NYC OTB Closing Plan

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NEW YORK CITY OFF-TRACK BETTING CORPORATION

MANAGEMENT’S PLAN FOR CLOSURE OF NYCOTB

November 2010 Lawrence Schwartz Chairman Gregory F. Rayburn President & CEO

INTRODUCTION It is anticipated that by no later than mid December 2010 the corporation will have depleted all of its unrestricted cash. The Corporation’s only hope for a turn-around is through the enactment of a bill presented to the New York State legislature on November 29, 2010. Provisions of such bill have been agreed to by the members of the committee of unsecured creditors in the Corporation’s chapter 9 debt adjustment proceedings. The passage of which is also a necessary condition to the confirmation and execution of NYCOTB’s plan of debt adjustment under chapter 9 (the “Plan”). However, if the legislation fails to be enacted, NYCOTB is faced with no choice but to carry out the closure plan of April 2010, as modified below (the “Closure Plan”).

Plan Summary This planning document is intended to furnish a roadmap for the complete shutdown of all aspects of the Corporation. Thus, the Closure Plan deals with the closing of: o all branches and tele-theaters o all restaurant wagering facilities o Advance Deposit Wagering (i.e., telephone and internet betting) operations o NYCOTB’s headquarters at 1501 Broadway o satellite warehouse facility The Closure Plan also provides for: o the layoff of 1,026 employees of the Corporation1 The term “Commencement Date,” as used in the Closure Plan, denotes the date on which the first employee layoffs will begin. This date is subject to certain actions that must be taken by parties outside the Corporation pursuant to union agreements and legislation, as well as by potential intervening events. Although NYCOTB will be cash negative on the Commencement Date, it is anticipated that pensions will have in place only the money paid to date and may or may not be current and that ordinary trade creditors currently in arrears will not be paid any money.

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1,026 represents the number of employees as of November 26, 2010.

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The Closure Plan is divided into the following sections: Section 1: Operations Overview Section 2: Outline of Procedures for Employee Layoffs Section 3: Branch Closing Procedures Section 4: Telephone Betting Closing Procedures Section 5: Headquarters (1501 Broadway) Closing Procedures Section 6: Warehouse Closing Procedures

Section 1 OPERATIONS OVERVIEW In order to understand what a complete shutdown of the Corporation entails, a brief overview is necessary. Branch System The NYCOTB branch system is comprised of 44 branches, 3 Teletheaters, and 7 restaurant locations. The branch system employs 593 people in the following titles: Branch Manager, Restaurant Supervisor, Betting Clerk, and Junior Building Custodian (JBC). Advance Deposit Wagering Center (formerly known as the Telephone Betting Center) Telephone Betting and Internet Wagering are operated out of 1501 Broadway, NY, NY. The operation generates 20% of the overall handle and employs 218 people. The operational hours for Telephone Betting are 12:00 PM to 11:00 PM on Monday, Tuesday, and Wednesday, 12:00 PM to 11:30 PM on Thursday, Friday, and Saturday, and 12:00 PM to 9:00 PM on Sunday. The hours of operation for Internet Wagering mirror Telephone Betting. Corporate Headquarters The Corporation is headquartered on three floors (recently downsized from four floors) of 1501 Broadway, NY, NY, which houses the following administrative and support departments (these departments employ 178 people in total):

Department Finance/Accounting Legal Branch Operations Racing Operations

Number of People/ Positions 36 02 19 06

Union Members 21 0 15 02

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Executive Office Disciplinary Action EEO Security Marketing Human Resources Customer Service Telecommunications Information Technology Facilities Real Estate Office Services

01 03 01 23 0 08 14 23 11 18 02 11 178

0 02 0 22 0 03 13 21 04 16 0 10 129

Warehouse In addition to the above, The Corporation operates a warehouse located at 53-06 Grand Avenue, in Maspeth, Queens. The warehouse employs 37 people in the following departments:
Department Auto Mechanics Motor Vehicle Operators Print Shop Stock Room Supervising Technicians Technicians Warehouse Administration Number of People/ Positions 01 06 03 12 02 12 01 37 Union Members 01 06 03 12 02 12 0 36

Vehicles The Corporation owns a fleet of 47vehicles (11 passenger vehicles and 31 vans, and 5 light duty trucks), which are serviced at the warehouse facility. Employees In total, The Corporation employs 1026 people, of which 58 are non-union and 968 are union members, represented by the four following unions: Local 2021 of District Counsel 37 (803); Local 858 of the International Brotherhood of Teamsters (148); Local 3 of the International Brotherhood of Electrical Workers (14); and the Organization of Staff Analysts (3). The current annual payroll (salary and overtime) is approximately $48,000,000. The employees are in Per

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Diem/Hourly, Part Time, and Full Time positions that for City-employment purposes are noncompetitive from the entry level up to the executive level.

Section 2 OUTLINE OF PROCEDURES FOR EMPLOYEE LAYOFFS The following is an outline of the steps to be taken with respect to employee layoffs:

ACTION o Identification and categorization of those employees essential to implementation of the Closure Plan (“Essential Employees”) for whom special arrangements will have to be made to ensure continuity of their employment during the closure process. o Prepare and send layoff notifications to unions: - Summary by layoff unit including number of affected positions by title, tc#, civil service status and name, SS#, start date, title start date in inverse seniority order excluding essential employees. o Prepare layoff notification booklet for employees (includes information with respect to benefits to which employees are entitled in event of layoff). o Meeting with unions to discuss aspects of Closure Plan

TIME FRAME Immediately after the determination is made that operations will have to be shutdown.

Immediately after the determination is made that operations will have to be shutdown.

Immediately after the determination is made that operations will have to be shutdown.

Immediately after the determination is made that operations will have to be shutdown. 5

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o Send Federal WARN notices to unions for represented employees and directly to non-union employees as well as to Mayor and State Department of Labor o Send Layoff Notifications to unions. o Send out layoff notification to non-union (managerial) employees (includes OTB specific forms along with layoff notification booklet). o Send layoff notification to union employees (includes layoff notification booklet). o Make HR personnel available to provide guidance to and answer questions from employees being laid off. Guidance might simply consist of referring laid off employees to support agencies and entities, such as NYCERS for pension matters, for example.

Immediately after the determination is made that operations will have to be shutdown.

Immediately after the determination is made that operations will have to be shutdown. At the discretion of NYCOTB based upon need for employee’s services

Immediately after the determination is made that operations will have to be shutdown.

To begin at time that layoff letters are disseminated.

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Section 3 BRANCH CLOSING PROCEDURE The last day of branch betting operations will be December 3rd and at the close of business on that day, all bricks and mortar branch locations will no longer be open to the public. The positions of 593 people assigned to the branches and restaurants will all be terminated (with requisite prior notifications having been made). Please note that NYCOTB will retain no more than 12 branch staff personnel for approximately 6 days a week to assist with the shutdown. During that period, 3 branch locations will remain operational to allow for the cashing of tickets (Branch 003 in Queens located at 107-40 Queens Blvd; Branch 133 in Brooklyn located at 67-19 Bay Parkway; and Branch 119 in Manhattan located at 515 7th Avenue). Provisions will be made for appropriate signage to be posted on the doors or windows of the branches informing customers that the branch is permanently closed and where to have tickets/vouchers cashed and/or to get further information. The following table shows the number of positions to be lost:

Title Full Time Branch Managers Shift Branch Managers Part Time Branch Managers Full Time Restaurant Supervisors Part Time Restaurant Supervisors Full Time Betting Clerks Part Time Betting Clerks Per Diem Betting Clerks Full Time Restaurant Clerks Part Time Restaurant Clerks Per Diem Restaurant Clerks Full Time Admission Clerk Part Time Admission Clerk Full Time JBCs Part Time JBCs Per Diem JBCs Released To Union Total

Number of People/Positions 39 30 60 12 07 159 142 0 11 08 5 04 03 38 73 0 02 593

Union Members 39 30 60 12 07 159 142 0 11 08 5 04 03 38 73 0 02 593

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Security measures for the branches, once business operations cease, will include, but not be limited to, the continued activation of the alarm systems at each branch, rekeying of all branches, and, if necessary, patrol teams culled from staff remaining on payroll. In addition, NYCOTB will work with local police precincts to augment the security patrol to minimize vandalism or other criminal acts at the closed branches.

Specifically, on the Commencement Date, all branch offices, except those branches designated to be open until for a week to cash winning betting tickets, will close to the public at 5:00 PM. After the branches have closed, the armored carrier will pick up deposits at all branches beginning at 5:45 PM.

OTB Security will pick up petty cash funds and checks beginning at 5:45 PM on the Commencement Date. All petty cash funds and receipts and checks, should be placed in separate bank deposit bags, sealed and these bags identified as to the branch #, branch location, branch manager/petty cashier and the amount of money or checks enclosed in the bag. The transmittal sheets, to be delivered to the branches prior to the date of closure, should be placed inside the sealed bags with the petty cash funds and checks.

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Section 4 TELEPHONE BETTING CLOSING PROCEDURE The positions of the 129 Full and Part Time Betting Agents (along with the 69 Per Diem Agents) assigned to the Account Deposit Wagering Center at 1501 Broadway (formerly known as the Telephone Betting Center) will be terminated on the Commencement Date (with requisite prior notifications having been made). After the cessation of all account deposit wagering, AmTote (NYCOTB’s contracted outside totalizator wagering system) will produce a report of all wagering accounts including individual account balances. Each account holder with a balance greater than $5.00 will be sent a check for that amount to his/her address of record. The Customer Service department head, plus several staff members, will remain on payroll to complete this process. It is anticipated that the paying out of all account balances will take four to six weeks.

The remaining Customer Service Staff will also handle claims for un-cashed winning tickets. Once the Customer Service Department has been closed down (after all account balances have been paid out), provision will be made for the cashing of winning tickets until such time has expired that the funds for those tickets has been forfeited to the State.

The following table shows the number of positions to be lost:
Union Members Number of People/Positions Title Supervisors Full Time Agents Part Time Agents Per Diem Agents Clerical Staff Account Wager Reps Total 08 87 42 69 05 07 218 0 87 42 69 05 07 210

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Section 5 HEADQUARTERS (1501 BROADWAY) CLOSING PROCEDURES Essential management and union staff from the below listed departments will remain on payroll to execute the closing process. Essential positions (both union and non-union) in the various departments at headquarters will be terminated as soon as is practicable. NYCOTB does not intend on keeping employees more than 120 days after the Commencement date.

The following table shows positions to breakdown of positions retained during shutdown:
Department Security Clericals Operations Finance/Acct/Audit IT/Betting Systems Executive Inspector General Facilties/Real Estate Admin/Records/Discipline Customer Service Legal Human Resources Staff Remaining For Closing Process 11 06 03 10 04 02 0 05 03 06 02 06 58

A plan will be developed for the proper storage of the Corporation’s books, records and legal documents as may be required by law and regulations. NYCOTB records will be turned over to the Office of General Services.

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Section 6 WAREHOUSE CLOSING PROCEDURES Staff from Materials Management, Facilities and Security will be assigned to the Maspeth facility to assist with the closing. All Corporate vehicles will be parked at Maspeth.

The warehouse facility will be used to store any property removed from the branches, as well as from 1501 Broadway. Until a determination is made regarding how to dispose of OTB assets, NYCOTB will work with NYS OGS to ensure that all of the Corporations assets are protected and secure.

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