MEMORANDUM OF UNDERSTANDING

     AGREEMENT made between New York City Transit Authority (hereinafter referred to as �the Authority�) and Subway Surface Supervisors Association (hereinafter referred to as the �Union� or �SSSA�).

     It is mutually agreed that the collective bargaining agreement between the Authority and the Union shall be amended as follows:

1. TERM

     This agreement shall be effective from February 21, 1998 and continue in affect through October 31, 2003. This agreement is subject to approval by the Metropolitan Transportation Authority (�MTA�) Board and ratification by the membership of the Union.

2. JOB SECURITY/NO LAYOFF

     During the period between full ratification and approval of this agreement and October 31, 2003, the Authority will not layoff or furlough any employee represented by the Union, consistent with the original no layoff agreement reached between New York City and DC 37. Prior to any demotions due to unforeseen fiscal problems, cooperative efforts between the parties regarding redeployment, reassignment, etc. of employees, shall continue where necessary.

     Prior to demoting supervisory employees to the hourly ranks due to budget reductions, NYC Transit will meet with the Union to discuss whether the Union can generate sufficient savings to avoid such demotions.

3. GENERAL WAGE INCREASES

The wage rates for employees represented by the Union shall be increased as follows:

     a. Effective March 1, 1999, the rates of pay in effect on February 28, 1999 shall be increased by 3.75 percent.

     b. Effective August 1, 2000, the rates of pay that were in effect on July 31, 2000 shall be increased by five (5) percent.

     c. Effective August 1, 2001, the rates of pay that were in effect on July 31, 2001, shall be increased by three (3) percent.

     d. Effective August 1, 2002, the rates of pay that were in effect on July 31, 2002 shall be increased by four (4) percent.

     e. There shall be an increase of 3.75 percent in the night shift differential effective March 1, 1999.

     f. Rates of pay below the top rates shall be adjusted in accordance with the appropriate progression schedules.

4. LUMP SUM PAYMENT

Effective upon full ratification and approval of this agreement, the Authority shall pay as soon as practicable a one-time lump sum payment, of 2 percent (2%) calculated by multiplying 2 percent (2%) times the employee�s hourly rate as of November 1, 1997 times two thousand and eighty eight (2088). This payment is pensionable. The payment is to be made to all employees on the payroll on November 1, 1996 and November 1, 1997. Employees in an hourly title on November 1, 1996 who were subsequently promoted and were in a supervisory title on November 1, 1997 are eligible for the lump sum as set forth herein. For employees hired before November 1, 1996 who have retired or have been injured on duty prior to November 1, 1997, so that they are not on the payroll on that date, the lump sum shall be prorated.

5. LONGEVITY PAYMENTS

A. Effective June I, 1997, the Authority will make longevity payments according to the following schedule:

a) An employee with thirty (30) or more years of continuous service shall receive and annual payment of five hundred dollars ($500.00).

b) An employee with twenty (25) but less than thirty (30) years of continuous service shall receive an annual payment of four hundred dollars ($400.00).

c) An employee with twenty (20) but less than twenty-five (25) years of continuous service shall receive an annual payment of three hundred dollars ($300.00).

d) An employee with fifteen (15) but less than twenty (20) years of continuous service shall receive an annual payment of two hundred dollars ($200.00).

Entitlement for the longevity shall be based upon the anniversary date of the individual who meets the stated criteria. Such payments are pensionable.

B. Upon full ratification and approval of the agreement, longevity payments due to employees for the retroactive period from June 1, 1997 through December 31, 1999 shall be paid in one lump sum to be paid as soon as practicable. Thereafter, payments will be made in a lump sum on the first payroll period in December. Employees who resign, die, retire or are separated from service or are promoted to a title that does not receive longevity payments before the payment for longevity is made will be paid a pro-rata share of the longevity payment based on the number of days the employee was in paid status during the eligible year.

6. 25/55 EARLY RETIREMENT PLAN EMPLOYEE HEALTH CONTRIBUTION

Effective upon full ratification and approval of the agreement, the additional one (1) percent employee contribution made by participating members, pursuant to the parties� collective bargaining agreement, will be eliminated and refunded retroactive to January 1, 1997. All 25/55 medical contributions made by participating members prior to January 1, 1997 shall revert to the Authority.

7. PENSION

The MTA and the Authority has supported state legislation which has been signed into law which would reduce all member contributions as follows: those paying contributions of 5.3 percent will pay 2 percent, and those paying 3 percent contribution will pay 2 percent contribution as soon as the law allows.

8. HEALTH & WELFARE BENEFITS

(See attached Stipulation and Agreement)

9. DISCIPLINE PROCEDURE

a. Disciplinary cases where the recommended penalty is a 15-day suspension or less will be subject to the disciplinary arbitration provisions in the contract pursuant to Article 1 Section 1.7 (B) 1.

b. All cases involving sick leave violations, despite the level of the penalty with the exception of those charges involving fraud, will be processed through the disciplinary arbitration provision in the contract.

c. The parties agree no charge of fraudulent sick lines will be brought against an employee if more than one year has expired since submission of the sick lines.

d. It is understood that employees will not be pre-disciplinary suspended for time and attendance related violations except where the charge involves fraud.

10. EARNINGS CAP (Related to Overtime Distribution)

a. The parties agree that the earnings cap for supervisors covered by the agreement shall be $85,000 over a rolling 12-month period including all monies paid to the employee. It is understood that such an earnings cap will be correspondingly increased by negotiated increases in wages including the 3.75% increase as set forth above. This provision replaces the procedure detailed in Article II Section 2.2 (g) 1 of the existing integrated agreement. NYC Transit will continue to publish a list indicating which employees have exceeded the earnings cap.

b. Any retroactive monies paid pursuant to this agreement related to periods prior to October 1, 1999 shall not be considered in the calculation of an employee�s earnings for purpose of the cap.

c. Exceptions to the earnings cap can only be made by a Department Head based upon unusual circumstances involving an employee or the operation or an emergency.

11. COMMERCIAL DRIVER�S LICENSES

     Commencing upon full ratification and approval of this agreement, the Authority will reimburse employees required to have Commercial Drivers Licenses.

12. COMMINGLING - See attached side letter

13. TRANSITCHEK

     Effective as soon as practicable following full ratification and approval, the Authority will offer Transitchek benefits to employees who express interest.

14. 401(K)

     Effective on the earliest practicable date, but in no event, later than January 1, 2001, the Authority will offer employees the option of opening a 401(k) account on the same terms and conditions as currently in effect, as it may be amended.

15. REGIONAL BUS COMPANY

     The parties agree that the artificial distinctions that currently exist between the bus operations at the Transit Authority and the Operating Authority do not well serve the riding public or the members of the union. In furtherance of that mutual recognition, the parties agree to convene a senior level labor/management executive committee. This committee will be charged with developing a plan to consolidate the bus operations at the Transit Authority and the Manhattan and Bronx Surface Transportation Operating Authority into a new subsidiary of the Metropolitan Transportation Authority. The purpose of such consolidated bus company would be providing efficient, cost effective bus service in the metropolitan region transportation district.

     The parties agree that the Committee will convene no later than 30 days following full ratification and approval of this agreement. The Committee will identify impediments to the creation and efficient operation of such regional bus authority and recommend solutions to said impediments. If the parties agree that such consolidated bus company is feasible and have resolved outstanding issues then required legislation shall be jointly drafted and supported.

16. SICK LEAVE CASH-OUT

Effective November 1, 2000, the parties agree to establish a sick leave cash out program as follows:

Employees with ten (10) or more years of service with NYC Transit, and a minimum of half of their potential sick leave will be paid, upon retirement and voluntary separation, a non-pensionable lump sum cash payment of 50% of their sick leave balance. Employees who have 70 percent or more of their potential sick leave at the time of voluntary separation and retirement from the Transit Authority will receive a cash out allowance of 60 percent of their sick leave balance. This payment will be based on (8) hours straight time pay for each day at the rate in effect at the time of separation.

17. SICK LEAVE CONTROL PROGRAM

Effective April 1, 2000, the following sick leave control provisions shall apply:

1) An employee having five (5) unsubstantiated instances of sick leave absences in any running one year period will be counseled by his/her supervisor, at which time he/she will be advised and instructed to improve his/her sick leave record. The employee shall be paid for the time he/she is counseled and may have a union representative present if he/she requests one.

2) Upon the sixth (6) unsubstantiated instance of sick leave absence in any running one year period, he/she will be placed on the Sick Leave Control List and be so notified with a copy to his/her union representative. The employee shall be required to acknowledge in writing receipt of the notification that he/she is on the Sick Leave Control List.

3) An employee having a recent pattern of one or two day absences, with less than one half (1/2) of his possible sick leave balance in the bank, will be counseled by his/her supervisor. The employee will be advised and instructed to improve his/her sick leave record. Should such patterned absences continue the employee will be placed on the Sick Leave Control List.

4) An employee who is placed on the Sick Leave Control List must provide medical documentation for all sick leave absences including unpaid absences, regardless of duration. Failure to do so will be cause for loss of pay, if the employee would be normally entitled to same, and may be cause for disciplinary action. New employees promoted into the SSSA on or after November 1, 2000 and approval of the agreement who at any time are on the Sick Leave Control List will not be granted sick leave with pay for the first (1st) day of any sick leave instances while on such list.

5) Each Department must furnish daily to Absentee Control a list of all employees who are on the Sick Leave Control List and have reported sick.

6) The record of each employee on the Sick Leave Control List will be reviewed every six (6) months starting with the date the employee is placed on the Sick Leave Control List. If on the six (6) month review, the employee has two (2) or less sick leave instances during the previous six (6) months or four (4) or less sick leave instances during the previous twelve (12) months, his/her name will be removed.

7) In the event the employee was absent more than two (2) times during the six (6) month period or more than four (4) times during the twelve (12) month period, he/she will remain on the Sick Leave Control List and may be subject to appropriate disciplinary action.

8) A notice will be sent to all employees who have been removed from the Sick Leave Control List, with a copy to his/her Union Representative.

18. Article II, Section 2.8 (e) shall be modified to read

�An employee may elect to accumulate an AVA day only if he/she does not have a total of fifty (50) days of AVAs to his/her credit. At the employee�s option, he/she may elect to accumulate up to forty-eight (48) hours of OTO time. OTO time may be used to receive time off with prior approval of the department. OTO time will be accumulated at the rate of 1 � hours for each overtime hour worked.�

19. If an employee does not utilize his/her personal leave day during the calendar year, he/she may cash-out the PLD during the last month of the calendar year with appropriate written notice. Such a cash-out will not be considered pensionable income.

20. The side letter dated 4/28/97 appendix C paragraph A (1) is amended to read as follows: �The Authority agrees to allow the SSSA to designate four persons who will work one week assigned on regular Authority work assignments and one week devoted to contract administration�.

21. The side letter dated April 28, 1997 (various topics); November 22, 1982 (SSSA- Workers� Compensation/Differential Pay); and April 14, 1992 (Additional sick leave requests) shall continue in effect during the term of this agreement. The new side letters appended hereto shall also be appended to the collective bargaining agreement.

22. ADDITIONAL PROVISIONS

The parties agree to further amend the collective bargaining agreement consistent with the attached Appendices A & B and this MOU.

This agreement may not be entered into evidence during any interest arbitration procedures to establish a contract to be effective February 21, 1998.

IT IS AGREED BY AND BETWEEN THE PARTIES THAT ANY PROVSION OF THIS AGREEMENT REQUIRING LEGISLATIVE ACTION TO PERMIT ITS IMPLEMENTATION BY AMENDMENT OF LAW OR BY PROVIDING ADDITIONAL FUNDS THEREFORE, SHALL NOT BECOME EFFECTIVE UNTIL THE APPROPRIATE LEGISLATIVE BODY HAD GIVEN APPROVAL. IT IS FURTHER AGREED THAT THE PARTIES WILL JOINTLY SEEK SUCH APPROVAL WHERE REQUIRED.

�� L I N K S

1. MEMORANDUM OF UNDERSTANDING
2. APPENDIX A
3. APPENDIX B
4. 2000 SIDE LETTER
5. STIPULATION AND AGREEMENT
6. SCHEDULE OF RAISES
7. HOME PAGE