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Vice President Marketing Severance Agreement - Sharon Kelly

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Sectors: Real Estate
Governing Law: California , View California State Laws
Effective Date: August 30, 1996
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Board of Directors

August 30, 1996

Sharon Kelly Vice President - Marketing Bay Meadows Operating Company 2600 S. Delaware Street San Mateo, California 94402

Dear Ms. Kelly:

Bay Meadows Operating Company (the "Company") considers it essential to the best interests of the Company and its shareholders to encourage the continuous employment of key management personnel. In this connection, the Board of Directors of the Company (the "Board") recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders. Accordingly, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's top management, including yourself, to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a disposition or other change in the structure of the Company.

To persuade you to remain in the employ of the Company and in consideration of your agreement stated in Section 5, the Company agrees with you as follows:

1. Term and Operation of Agreement. This Agreement shall commence on the date hereof and shall continue in effect through December 31, 1997; provided, however, that commencing on January 1, 1998 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless, not later than June 30 of the preceding year, the Company shall have given notice that it does not wish to extend this Agreement; and provided further, that notwithstanding any such notice by the Company not to extend, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the term provided herein if a "Change in Control" (as defined in Section 2) shall have occurred during such term. 2
2. Change in Control. For purposes of this Agreement, a "Change in Control" shall mean any one or more of the following:

(i) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the Voting Securities
of the Company outstanding immediately prior to such a merger or
consolidation continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of the surviving entity)
at least 90% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation;

(ii) the stockholders of the Company approve a plan
of complete liquidation of the Company, an agreement for the sale or
disposition by the Company (in one transaction or a series of
transactions) of all or substantially all the Company's assets, or a
plan pursuant to which (in one transaction or a series of transactions)
all or substantially all the Company's assets shall be transferred to a
person (defined, for purposes of this Section 2, as such term is used
in Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934,
as amended) not wholly owned by the Company (including but not limited
to a plan pursuant to which all or substantially all of the Company's
assets shall be transferred to a partnership not entirely owned by the

(iii) any person holds or comes to hold directly or
indirectly 20% or more of the voting power entitled to elect the
Company's directors, whether through "beneficial ownership" (defined,
for purposes of this Section 2, as defined in Rule 13d-3 under such
Act) of the Company's securities or otherwise, provided that the
following acquisitions shall not constitute a Change in Control: (a)
any acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (b) any acquisition
by the Company, or (c) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company;

(iv) individuals who, as of the date hereof,
constitute the Board of Directors (the "Incumbent Board") cease for any
reasons to constitute at least a majority of the Board; provided,
however, than any individual becoming a director subsequent to the date
hereof 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 compromising 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 of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) 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;

2 3
(v) the Company's Board of Directors shall authorize
any action which if consummated would constitute a Change in Control;

(vi) the Company shall enter into an agreement the
consummation of which would result in the occurrence of a Change in
Control; or

(vii) the Company shall publicly announce an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control.

3. Termination In Connection With or After Change in Control.

(a) General. If, during the term of this Agreement, your employment terminates in connection with or after a Change in Control, you shall be entitled to the benefits provided in Section 4(c) unless such termination is (i) because of your death or Retirement, (ii) by the Company for Cause or Disability or (iii) by you other than for Good Reason.

(b) Disability; Retirement. Termination by the Company of your employment based on "Disability" shall mean termination because of your absence from your duties with the Company on a full-time basis on account of physical or mental health conditions continued after the period for which you are entitled to continued employment under the Company's disability policy as in effect on the date hereof, unless within 30 days after Notice of Termination (as hereinafter defined) is given following such absence you shall have returned to the full-time performance of your duties. (Any termination on account of disability will be subject to your rights and benefits under such plan, and no purported Notice of Termination contrary to such plan will be deemed to commence the running of the 30-day period referred to in the preceding sentence or be considered a termination for Disability for any purpose.) Termination by the Company or you of your employment based on "Retirement" shall mean termination in accordance with the Company's retirement policy in effect on the date hereof, including (at your election, as set forth in writing) early retirement, generally applicable to its salaried employees or in accordance with any retirement arrangement established with your written consent with respect to you.

(c) Cause. Termination by the Company of your employment for "Cause" shall mean termination upon

(i) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such
failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure resulting from your
termination for Good Reason), after a demand for substantial
performance is delivered to you by the Board which specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, or

(ii) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily or

3 4 For purposes of this paragraph, no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in the best interest of the Company. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of resolution duly adopted by the affirmative vote of not less than three-quarters o
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