Exhibit 10.16

MEMORANDUM OF AGREEMENT

PENNSYLVANIA NATIONAL TURF CLUB, INC. / MOUNTAINVIEW RACING ASSOCIATION
(collectively, the “Employer”), wholly owned subsidiaries of Penn National
Gaming Inc. and SPORTS ARENA EMPLOYEES’ UNION, LOCAL NO. 137 (the “Union”) have
engaged in negotiations for a successor collective bargaining agreement
(“Successor Agreement”) to the one which expired on September 30, 2002
(“Previous Agreement”) and by mutual agreement the Previous Agreement has been
extended by the parties.  Pending ratification as set forth below, the parties
hereby agree as follows:

1.             THE PARTIES AGREE THAT THE PROVISIONS OF THE PREVIOUS AGREEMENT
SHALL BE AND REMAIN IN THE SUCCESSOR AGREEMENT EXCEPT AS MODIFIED BY THE
FOLLOWING PROVISIONS AND LANGUAGE:

2.             3 YEAR TERM — DECEMBER 1, 2004 TO DECEMBER 31, 2007.

3.             ANY CLOSINGS OR CHANGES TO THE NUMBER OF SCHEDULED WORKDAYS NOT
CAUSED BY THE UNION IN VIOLATION OF THE APPLICABLE LAW OR THE NO-STRIKE CLAUSE
SHALL CAUSE A PROPORTIONAL CHANGE IN THE NUMBER OF DAYS REQUIRED FOR ANY
CRITERIA TO BE MET UNDER THE SUCCESSOR AGREEMENT.

4.             ARTICLE IV — GRIEVANCES — CHANGE “5 CALENDAR DAYS” TO “7 CALENDAR
DAYS”

5.             ARTICLE XXIV — UNIFORMS — CHANGE TO REPLACE 1C WITH THE
FOLLOWING:

“No vests required; No Blue Jeans; only solid colors for pants & skirts;
Employees may be required to wear name tags with only the employee’s first name
and last initial”; and

Delete second sentence of Article XXIV, Sec. 1a; and

Delete 2a & 2nd sentence of 2c; and

Delete all of 2d.

 

 

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6.             ARTICLE XXI — DEATH IN THE FAMILY — AMEND TO “THREE
(3) CONSECUTIVE WORKING DAYS OFF COMMENCING WITHIN SEVEN (7) CALENDAR DAYS” AND
ADD “GRANDCHILDREN” TO DEFINITION OF FAMILY.

7.             ARTICLE I — RECOGNITION — AMEND TO REFLECT THAT THE WORK OF THE
TURF CLUB ATTENDANT SHALL BE UNIT WORK, EXCEPT SO LONG AS THE CURRENT EMPLOYEE
IN THAT POSITION CONTINUES TO PERFORM THAT WORK SHE WILL NOT BE FORCED TO JOIN
THE UNION.

8.             ARTICLE VII, SEC. 4 & 5 — AMEND FROM “$7.50” TO “$10.00”

9.             ARTICLE VII, 5(B)(4) — PARTIES AGREE:  NO CHANGE IN TELEBET SHIFT
LENGTH; AND EMPLOYER WILL OFFER TO CREATE A “CALL-IN-LIST” TO COVER TIMES WHEN
THE EMPLOYER NEEDS ADDITIONAL OPERATORS ON SHORT NOTICE, AFTER SHAPE-UP IS
EXHAUSTED FROM REGULAR PROCEDURES.

10.           ARTICLE XII — WAGES

Sec. 5 — amend to $10.00

Sec. 13 — amend to reflect a “hire” rate of 90% of regular rate and then each
such employee shall go to 100% of rate on or after the one (1) year anniversary
of their hire — effective upon ratification.

11.           ARTICLE XV — VACATION — AMENDED TO READ:

All seniority shifts count

<10 yrs

 

>10 yrs

 

85% of live

 

5

 

 

10

 

65% of live

 

4

 

 

7

 

50% of live

 

2

 

 

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12.           ARTICLE XIX — AMEND SEC. 4 TO READ:  IN THE EVENT THE EMPLOYER
(1) SELLS ALL OR A CONTROLLING INTEREST IN ANY OF THE PNRC RACING OPERATIONS OR
(2) LEASES ANY OF THE PNRC RACING OPERATIONS TO A THIRD PARTY, THEN THE
EXECUTION AND ADOPTION OF THIS AGREEMENT BY THE RELEVANT THIRD PARTY SHALL BE
PREREQUISITE TO THE ACTIONS DESCRIBED IN (1) AND (2) OF THIS PARAGRAPH.  DURING

 

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THE TERM OF THE SUCCESSOR AGREEMENT TO PROTECT AND PRESERVE THE WORK OF THE
EMPLOYEES CURRENTLY WORKING UNDER THE PREVIOUS AGREEMENT, THE EMPLOYER AGREES,
TO THE EXTENT PERMITTED BY LAW, TO REQUIRE THAT AS A PREREQUISITE TO
SUBCONTRACTING CURRENT BARGAINING UNIT WORK, THE ENTITY PERFORMING THE
SUBCONTRACTED WORK SHALL BE REQUIRED TO ASSUME THE SUCCESSOR AGREEMENT WITH
RESPECT TO THE SUBCONTRACTED WORK.  IF THIS PREREQUISITE AND ASSUMPTION IS NOT
LEGALLY ENFORCEABLE, THEN THE EMPLOYER AGREES TO REFRAIN FROM SUBCONTRACTING
CURRENT BARGAINING UNIT WORK TO ANY SUBCONTRACTOR WHICH DOES NOT OBSERVE THE
WAGES, HOURS AND OTHER ECONOMIC CONDITIONS OF EMPLOYMENT EQUIVALENT TO THOSE
ESTABLISHED BY THE AGREEMENT, TO THE EXTENT PERMISSIBLE BY LAW.  FOR CLARITY,
THIS SUBCONTRACTING RESTRICTION ONLY APPLIES TO WORK CURRENTLY PERFORMED BY THE
BARGAINING UNIT, WHICH IS (1) ADMISSIONS PERSONNEL IN THE RACING DIVISION,
(2) TELEBET OPERATORS IN THE RACING DIVISION AND (3) MUTUAL PERSONNEL IN THE
RACING DIVISION.  FURTHER, THE UNION ACKNOWLEDGES THAT ANY AND ALL PORTIONS
BEYOND THE THREE ENUMERATED POSITIONS IN THIS PARAGRAPH MAY BE SUBCONTRACTED BY
EMPLOYER WITHIN THE SOLE DISCRETION OF THE EMPLOYER.

In Addition, the parties agree to conform Article VIII to this preceding
language.

13.           SCHEDULE C — TELEBET PRODUCTION — AMEND LAST SENTENCE OF FIRST
PAGE OF C TO DELETE THE WORDS “… NOT … NOR & BUT …” AND REPLACE WITH THE WORK “…
USED … AND …& AND …”

14.           SCHEDULE D — SHORTAGE POLICY — THE PARTIES AGREE TO AMEND TO
INCLUDE A $750.00 CAP ON LIABILITY OF TELEBET TELLERS TO PAY FOR ANY SHORTAGES,
WITH DISCIPLINE ONLY FOR SHORTAGE IN EXCESS OF THAT UNDER THE DISCIPLINE POLICY
TO INCLUDE PROGRESSIVE DISCIPLINE POLICY CURRENTLY IN PLACE.

15.           HEALTHCARE — AMEND PREVIOUS AGREEMENT TO PROVIDE THAT UPON START
OF SLOT OPERATIONS BY THE EMPLOYER, EMPLOYER SHALL CONTRIBUTE 75% OF THE COST OF
THE PREMIUMS FOR THE

 

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INSURANCE COVERAGES THEN PROVIDED TO THE CURRENT NON-UNION EMPLOYEES AND
CLASSIFIED AS “BASIC COVERAGE LIMITS AND PROVIDING APPLICABLE COVERAGES
INCLUDING DEPENDENT COVERAGES.

… for mutual employees who achieve either 300 shifts or an average 35 hours per
week in the prior calendar year and any Telebet or admissions employee who
achieves either 250 shifts or any average of 35 hours per week, in the prior
calendar year.

16.           401K — AMEND AGREEMENT TO PROVIDE THAT UPON START OF SLOT
OPERATIONS BY THE EMPLOYER THE EMPLOYER SHALL PERMIT PARTICIPATION IN THE
COMPANY 401 K BY ANY EMPLOYEE WHO BY THE AGE OF 21 HAS WORKED AT LEAST 1000
MINIMUM HOURS AND ACHIEVED 1 YEAR OF SERVICE, WITH THE THEN CURRENT PLAN OFFERED
TO THE CURRENT; NON-NON EMPLOYEES.

17.           DELETE CURRENT ARTICLE 25.

18.           ADD TO CONTRACT — “ALL PARI-MUTUAL TELLER OPERATED MACHINES SHALL
BE ABLE TO ACCEPT THE EXACT SAME TYPE OF BETS WITH REGARD TO RACETRACK, DOLLAR
AMOUNT, TYPE AND FORMAT OF BET, AS THE SELF-SERVICE MACHINE.”

19.           HOURLY CONVERSION SHALL BE PERMITTED PROVIDED THE EFFECT IS NO
LOSS OF SHIFTS, ECONOMICS OR WORK BY VIRTUE OF SUCH CONVERSION.  THE PARTIES
AGREE THAT THEIR INTENTION IS TO MAKE THE CONVERSION NEUTRAL AND TO THE
DETRIMENT OF NEITHER.

20.           BONUSES AND WAGE INCREASES:

Upon ratification, the Employer shall pay to all employees currently employed
and anyone on an approved leave of absence:

A)           a one-time lump sum 4% bonus to be paid in 2004 based on all hours
worked October 1st to December 31st in 2002 and all hours worked in 2003; and

B)            a one-time lump sum bonus of 4% on all hours worked in 2004, be
paid at the second pay period in 2005; and

 

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C)            effective 1/1/05 an increase of 4% on all rates of compensation in
the Agreement; and

D)            effective 1/1/06 an increase of 3% on all rates of compensation in
the Agreement; and

E)            effective 1/1/07 an increase of 3% on all rates of compensation in
the Agreement.

21.           INCLUDE IN THE SUCCESSOR AGREEMENT “BARGAINING COMMITTEE MEMBERS
SHALL BE CREDITED WITH TIME WORKED FOR ALL HOURS SPENT RELATED TO ANY EXTENSION
OF THE PREVIOUS AGREEMENT AND ANY SUCCESSOR AGREEMENT, EXCEPT FOR PAY.”

22.           ARTICLE V, SEC. 11 — ADD THE WORD “DEALERS.”

23.           THE PARTIES WILL INCLUDE IN THE SUCCESSOR AGREEMENT LANGUAGE TO
THE EFFECT THE EMPLOYER AGREES TO MAKE ADJUSTMENTS IN THE PRODUCTIVITY STANDARD
FOR ABOVE AVERAGE CANCELLATIONS (ARISING FROM WAGES PLACED WITH OTHER TELLERS)
WHICH CAUSES A TELLER TO NOT RECEIVE THE INCENTIVE AS IS CURRENTLY PRACTICED.

24.           ARTICLE II, B(1)(A) — “ANYONE WORKING THE EXTRA PAY POSITIONS OF
INFORMATION WINDOWS OR “MACHINE SKIMMER” MUST WORK THE LIVE SHIFT WHICH
COMPLETELY CORRESPONDS TO THE PENN NATIONAL LIVE EVENT.

25.           THE PARTIES WILL INCLUDE REFERENCES IN THE SUCCESSOR AGREEMENT
THAT EXPLICITLY DESCRIBE THE BARGAINING UNIT AS ONE THAT DOES NOT APPLY TO
POSITIONS IN GAMING OPERATIONS OTHER THAN RACING.

26.           ARTICLE I, SECTION 2 — ADD “PARI-MUTUAL” BEFORE “BETTING” ON LINE
2, RECOMMENDATION/RATIFICATION.

 

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This Memorandum shall be subject to, and without any legal effect, until it has
received the ratification of the Union members covered by this Agreement.  The
Union’s negotiating team and the Union leadership as well as all other persons
signed below agree that each of them will affirmatively recommend the terms of
this Memorandum of Agreement to the Union membership.  After ratification, these
terms will be promptly documented in the Successor Agreement.  Terms not in
quotations in this Memorandum shall be definitively drafted and place
appropriately within the Successor Agreement.  Until such time the Previous
Agreement remains if effect.

 

FOR THE UNION:

 

FOR THE EMPLOYER:

 

 

 

 

 

 

 

 

 

/s/Robert Liguori

 

/s/Richard Schnaars

 

Robert Liguori

 

Richard Schnaars, Manager of
Racetrack Operations

 

 

 

 

 

 

 

 

 

Negotiating Team Members

 

 

 

 

 

 

 

 

 

 

 

/s/Roay Garganese

 

 

 

Ray Garganese

 

 

 

 

 

 

 

 

 

 

 

/s/James Mahoney

 

 

 

James Mahoney

 

 

 

 

 

 

 

 

 

 

 

/s/Douglas Davis

 

 

 

Douglas Davis

 

 

 

 

 

 

 

 

 

 

 

 

 

Dec. 10, 2004

 

 

 

 

 

 

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