Memorandum of Understanding entered into so as to be effective July 1,2001 between the Hotel Association of New York City, Inc. in its own behalf and in behalf of the HANYC Bargaining Group Hotels' (hereinafter collectively referred to as the "Employer" and the New York Hotel and Motel Trades Council, AFL-CIO in its own behalf and in behalf of its affiliate unions (hereinafter- referred to as "Trades Council" or "Union").

   WHEREAS, the Employer and the Trades Council are signatories to a Collective Bargaining Agreement signed June 26,1985, as amended by a Memorandum of Understanding signed January 30,1990 (hereinafter collectively referred to as the "1990 Agreement"), which 1990 Agreement by its terms, expired on June 30,1995, and was extended by the parties to midnight July 4,1995, and further amended by a Memorandum of Understanding signed July 5, 1995 (hereinafter collectively referred to as the "1995 Agreement"), "which Agreement by its terms, expires on June 30,2001;

   WHEREAS, the Employer and the Trades Council desire to modify and extend the 1995 Agreement as now restated in this Memorandum of Understanding, signed June 15, 2000 (hereinafter referred to as "2001 Agreement" or "this Agreement"),
   NOW THEREFORE, it is mutually agreed as follows:

1. Duration

    Except as expressly provided for herein, the 1995 Agreement is renewed and extended from July 1,2001 until midnight June 30,2006.

2. Wages
   

    a. Effective My 1,2001, each employee on the Employer's payroll on that date shall receive a wage increase of 4.0% of the employee's  actual rate of pay in effect on that date.
    b. Effective July 1,2002, each employee Oft the Employer's payroll on that date shall receive a wage increase of 4.0% of the employee's  actual rate of pay In effect on that date.
    c. Effective July 1,2003, each employee on the Employer's payroll on that date shall receive a wage increase of 4.0% of the employee's actual rate of pay in effect on that date. 

     d. Effective July 1,2004, each employee on the Employer's payroll on that date shall receive a wage increase of 4.0% of the employee's actual rate of pay in effect on that date.
    e. Effective July 1,2005, each employee on the Employer's payroll  on that date shall receive a wage increase of 4.0% of the employee's  employee's actual rate of pay in effect on that date.

     f. The Employer and the Union agree that, in accordance with past practice, the rate of the aforesaid wage increases shall be applicable   to all wage-related items contained in the 2001 Agreement, e.g., extra
room rates, night shift differential rates, banquet rates, etc.
     g. The minimum weekly rates set forth in Schedule A of the 1995 Agreement shall be increased by the wage increases provided for in paragraphs 2(a), 2(b), 2(c), 2(d) and 2(e) above.

3. Health Benefits Fund 

a. Effective as of January 1,2003, the contribution rate payable by contributing Employers to the Health Benefits Fund (formally known as the Insurance Fund, Dental Fund and Medical Fund) shall be; increased by an additional one percent (1.0%) of wages as defined under Schedules B, D and E of the I. W. A.

 b. The Employer and the Union agree that the following improvements in benefits provided by the Health Benefits Fund will be implemented:
(i) Effective no later than July 1,2003"full-time students who are dependents of covered employees will continue to receive coverage wider the Health Benefits Fund until the last calendar day of the calendar year in which said dependent reaches twenty-three (23) years of age.
(ii) Effective no later than July 1,2003, the Health Benefits Fund will provide up to thirty (30) days of in-patient psychiatric coverage. It
is understood that in the event that legislation is enacted which requires modification to this benefit, the parties agree to meet to discuss the impact of such mandated modification of this benefit in order to maintain the then current contribution rate.
c. The parties agree to direct the Trustees to maintain the projected liquid assets of the Health Benefits Fund at the end of each calendar year at not less than forty-five percent (45%) of the following year's expenses of the Fund.

 4. Pension Fund
  

a. Effective as of July 1,2001, the contribution rate payable by contributing Employers to tie Pension Fund shall be increased from five and one-half percent (5.5%) of wages as defined under Schedule C of the I.WA. to seven percent (7.0%) of wages as defined under Schedule C of the I.W.A.
b. The Employer and the Union agree that the following increases in pension "benefits provided by the Pension Fund will be implemented in accordance with the following table for employees in active covered employment as of the effective dates set forth below:

c. The Employer and the Union agree that the following increases in monthly pension benefit payment will be implemented in accordance with the fallowing table for pensioners and beneficiaries in pay status on the effective dates set forth below:

5. Pre-Paid Legal Fund - Effective on July 1, 2001, the Employer shall contribute to the Pre-Paid Legal Fund, at -the rate of one-half of one percent (0.5%) of wages as defined in Schedule D of the I.W.A. Said new contribution rate shall replace and supersede the current contribution rate of five cents (5¢) per hour per employee.

6. Additional Sick Day - Effective on July 1,2003, the number of paid sick days to which employees shall be entitled under the provisions of Section 54 of the I.W.A. shall be increased to seven (7) paid sick days.

7. Accumulation of Unused Sick Days - Effective July 1,2001, in lieu of receiving one day's pay for each unused sick day in December of each year, each employee shall have the option to carry over unused sick days from year to year, provided that no employee shall be permitted to accumulate more than fifteen (15) unused sick days at any time, If in January of any calendar year, an employee's entitlement to sick days for that year would result in an accumulation of more than fifteen (15), the Employer shall pay to the employee in the second payroll week of the preceding December the number of sick days to reduce the accumulation to fifteen (15) in January at the employee's then current rate of pay. An employee may elect to receive a pay out of his/her accumulated sick days during the second payroll week of December by providing the Employer with two (2) weeks advance written notice. Upon an employee's termination of employment, the Employer shall pay the employee for any unused sick days accrued by the employee, at the employee's then current rate of pay.

8. Second Year Rate for New Employees - New employees hired on or after July 1, 2001, shall receive not less than eighty-five (85%) of the wage rate set forth in Schedule A of the I.W.A. as amended by subsequent wage increases during said employee's second year of employment, provided, however, that this provision shall not apply to any employee who, during the twenty-four (24) months prior to his/her employment, was continuously employed for a period of twelve (12) months by an Employer signatory to this Agreement.

9. 401(K) Plan - Effective July 1,2001, the parties agree that a non-employer contributory 401(K) Plan will be established in accordance with applicable law for the benefit of employees covered by this Agreement. Employee contributions into said 401 (K) Plan shall be made by employees on a voluntary basis. Any and all costs attendant to the establishment, implementation and administration of said 401(K) Plan, other than costs of deducting and withholding from employee wages and transmitting same to the Plan, shall be paid out of the employee elective deferral contributions.

10. Attached hereto are a series of side letter agreements by and between the parties which are incorporated and made part of this Agreement,

11. The parties agree that on or about September 1, 2000, a committee of 2 representatives from the Union and 2 representatives from the Association will meet to incorporate the component documents which currently comprise the Industry-Wide Agreement including the 1985,1990,1995 and 2001 Memoranda of Understanding into a single consolidated Industry-Wide Agreement.

12. The parties have failed to reach agreement regarding the Association's proposal regarding the impact of technological change on bargaining unit jobs and it is understood that an arbitration involving these issues has been filed by the Association, The parties agree that their failure to reach an accord in negotiations relating to this subject does not prejudice either party's position regarding the correct interpretation of Section 53 of the I.W.A.

13. The parties hereto agree that their understanding and agreements as set forth in this Agreement and the attached side letter agreements are subject to ratification by the Union and by the Board of Directors of the Association.

IN WITNESS WHEREOF, the Employer and the Union have offered their hands and seals the day and year first above written.

The Hotel Association of New York City Inc.
Joseph E. Spinnato, President
New York Hotel & Motel Trades Council, AFL-CIO
Peter Ward, President

Exhibit 1 - HANYC Bargaining Group Hotel