Date or, in the event the Member becomes
Totally and Permanently Disabled prior to the attainment of age 55, as of the
last day of the calendar quarter preceding the date the Member attains age 55.
For purposes of determining the Member's life expectancy, the GAM 94 mortality
table shall be used.
ARTICLE 3
MEMBERSHIP IN THE PLAN
3.1 Eligibility for membership in this Plan shall be determined by the
Committee in its sole discretion, on an individual basis. However, a Member
whose benefits under the Plan have commenced to be paid shall not be removed
from membership in the Plan unless the Member is convicted of a felonious act
against the Employer.
3.2 If a Member is removed from the Plan under Section 3.1, all future
benefits payable under this Plan to the Member shall cease.
3.3 The payment of benefits to the Member under this Plan is conditioned
upon the continuous employment of the Member by the Employer (including periods
of disability and authorized leaves of absence) from the date of the Member's
participation in the Plan until the Member's Retirement Date or Disability,
whichever first occurs.
63
ARTICLE 4
MONTHLY RETIREMENT INCOME AND BENEFIT
4.1 The amount of a Member's Monthly Retirement Income shall be
forty-five percent (45%) of his Average Monthly Earnings increased by one
percent for each twelve month period that the Member remains employed by the
Employer following attainment of age 55 with the maximum Monthly Retirement
Income not to exceed fifty-five percent (55%) of his Average Monthly Earnings,
reduced as set forth in Sections 4.1A, 4.1B, 41.C and 4.1D.
A. One hundred percent (100%) of the Member's Primary Social
Security benefit under the Social Security law in effect on
his Retirement Date, such amount not being applied to reduce
the amount set forth in Section 4.01 hereof until the later of
the Member's Retirement Date or attainment of age 62. If the
Member's Retirement Date occurs on or after the attainment of
age 59, the reduction shall be 50% rather than 100%.
B. One hundred percent (100%) of the Member's monthly income
calculated in the form of a 50% Joint & Survivor annuity under
the Qualified Plan formerly maintained by the Employer as of
his Retirement Date, the specific amount of which is more
specifically set out in the Member's Plan Agreement.
C. One hundred percent (100%) of the Monthly Income Option
calculated as a 50% Joint & Survivor annuity from the cash
surrender value of all life insurance policies (if applicable)
listed on Schedule A attached to the Member's Plan Agreement.
Such Monthly Income shall be determined as of the Member's
Retirement Date. If the Member's Retirement Date occurs on or
after the attainment of age 59, this reduction shall be
eliminated.
D. One hundred percent (100%) of the Employer contributions
and any Member contributions up to a maximum of two thousand
($2,000) per year allocated to his accounts under the
Churchill Downs Incorporated Profit Sharing Plan, calculated
in the form of a 50% Joint & Survivor annuity payable on his
Retirement Date. If the Member's Retirement Date occurs on or
after the attainment of age 59, the reduction for Member
contributions shall be eliminated.
4.2 The basic form of Monthly Retirement Income (to which the formula
indicated in Section 4.1 applies) shall be a monthly income commencing on the
Member's Retirement Date and continuing for his life, with 50% of said benefit
being paid for the life of a Surviving Spouse. This benefit shall not be
actuarially reduced unless the Member's Retirement Date occurs prior to age 57.
64
4.3 A Member is entitled to receive a Monthly Retirement Income under
the Plan only by remaining in the employ of the Employer until age fifty-five
(55).
4.4 A Member may elect for the Member and/or the Member's Surviving
Spouse to continue to participate in the Employer's group health insurance plan
following Retirement or Disability. In the case of death under Article 6, the
Member's Surviving Spouse may make such an election. The Member, or Member's
Surviving Spouse, in the case of the Member's death, shall be responsible for
all expenses (including applicable premiums) associated with such election
ARTICLE 5
DISABILITY BENEFITS
5.1 If a Member is determined to be Disabled while employed by the
Employer prior to his attainment of age fifty-five (55), the Disabled Member
shall be entitled to receive a Monthly Retirement Income benefit, commencing on
the first day of the month coincident with or immediately following the
attainment of age fifty-five (55), equal to forty-five percent (45%) of the
Member's Average Monthly Earnings reduced by Sections 5.1A, 5.1B, and 5.1C.
A. One hundred percent (100%) of his monthly Long Term
Disability benefit or, in the event there is no Long Term
Disability benefit, one hundred percent (100%) of the Primary
Social Security Disability benefit payable to the Member at
age sixty-five (65) under the Social Security law in effect at
that time. This offset shall occur without regard to whether
the Member actually receives said benefits.
B. One hundred percent (100%) of his monthly income calculated
in the form of a 50% Joint & Survivor annuity under the
Qualified Plan as of the date Disability Benefits commence.
C. One hundred percent (100%) of the Employer contributions
allocated to his account(s) under the Churchill Downs
Incorporated Profit Sharing Plan, calculated in the form of a
50% Joint & Survivor annuity payable on the date Disability
Benefits commence.
5.2 If a Member becomes Disabled on or after attaining age 55, the
Member shall be treated as having elected Retirement at the time the
Disability is determined.
65
ARTICLE 6
DEATH BENEFITS
6.1 If a Member dies after attaining age 55 but prior to Retirement, the
Member's Surviving Spouse shall be entitled to a benefit as if the Member had
elected to retire on the day before the Member's death.
6.2 The Surviving Spouse of a Retired Member shall be entitled to a
benefit under the terms of 4.2 herein.
ARTICLE 7
PLAN ADMINISTRATION
7.1 The Board of Directors shall appoint a committee to administer the
Plan and keep records of individual Member benefits.
7.2 The Committee shall have the authority to interpret the Plan, to
adopt and review rules relating to the Plan and to make any other determinations
for the administration of the Plan.
Subject to the terms of the Plan, the Committee shall have exclusive
jurisdiction (i) to select the Members eligible to become Members, (ii) to
determine the eligibility for, and form and method of any benefit payments,
(iii) to establish the timing of benefit distributions, (iv) to settle claims
according to the provisions in Article 8, and (v) to remove Members from
participation in the Plan.
7.3 The Committee may employ such counsel, accountants, actuaries, and
other agents as it shall deem advisable. The Employer shall pay the compensation
of such counsel, accountants, actuaries, and other agents and any other expenses
incurred by the Committee in the administration of the Plan.
ARTICLE 8
CLAIMS PROCEDURE
8.1 The Treasurer of the Employer shall administer the claims procedure
under this Plan.
A. The business address and telephone number of the
Treasurer of the
Employer is:
Vicki L. Baumgardner
700 Central Avenue
Louisville, Kentucky 40208
(502) 636-4400
66
B. The Employer shall have the right to change the address and
telephone number of the Treasurer. The Employer shall give the
Member written notice of any change of the Treasurer, or any
change in the address and telephone number of the Treasurer.
8.2 Benefits shall be paid in accordance with the provisions of this
Plan. The Member (hereinafter referred to as the "Claimant") shall make a
written request for the benefits provided under this Plan. This written claim
shall be mailed or delivered to the Treasurer.
8.3 If the claim is denied, either wholly or partially, notice of the
decision shall be mailed to the Claimant within a reasonable time period. This
time period shall not exceed more than 90 days after the receipt of the claim by
the Treasurer.
8.4 The Treasurer shall provide such written notice to every Claimant
who is denied a claim for benefits under this Plan. The notice shall set forth
the following information:
A. the specific reasons for the denial;
B. the specific reference to pertinent plan provisions on
which the denial is based;
C. a description of any additional material or information
necessary for the Claimant to perfect the claim and an
explanation of why such material or information is
necessary; and
D. appropriate information and explanation of the claims
procedure under this Plan to permit the Claimant to submit
his claim for review.
8.5 The claims procedure under the Plan shall allow the Claimant a
reasonable opportunity to appeal a denied claim and to get a full and fair
review of that decision from the Board.
A. The Claimant shall exercise his right of appeal by
submitting a written request for review of the denied claim to
the Treasurer. This written request for review must be
submitted to the Treasurer within sixty (60) days after
receipt of by the Claimant of the written notice of denial.
B. The Claimant shall have the following rights under this
appeal procedure:
(1) to request a review by the Committee upon written
application to the Treasurer;
67
(2) to review pertinent documents with regard to the employee
benefit plan created under this Plan;
(3) the right to submit issues and comments in writing;
(4) to request an extension of time to make a written
submission of issues and comments; and
(5) to request that a hearing be held to consider
Claimant's appeal.
8.6 The decision on the review of the denied claim shall promptly be
provided by the Committee:
A. within forty-five (45) days after the receipt of the
request for review if no hearing is held; or
B. within ninety (90) days after the receipt of the request
for review, if an extension of time is necessary in order
to hold a hearing.
(1) If an extension of time is necessary in order to
hold a hearing, the Committee shall give the
Claimant written notice of the extension of
time and of the hearing. This notice shall be
given prior to any extension.
(2) The written notice of extension shall indicate
that an extension of time will occur to hold a
hearing on Claimant's appeal. The notice shall
also specify the place, date, and time of that
hearing and the Claimant's opportunity to
participate in the hearing. It may also include
any other information the Committee believes
may be important or useful to the Claimant in
connection with the appeal.
8.7 The decision to hold a hearing to consider the Claimant's appeal of
the denied claim shall be within the sole discretion of the Committee, whether
or not the Claimant requests such a hearing.
8.8 The Committee's decision on review shall be made in writing and
provided to the Claimant within the specified time periods. This written
decision on review shall contain the following information:
A. the decision(s);
B. the reasons for the decision(s); and
68
C. specific reference to the Plan provisions of the Plan on
which the decision(s) is/are based.
All of this information shall be written in a manner calculated to be
understood by the claimant.
ARTICLE 9
MISCELLANEOUS
9.1 Nothing contained in this Plan shall be deemed to give any Member or
Employee the right to be retained in the service of the Employer or to interfere
with the right of the Employer to discharge any Member or Employee at any time
regardless of the effect which such discharge shall have upon him as a Member of
the Plan.
9.2 Nothing contained in this Plan and no action taken pursuant to the
provisions of this Plan shall create or be construed to create a trust of any
kind or a fiduciary relationship between the Employer and the Member, his spouse
or any other person. Any funds which may be invested by the Employer to insure
itself against any and all financial losses which the Employer may incur under
the provisions of this Plan shall continue for all purposes to be a part of the
general funds of the Employer, and no person other than the Employer, shall, by
virtue of the provisions of this Plan, have any interest in such funds. To the
extent that any person acquires a right to receive payment from the Employer
under this Plan, such right shall be no greater than the right of any general
unsecured creditor of the Employer.
9.3 This Plan does not involve a reduction in salary for the Members or
a foregoing of an increase in future salary by the Member.
9.4 A retired Member shall not be considered an Employee for any purpose
under the law.
9.5 Except insofar as this provision may be contrary to applicable law,
no sale, transfer, alienation, assignment, pledge, collateralization, or
attachment of any benefits under this Plan shall be valid or recognized by the
Committee.
9.6 The Employer reserves the right at any time and from time to time,
by action of its Board of Directors to terminate, modify or amend, in whole or
in part, any or all of the provisions of the Plan, including specifically the
right to make any such amendments effective retroactively; provided that no such
action shall reduce the benefits of any Disabled or Retired Member who is
receiving a Monthly Retirement Income at the time of the termination,
modification or amendment.
69
9.7 The Employer shall not merge into, be acquired by, or consolidate
with any other Employer unless and until such other Employer agrees to assume
all rights and obligations set forth in this Plan.
9.8 This Plan shall be binding upon and inure to the benefits of the
Employer, its successors and assigns and each Member and his legal
representatives.
9.9 This Plan shall be governed by the laws of Kentucky. This Plan is
solely between the Employer and the Member. The Member shall only have recourse
against the Employer for enforcement of the Plan.
9.10 Any words herein used in the masculine shall be read and construed
in the feminine where they would so apply. Words in the singular shall be read
and construed as though used in the plural in all cases where they would so
apply.
70
CERTIFICATE
I, Rebecca C. Reed, Secretary to Churchill Downs Incorporated, do hereby
certify that the foregoing Amended and Restated Churchill Downs Supplemental
Benefit Plan sets forth in its entirety and replaces, as of April 1, 1999, the
Churchill Downs Supplemental Benefit Plan dated as of December 1, 1998.
/s/ Rebecca C. Reed
---------------------------
Rebecca C. Reed
71