ARTICLE IV: BENEFITS
INDEX
Section 1. Player Benefits
Section 2. Player 401(k) Benefits
Section 3. Player Supplemental
Medical Benefits
Section 4. Labor-Management Cooperation
and Education Trust
Section 5. Additional Player
Benefits
Section 6. Insurance Carriers
Section 7. New Benefits Funding
Section 8. Projected Benefits
Section
1. Player Benefits.
Except as set forth below in this Section 1, effective
with the date of this Agreement, and continuing for
the duration thereof, the NBA shall provide the following
pension benefits to NBA players and former NBA players:
(a) Subject to the provisions of Section 1(d) below,
the NBA shall provide pension benefits in accordance
with the terms of the National Basketball Association
Players' Pension Plan, as restated effective February
2, 1997, and as amended by the First, Second, Third
and Fourth Amendments thereto (the "Pension Plan").
In accordance with the September 1995 and January 1999
Collective Bargaining Agreements between the parties,
the "Normal Retirement Pension" (as defined
under the Pension Plan) payable to a player under the
Pension Plan is the maximum monthly amount permitted
by the applicable benefit limitations under the Internal
Revenue Code of 1986, as amended (the “Code”),
as in effect immediately prior to the enactment of the
Economic Growth and Tax Relief Reconciliation Act of
2001 ("EGTRRA"), to be paid to the player
at his "Normal Retirement Date" (as defined
under the Pension Plan) under the Pension Plan, based
upon a Social Security Retirement Age of 65 (the "Maximum
Monthly Benefit"). The Maximum Monthly Benefit
shall be increased only as specifically provided for
in this Section 1(a).
Effective only for the duration of this Agreement, the
Maximum Monthly Benefit shall, except as otherwise provided
herein, be adjusted for increases in the cost of living
in the manner provided for under Section 415(d)(2) of
the Code. In no event, however, shall the adjusted Maximum
Monthly Benefit for a Plan Year exceed an amount that
would require the actuarially-determined scheduled contributions
(to be made to the Pension Plan to fund for such adjusted
benefit for the Plan Year) to exceed, by more than five
(5) percent, the actuarially-determined scheduled contributions
that would be made to the Pension Plan for that Plan
Year using the Maximum Monthly Benefit in effect for
the immediately preceding Plan Year. The parties agree
that the determinations described in the preceding sentence,
including any actuarial assumptions and projections
related thereto, shall be made by the actuaries of the
Pension Plan and that any such determinations shall
be binding and conclusive. Any increase in the Maximum
Monthly Benefit hereunder shall be effective as of the
first day of the month following the beginning of the
Plan Year of the Pension Plan to which the increase
relates (the "Benefit Increase Commencement Date"),
shall apply only with respect to any benefit payment
or payments to be made on or after the Benefit Increase
Commencement Date, and shall not require the recalculation
of any benefit payment or payments made prior to the
Benefit Increase Commencement Date.
Notwithstanding the foregoing:
(1) Except as may otherwise be required under the
Code, the benefit payable to any player or beneficiary
under the Pension Plan shall in no event exceed the
limitations on benefits under the Code, as in effect
immediately prior to the enactment of EGTRRA.
(2) If all or any portion of the actuarially-determined
scheduled contributions to be made to the Pension
Plan will not be fully deductible under the Code when
paid, the Maximum Monthly Benefit shall not exceed
the amount which would result in all of such contributions
being fully deductible when paid. The Players Association
shall be given written notice of any such determination.
The parties agree that the determinations described
in this subsection (a)(2), including any actuarial
assumptions and projections related thereto, shall
be reasonable and shall be made by the actuaries of
the Pension Plan. Any such determinations shall be
binding and conclusive.
(3) The "Normal Retirement Benefit" (as
defined under the Pension Plan) payable to a “Pre-1965
Player” (as defined under the Pension Plan)
under the Pension Plan shall continue to be $200 per
month for each "Year of Pre-1965 Credited Service"
(as defined under the Pension Plan). Any benefits
that are unable to be paid to Pre-1965 Players under
the Pension Plan because of the benefit limitations
imposed by Section 415 of the Code shall be paid to
such Pre-1965 Players pursuant to the National Basketball
Association Excess Benefit Plan for Pre-1965 Players.
(4) The benefit payable to any player or beneficiary
under the Pension Plan for a Plan Year shall in no
event exceed the maximum benefit that may be paid
to such player or beneficiary under the applicable
benefit limitations under the Code, as in effect for
that Plan Year.
(5) The Maximum Monthly Benefit for a Plan Year shall
in no event exceed the maximum monthly amount permitted
by the applicable benefit limitations under the Code,
as in effect for that Plan Year.
(b) Notwithstanding the provisions of Section 1(a)
above, the NBA and the Players Association agree as
follows:
(1) The NBA, with the assistance of the Players Association,
will seek a private letter ruling from the Internal
Revenue Service ("IRS") determining that
if the assets and liabilities under the Pension Plan
attributable to former players who were never eligible
to participate in the NBA-NBPA 401(k) Savings Plan
("Pre-1999 Players") are transferred to
a newly-established defined benefit pension plan (which
shall be substantially similar to the Pension Plan)
covering only Pre-1999 Players (the "New Pension
Plan"), the combined deduction limitation provisions
of Section 404(a)(7) of the Code shall not apply to
the New Pension Plan and contributions made by the
NBA Teams to the New Pension Plan shall be subject
only to the deduction limitations of Section 404(a)(1)
of the Code.
(2) The NBA, with the assistance of the Players Association,
shall file with the Pension Benefit Guaranty Corporation
("PBGC"), in accordance with Section 4231
of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), and the regulations
promulgated thereunder, notice of their intent to
transfer assets and liabilities attributable to Pre-1999
Players from the Pension Plan to the New Pension Plan
(the "Spinoff Transaction"). The NBA shall
also file with the PBGC a request for a determination
that the Spinoff Transaction complies with the requirements
of Section 4231 of ERISA as soon as reasonably feasible
following the date that notice of the Spinoff Transaction
is provided to the PBGC. The NBA and the Players Association
shall cooperate in satisfying any action or condition
that the PBGC may establish in order for the NBA to
obtain a favorable determination with respect to the
Spinoff Transaction.
(3) If the NBA receives the private letter ruling
described in Section 1(b)(1) above, the NBA shall,
to the extent permitted by applicable law, establish
the New Pension Plan and effectuate the Spinoff Transaction,
subject to the approval of the IRS. The effective
date of the New Pension Plan and the Spinoff Transaction
shall be no earlier than the later of either (i) 120
days after receipt by the PBGC of the notice of the
Spinoff Transaction from the NBA or (ii) the receipt
from the PBGC of the determination requested pursuant
to Section 1(b)(2) above. Upon the establishment of
the New Pension Plan and the consummation of the Spinoff
Transaction, pension benefits to Pre-1999 Players
shall be provided solely under the New Pension Plan.
The Pension Plan shall be amended to reflect the Spinoff
Transaction.
(4) If the NBA receives the private letter ruling
described in Section 1(b)(1) above, following the
completion of the actions described in Section 1(b)(2)
and (b)(3) above, subject to approval by the IRS and
to the extent permitted by applicable law, the Pension
Plan shall be amended to provide, and the New Pension
Plan shall provide (or if applicable, shall be amended
to provide), that the Normal Retirement Pension payable
to a player under the Pension Plan and New Pension
Plan is the maximum monthly amount permitted by the
applicable benefit limitations under the Code, as
in effect for the year in which this Agreement is
executed, to be paid to the player at his Normal Retirement
Date under the Pension Plan and New Pension Plan (the
"New Maximum Monthly Benefit"). The New
Maximum Monthly Benefit shall be increased only as
specifically provided for in this Section 1(b)(4).
Effective only for the duration of this Agreement,
the New Maximum Monthly Benefit shall, except as otherwise
provided herein, be adjusted for increases in the
cost of living in the same manner as the cost of living
adjustment for the dollar limitation under Section
415(d)(1) of the Code, as in effect for the year in
which the Agreement is executed (or, if applicable,
in the manner provided for under Section 415(d)(2)
of the Code). In no event, however, shall the adjusted
New Maximum Monthly Benefit for a Plan Year exceed
an amount that would require the actuarially-determined
scheduled contributions (to be made in the aggregate
to the Pension Plan and New Pension Plan to fund for
such adjusted benefit for the Plan Year) to exceed,
by more than five (5) percent, the actuarially-determined
scheduled contributions that would be made in the
aggregate to the Pension Plan and New Pension Plan
for that Plan Year using the New Maximum Monthly Benefit
in effect for the immediately preceding Plan Year.
The parties agree that the determinations described
in the preceding sentence, including any actuarial
assumptions and projections related thereto, shall
be made by the actuaries of the Pension Plan and New
Pension Plan and that any such determinations shall
be binding and conclusive. Any increase in the New
Maximum Monthly Benefit hereunder shall be effective
as of the first day of the month following the beginning
of the Plan Year of the Pension Plan and New Pension
Plan to which the increase relates (the "New
Benefit Increase Commencement Date"), shall apply
only with respect to any benefit payment or payments
to be made on or after the New Benefit Increase Commencement
Date, and shall not require the recalculation of any
benefit payment or payments made prior to the New
Benefit Increase Commencement Date.
Notwithstanding the foregoing:
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(i) The benefits payable to any player or beneficiary
under the Pension Plan and New Pension Plan
shall in no event exceed the limitations on
benefits under the Code, as in effect for the
year in which this Agreement is executed.
(ii) If all or any portion of the actuarially-determined
scheduled contributions to be made to the Pension
Plan and New Pension Plan will not be fully
deductible under the Code when paid, the New
Maximum Monthly Benefit shall not exceed the
amount which would result in all of such contributions
being fully deductible when paid. The Players
Association shall be given written notice of
any such determination. The parties agree that
the determinations described in this Section
1(b)(4)(ii), including any actuarial assumptions
and projections related thereto, shall be reasonable
and shall be made by the actuaries of the Pension
Plan and the New Pension Plan. Any such determinations
shall be binding and conclusive.
(iii) The Normal Retirement Benefit payable
to a Pre-1965 Player under the New Pension Plan
shall continue to be $200 per month for each
Year of Pre-1965 Credited Service. Any benefits
that are unable to be paid to Pre-1965 Players
under the Pension Plan because of the benefit
limitations imposed by Section 415 of the Code
shall be paid to such Pre-1965 Players pursuant
to the National Basketball Association Excess
Benefit Plan for Pre-1965 Players.
(iv) The benefit payable to any player or beneficiary
under the Pension Plan or the New Pension Plan
for a Plan Year shall in no event exceed the
maximum benefit that may be paid to such player
or beneficiary under the applicable benefit
limitations under the Code as in effect for
that Plan Year.
(v) The applicable provisions of this Section
1(b) shall become effective only after the adoption
of both the New Pension Plan and the amendment
to the Pension Plan as provided for under this
Section 1(b)(4). Any additional benefits that
may be payable to a player or beneficiary under
the Pension Plan and the New Pension Plan as
a result of the adoption of both the New Pension
Plan and the amendment to the Pension Plan in
order to implement the provisions of this Section
1(b) shall apply only to those players or beneficiaries
who had not yet received or begun to receive
a benefit under the Pension Plan as of July
1, 2005, and to those players or beneficiaries
who were receiving monthly benefits under the
Pension Plan as of July 1, 2005; and the provisions
of this Section 1(b) shall apply only with respect
to any benefit payment or payments made on or
after July 1, 2005, and shall not require the
recalculation of any benefit payment or payments
made prior to July 1, 2005. Except as may otherwise
be required by law, under no circumstances will
a player or beneficiary, who has received or
begun to receive payment of his benefit under
the Pension Plan and who is entitled to receive
an additional benefit under the Pension Plan
or the New Pension Plan pursuant to the provisions
of this Section 1(b)(4)(v), be entitled to receive
any additional amounts in respect of such additional
benefit, including, but not limited to, any
interest or actuarial increase relating to the
additional benefit.
(vi) The increase in the amount of the actuarially-determined
scheduled contributions that in the aggregate
are required to be made for a Plan Year to the
Pension Plan and the New Pension Plan in order
to fund for the benefit described in this Section
1(b) (including any contributions that may be
required in order to satisfy Section 4231 of
ERISA and the regulations promulgated thereunder,
and/or to receive the PBGC determination described
in Section 1(b)(2) above), over the amount of
the actuarially-determined scheduled contributions
that in the aggregate would be required to be
made for that Plan Year to the Pension Plan
and the New Pension Plan in order to fund for
the benefit described in Section 1(a) had this
Section 1(b) never been in effect (the "EGTRRA
Cost Increase"), shall be applied against
the New Benefit Amount provided for by Section
7 below; provided, however, that the amount
to be applied against the New Benefit Amount
pursuant to this Section 1 (b)(4)(vi) shall
not exceed an amount equal to, for that Plan
Year, fifty (50) percent of the EGTRRA Cost
Increase or, if greater, the EGTRRA Cost Increase
minus $5 Million. For purposes of the preceding
sentence, the determination of the amount of
the actuarially-determined scheduled contributions
that would be required to be made for a Plan
Year to the Pension Plan and the New Pension
Plan in order to fund for the benefit described
in Section 1(a) had this Section 1(b) never
been in effect shall be made without regard
to the five (5) percent limitation on cost of
living adjustments to the Maximum Monthly Benefit
provided in Section 1(a) above. For purposes
of determining the EGTRRA Cost Increase for
a Plan Year, the scheduled contributions shall
be determined based on the law in effect for
that Plan Year, taking into account (A) any
new law or change or amendment made to the Code,
ERISA, any other applicable law, or to any regulations
(whether final, temporary or proposed) or rulings
issued thereunder or (B) any regulations (whether
final, temporary or proposed) or rulings issued
under the Code or ERISA. The parties agree that
the determinations described in this Section
1(b)(4)(vi), including any actuarial assumptions
and projections related thereto, shall be reasonable
and shall be made by the actuaries of the Pension
Plan and the New Pension Plan. Any such determinations
shall be binding and conclusive.
(vii) The New Maximum Monthly Benefit for a
Plan Year shall in no event exceed the maximum
monthly amount permitted by the applicable benefit
limitations under the Code, as in effect for
that Plan Year.
(viii) The Players Association shall have the
right, exercisable no later than 90 days after
the NBA’s receipt of both the private
letter ruling described in Section 1(b)(1) above
and the completion of the actions described
in Sections 1(b)(2) and (b)(3) above, to direct
the NBA either (A) to not establish the New
Pension Plan and not effectuate the Spinoff
Transaction (in which case the provisions of
this Section 1(b) shall cease to apply under
this Agreement and the provisions of Section
1(a) above shall continue to apply to the pension
benefits being provided under the Pension Plan
for the duration of this Agreement) or (B) to
establish the New Pension Plan and effectuate
the Spinoff Transaction and to provide that
the New Maximum Monthly Benefit shall, in lieu
of the amount specified in the first sentence
of this Section 1(b)(4), be an amount specified
by the Players Association that is less than
the maximum monthly amount permitted by the
applicable benefit limitations under the Code,
as in effect for the year in which this Agreement
is executed.
(5) All reasonable costs, including the cost of professional
fees (e.g., attorneys, accountants, actuaries and
consultants), that are incurred in connection with
(i) requesting the private letter ruling described
in Section 1(b)(1) above, (ii) the PBGC filing and
request for the PBGC determination described in Section
1(b)(2) above, (iii) establishing the New Pension
Plan, and (iv) effectuating the Spinoff Transaction,
shall be paid by the Teams and shall be applied against
the New Benefit Amount provided for by Section 7 below.
(6) After submission to the IRS of the private letter
ruling request described in Section 1(b)(1) above
and the filing with the PBGC of the notice and determination
request described in Section 1(b)(2) above, if, for
any reason, the NBA fails to obtain either the rulings
from the IRS described in Section 1(b)(1) above or
the determination from the PBGC described in Section
1(b)(2) above, the provisions of this Section 1(b)
shall cease to apply under this Agreement, the NBA
shall have no further obligation to continue to seek
any such rulings or determination, and the provisions
of Section 1(a) above shall continue to apply to the
pension benefits being provided under the Pension
Plan for the duration of this Agreement.
(c) Notwithstanding anything else in this Agreement:
(1) if any change or amendment made to the Code, ERISA,
or to any regulations (whether final, temporary or proposed)
or rulings issued thereunder; (2) if any interpretation,
application or enforcement (or any proposed interpretation,
application or enforcement), by a court of competent
jurisdiction in the United States or by the IRS, of
the Code, ERISA, or any regulations or rulings issued
thereunder; or (3) if any regulations (whether final,
temporary or proposed) or rulings issued by the IRS
under the Code or ERISA; or (4) if any provisions of
this Agreement, including any of the amendments or benefit
increases to be provided under the Pension Plan and/or
the New Pension Plan pursuant to this Section 1, would
result in the Pension Plan and/or the New Pension Plan
no longer being a tax-qualified plan under Section 401(a)
of the Code, or would require NBA Teams to incur costs
over and above any costs required to be incurred to
implement the provisions of this Agreement or any prior
collective bargaining agreement in order for the Pension
Plan and/or the New Pension Plan to maintain its tax-qualified
status under Section 401(a) of the Code (provided, however,
that such additional costs are incurred solely in connection
with the provision of pension benefits to their non-player
employees or to non-player employees of affiliates (within
the meaning of Sections 414(b), (c) or (m) of the Code)
of such Teams), then any obligation to maintain and/or
make contributions to the Pension Plan and/or the New
Pension Plan pursuant to this Agreement or pursuant
to any prior collective bargaining agreement shall terminate;
provided, however, that any such termination shall not
impair the legally binding effect of any other provision
of this Agreement or the legally binding effect (if
any) of any other provision of any prior collective
bargaining agreement, nor shall it create any right
(i) to unilaterally implement during the term of this
Agreement any terms concerning the provision of pension
benefits to the players, (ii) to lockout, or (iii) to
strike. In the event of such termination, the NBA Teams
shall provide alternative benefits to the players, at
an annual cost (as determined on an after-tax basis)
to NBA Teams equal to the annual cost that such Teams
would have incurred under the Pension Plan and/or the
New Pension Plan to fund the benefit described in Section
1(a) above, commencing on the date of termination. The
NBA and the Players Association shall agree upon the
type(s) of alternative benefits to be provided.
(d) Players employed by Maple Leaf Sports & Entertainment
Ltd. (or any successor thereto) ("Toronto")
or by an NBA Team located in any other country other
than the United States shall receive pension benefits
of comparable value. Players employed by Toronto ("Toronto
Players") shall receive such benefits by means
of the Pension Plan and a separate pension plan maintained
by Toronto (the "Toronto Plan"); provided,
however, that (1) if the provision of pension benefits
under the Pension Plan to the Toronto Players (or, if
applicable, the provision of pension benefits under
the New Pension Plan to players formerly employed by
Toronto or any predecessor thereto who were never eligible
to participate in the NBA-NBPA 401(k) Savings Plan ("Pre-1999
Toronto Players")) would, at any time, result in
the Pension Plan or the New Pension Plan being subject
to Canadian Provincial Pension Legislation and/or Canadian
Federal Tax Laws (to the extent that the application
of such tax laws would result in adverse tax consequences
to the Pension Plan, the New Pension Plan, the NBA Teams,
the Toronto Players, and/or the Pre-1999 Toronto Players),
(2) if the Toronto Plan would not, at any future time,
either satisfy United States tax qualifications or be
able to be registered under Canadian Provincial Pension
Legislation and/or Canadian Federal Tax Laws, then any
obligation to establish, maintain and/or make contributions
to the Pension Plan with respect to Toronto Players,
the New Pension Plan with respect to Pre-1999 Toronto
Players, and the Toronto Plan pursuant to this Agreement
or pursuant to any prior collective bargaining agreement,
shall terminate. In the event of such termination, Toronto
shall provide alternative benefits to the Toronto Players
and/or the Pre-1999 Toronto Players and at an annual
cost (as determined on an after-tax basis) to Toronto
equal to the annual cost that Toronto would have incurred
under the Pension Plan, the New Pension Plan and the
Toronto Plan commencing on the date of termination.
The NBA and the Players Association shall agree upon
the type(s) of alternative benefits to be provided.
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Section 2. Player
401(k) Benefits.
Except as set forth below in this Section 2, effective
with the date of this Agreement, and continuing for
the duration thereof, the NBA shall provide the following
401(k) benefits to NBA players:
(a) Benefits in accordance with the NBA-NBPA Players'
401(k) Savings Plan established effective November 1,
1999 by the NBA and the Players Association pursuant
to the 1999 NBA/NBPA Collective Bargaining Agreement,
and as amended by the First, Second, Third, Fourth,
Fifth and Sixth Amendments thereto (the "401(k)
Plan"). The 401(k) Plan shall continue to provide
for (1) deferrals by players pursuant to Section 401(k)
of the Code and (2) except as may be limited below,
Team matching contributions in respect of player deferrals
for a Salary Cap Year to be determined by the Players
Association. Team matching contributions and deferrals
shall be subject to all applicable limitations under
the Code. The cost of funding all matching contributions
made by Teams under the 401(k) Plan (i) shall be applied
against the New Benefit Amount provided for by Section
7 below, and (ii) shall be limited to the portion of
the New Benefit Amount, if any, that is available for
this purpose pursuant to Section 7(b)(2) below. Any
matching contributions to be made to the 401(k) Plan
in respect of each Season shall be made no later than
thirty (30) days following the completion of the BRI
Audit Report for the Salary Cap Year covering such Season.
Notwithstanding the foregoing, the total amount of the
deferral contributions to be made by players to the
401(k) Plan and the Team matching contributions to be
made to the 401(k) Plan in respect of deferral contributions
made by players under the 401(k) Plan shall be limited
to an amount that (1) after first taking into account
the contributions made by Teams to the Pension Plan
(and, to the extent that any ruling described in Section
1(b)(1) above that may be obtained from the IRS no longer
applies, the New Pension Plan) and the contributions
made by Toronto to the Toronto Plan and (2) taking into
account only compensation paid to current players by
the Teams, would result in all of such deferral contributions
and matching contributions being fully deductible under
the Code (and, where applicable, Canadian income tax
laws) when paid to the 401(k) Plan.
(b) The terms of the 401(k) Plan shall continue to permit
participation by Toronto Players on a tax-effective
basis under Canadian income tax laws. If the NBA and
the Players Association should determine that the 401(k)
Plan cannot continue to be provided to Toronto Players
on a tax-effective basis under Canadian income tax laws,
an alternative arrangement, which is acceptable to both
the NBA and the Players Association, shall be established
for Toronto Players in lieu of the 401(k) Plan. The
cost to Toronto of funding for any such alternative
arrangement (1) shall be applied against the New Benefit
Amount provided for by Section 7 below, and (2) shall
be limited to the portion of the New Benefit Amount,
if any, that is available for this purpose pursuant
to Section 7(b)(2).
(c) Notwithstanding anything else in this Agreement:
(1) if any change or amendment made to the Code, ERISA,
or to any regulations (whether final, temporary or proposed)
or rulings issued thereunder; or (2) if any interpretation,
application or enforcement (or any proposed interpretation,
application or enforcement), by a court of competent
jurisdiction in the United States or by the IRS, of
the Code, ERISA, or any regulations or rulings issued
thereunder; or (3) if any regulations (whether final,
temporary or proposed) or rulings issued by the IRS
under the Code or ERISA; or (4) if any provisions of
this Agreement would result in the 401(k) Plan no longer
being a tax-qualified plan under Section 401(a) of the
Code, or would require NBA Teams to incur costs over
and above any costs required to be incurred to implement
the provisions of this Agreement or any prior collective
bargaining agreement in order for the 401(k) Plan to
maintain its tax-qualified status under Section 401(a)
of the Code (provided, however, that such additional
costs are incurred solely in connection with the provision
of benefits to their non-player employees or to non-player
employees of affiliates (within the meaning of Sections
414(b), (c) or (m) of the Code) of such Teams), then
any obligation to maintain and/or make contributions
to the 401(k) Plan pursuant to this Agreement or pursuant
to any prior collective bargaining agreement shall terminate;
provided, however, that any such termination shall not
impair the legally binding effect of any other provision
of this Agreement or the legally binding effect (if
any) of any other provision of any prior collective
bargaining agreement, nor shall it create any right
(i) to unilaterally implement during the term of this
Agreement any terms concerning the provision of 401(k)
benefits to the players, (ii) to lockout, or (iii) to
strike. In the event of such termination, the NBA Teams
shall provide alternative benefits to the players, at
an annual cost (as determined on an after-tax basis)
to NBA Teams equal to the annual cost that such Teams
would have incurred under the 401(k) Plan with respect
to Team matching contributions commencing on the date
of termination. The NBA and the Players Association
shall agree upon the type(s) of alternative benefits
to be provided. The costs of funding of any such alternative
benefits (A) shall be applied against the New Benefit
Amount provided for by Section 7 below, and (B) shall
be limited to the portion of the New Benefit Amount,
if any, that is available for this purpose pursuant
to Section 7(b)(2) below.
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Section 3. Player
Supplemental Medical Benefits.
Except as set forth below in this Section 3, effective
with the date of this Agreement, and continuing for
the duration thereof, the NBA shall provide the following
supplemental medical benefits to NBA players:
(a) Benefits in accordance with the terms of the NBPA-NBA
Supplemental Benefit Plan established, effective August
1, 2004, and as amended from time to time (the "Supplemental
Benefit Plan") and the Agreement and Declaration
of Trust of the NBPA-NBA Supplemental Benefit Plan established,
July 22, 2004 (the Trust created thereunder to be referred
to hereinafter as the "SBP Trust"). The SBP
Trust shall continue to be jointly operated and administered
by the NBA and Players Association in accordance with
Section 302(c)(5) of the Labor Management Relations
Act of 1947, as amended, and the provisions of the SBP
Trust and the Supplemental Benefit Plan. It is intended
by the NBA and Players Association that the SBP Trust
shall constitute a collectively-bargained voluntary
employees’ beneficiary association (“VEBA”)
that is tax exempt pursuant to Section 501(c)(9) of
the Code, and the parties shall continue to cooperate
in seeking qualification of the SBP Trust as such a
tax-exempt association.
(b) The SBP Trust and the Supplemental Benefit Plan
shall continue to be operated and administered for the
purpose of providing certain health-related benefits
to players who played in the NBA during and/or after
the 2000-2001 Season in accordance with provisions set
forth in the Supplemental Benefit Plan.
(c) The costs of funding the Supplemental Benefit Plan
and the costs attributable to the operation and administration
of the SBP Trust and the Supplemental Benefit Plan,
including the reasonable cost of professional fees (e.g.,
attorneys, accountants, actuaries and consultants) incurred
in connection with the administration of the SBP Trust
and the Supplemental Benefit Plan, shall be paid by
the Teams, and (1) shall be applied against the New
Benefit Amount provided for by Section 7 below, and
(2) shall be limited to the portion of the New Benefit
Amount, if any, that is available for this purpose pursuant
to Section 7(b)(6) below. Any contributions to fund
the Supplemental Benefit Plan in respect of each Salary
Cap Year shall be made no later than thirty (30) days
following the completion of the BRI Audit Report for
such Salary Cap Year.
(d) The daily operations of the Supplemental Benefit
Plan shall continue to be administered by an independent
third-party administrator, as selected by the trustees
of the SBP Trust, at the administrator’s office.
In the exercise of its responsibilities, the independent
third-party administrator shall be required to comply
with ERISA and all other applicable laws and to act
in a manner that is consistent with the provisions of
the SBP Trust and the Supplemental Benefit Plan.
(e) The SBP Trust and the Supplemental Benefit Plan
shall be operated and administered in a manner that
will result in all contributions by the Teams being
fully deductible under the Code (and, where applicable,
Canadian income tax laws) when paid to the SBP Trust.
If any Team is disallowed a deduction (in whole or in
part) for such contributions, and unless the NBA determines
otherwise, the obligation to maintain the Supplemental
Benefit Plan and to make further contributions to the
SBP Trust shall immediately terminate; provided, however,
that any such termination shall not impair the legally
binding effect of any other provision of this Agreement,
and shall not create any right (1) to unilaterally implement,
during the term of this Agreement, any terms concerning
the provision of benefits provided or to be provided
by the Supplemental Benefit Plan, (2) to lockout, or
(3) to strike.
(f) In the event of any termination pursuant to Section
3(e) above, the parties agree to bargain in good faith
with respect to an alternative arrangement designed
to provide the benefits described in the Supplemental
Benefit Plan. Such alternative arrangement shall, to
the extent permitted by applicable law, be funded by
such monies as may then remain in the SBP Trust and,
if the monies remaining in the SBP Trust may not lawfully
be used for, or are insufficient for, such purpose,
such alternative arrangement shall be funded, by the
NBA Teams; provided, however, that the annual cost incurred
by the Teams in connection with such alternative arrangement
(as determined on an after-tax basis) shall not exceed
the annual cost that such Teams would have incurred
to fund the Supplemental Benefit Plan commencing on
the date of termination. Any such alternative arrangement
shall be operated and administered in a manner that
will result in all contributions by the Teams being
fully deductible under the Code (and, where applicable,
Canadian income tax laws) when paid; and, no matter
how funded, the costs of funding for any alternative
to the Supplemental Benefit Plan shall be applied against
the New Benefit Amount provided for by Section 7 below,
shall be limited to the portion of the New Benefit Amount,
if any, that is available for this purpose pursuant
to Section 7(b)(6) below, and shall be subject to the
limitations set forth in this Agreement. If despite
good faith negotiations, the NBA and the Players Association
fail to agree with respect to an alternative arrangement
as described above, such failure to agree shall not
create any right (1) to unilaterally implement, during
the term of this Agreement, any terms concerning the
provision of benefits provided or to be provided by
the Supplemental Benefit Plan, (2) to lockout, or (3)
to strike.
(g) The terms of the Supplemental Benefit Plan shall
continue to permit participation by Toronto Players
in accordance with the terms of the July 22, 2004 letter
agreement between the NBA and the Players Association
regarding the implementation of the Supplemental Benefit
Plan with respect to Toronto Players, so that Toronto
Players receive benefits that are substantially equivalent
on an after-tax basis to the benefits received by players
employed by Teams located in the United States. If the
NBA and the Players Association determine that the Supplemental
Benefit Plan cannot continue to provide benefits to
Toronto Players that are substantially equivalent on
an after-tax basis to the benefits provided to players
employed by Teams located in the United States, an alternative
arrangement relating to Toronto Players, which is acceptable
to both the NBA and the Players Association, shall be
established in lieu thereof. The cost to Toronto of
funding for any such alternative arrangement shall be
applied against the New Benefit Amount provided for
by Section 7 below, shall be limited to the portion
of the New Benefit Amount, if any, that is available
for this purpose pursuant to Section 7(b)(6) below,
and shall be subject to the limitations set forth in
this Agreement. If despite good faith negotiations,
the NBA and the Players Association fail to agree with
respect to an alternative arrangement as described above,
such failure to agree shall not create any right to
lockout or to strike.
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Section 4. Labor-Management
Cooperation and Education Trust.
(a) Except as set forth below in this Section 4, effective
with the date of this Agreement, and continuing for
the duration thereof, the National Basketball Players
Association/National Basketball Association Labor-Management
Cooperation and Education Trust (the “Education
Trust”) shall continue to be jointly operated
and administered by the NBA and the Players Association
in accordance with the provisions of the Agreement and
Declaration of Trust Establishing the National Basketball
Players Association/National Basketball Association
Labor-Management Cooperation and Education Trust (the
“Education Trust Agreement”). It is intended
by the NBA and the Players Association that, at all
times, the Education Trust shall comply with the provisions
of Section 302(c)(9) of the Labor Management Relations
Act of 1947, as amended, and shall qualify as an exempt
organization under the provisions of Section 501(c)(5)
or 501(c)(3) of the Code.
(b) The Education Trust shall continue to be operated
and administered for the purpose of establishing and
providing (i) HIV/AIDS education programs and (ii) education
and career counseling programs designed to assist the
NBA, NBA Teams and NBA players in solving problems of
mutual concern not susceptible to resolution within
the collective bargaining process and to enhance the
involvement of NBA players in making decisions that
affect their working lives.
(c)
(1) Except as provided in Section 4(c)(2) below,
the costs of funding the Education Trust and the costs
attributable to the operation and administration of
the Education Trust, including the cost of professional
fees (e.g., attorneys, accountants, actuaries and
consultants) incurred in connection with the administration
of the Education Trust, shall be paid by the Teams,
and (i) shall be applied against the New Benefit Amount,
provided for by Section 7 below, and (ii) shall be
limited to the portion of the New Benefit Amount,
if any, that is available for this purpose pursuant
to Section 7(b)(5) below. Payment of the amount necessary
to fund the Education Trust in respect of each Salary
Cap Year shall be made within 30 days following the
completion of the BRI Audit Report for such Salary
Cap Year. The parties agree that, subject to the limitations
set forth in this Section 4, the amount to be paid
by the Teams to fund the education and career counseling
programs to be operated and administered by the Education
Trust for the 2005-2006 Salary Cap Year shall be no
greater than $840,000 and such maximum funding amount
shall be increased by five (5) percent for each subsequent
Salary Cap Year.
(2) The costs of funding the HIV/AIDS education programs
to be operated and administered by the Education Trust
(or any programs that, pursuant to Section 4(f) below,
are substituted for the HIV/AIDS education programs)
shall be paid by the Teams. Payment of the amount
necessary to fund such programs in respect of each
Salary Cap Year shall be made within 30 days following
the completion of the BRI Audit Report for such Salary
Cap Year. The parties agree that, subject to the limitations
set forth in this Section 4, the amount to be paid
by the Teams to fund the HIV/AIDS education programs
(or any programs that, pursuant to Section 4(f) below,
are substituted for the HIV/AIDS education programs)
to be operated and administered by the Education Trust
for the 2005-2006 Salary Cap Year shall be no greater
than $300,000 and such maximum funding amount shall
be increased by five (5) percent for each subsequent
Salary Cap Year.
(d) The Education Trust shall be operated and administered
in a manner that will result in all contributions by
the Teams being fully deductible under the Code (and,
where applicable, Canadian income tax laws) when paid.
If any Team is disallowed a deduction (in whole or in
part) for such contributions, and unless the NBA determines
otherwise, the obligation to maintain the Education
Trust and to make further contributions to the Education
Trust shall immediately terminate; provided, however,
that any such termination shall not impair the legally
binding effect of any other provision of this Agreement,
and shall not create any right (1) to unilaterally implement,
during the term of this Agreement, any terms concerning
the provision of education programs provided or to be
provided by the Education Trust, (2) to lockout, or
(3) to strike.
(e) In the event of any termination pursuant to Section
4(d) above, the parties agree to bargain in good faith
with respect to an alternative arrangement designed
to provide the programs described in the Education Trust
Agreement. Such alternative arrangement shall, to the
extent permitted by applicable law, be funded by such
monies as may then remain in the Education Trust and,
if the monies remaining in the Education Trust may not
lawfully be used for, or are insufficient for, such
purpose, such alternative arrangement shall be funded,
by the NBA Teams; provided, however, that the annual
cost incurred by the Teams in connection with such alternative
arrangement (as determined on an after-tax basis) shall
not exceed the annual cost that such Teams would have
incurred to fund the Education Trust commencing on the
date of termination. Any such alternative arrangement
shall be operated and administered in a manner that
will result in all contributions by the Teams being
fully deductible under the Code (and, where applicable,
Canadian income tax laws) when paid; and, no matter
how funded, the costs of funding for any alternative
to the Education Trust shall be applied against the
New Benefit Amount provided for by Section 7 below,
shall be limited to the portion of the New Benefit Amount,
if any, that is available for this purpose pursuant
to Section 7(b)(5) below, and shall be subject to the
limitations set forth in this Agreement. If despite
good faith negotiations, the NBA and the Players Association
fail to agree with respect to an alternative arrangement
as described above, such failure to agree shall not
create any right (1) to unilaterally implement, during
the term of this Agreement, any terms concerning the
provision of programs provided or to be provided by
the Education Trust, (2) to lockout, or (3) to strike.
(f) Upon written notice delivered to the NBA at least
six (6) months prior to the commencement of any Salary
Cap Year, the Players Association may elect to terminate
the programs currently provided by the Education Trust
and substitute alternative programs; provided, however,
that the NBA consents to such substitution, which such
consent shall not be unreasonably withheld; and provided,
further, that any new programs shall comply with the
provisions of Section 302(c)(9) of the Labor Management
Relations Act of 1947, as amended.
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Section 5. Additional
Player Benefits.
Except as set forth below, effective with the date of
this Agreement, and continuing for the duration thereof,
the NBA shall provide the following additional benefits
to NBA players:
(a) Life insurance and accidental death and dismemberment
benefits, as set forth in the U.S. Life Insurance Company
Policy No. G-245667 (the “U.S. Life Policy”);
provided, however, that if all or a portion of the New
Benefit Amount funding specified in Section 7(b)(3)
below is not available to be used for this purpose,
the benefits provided by the U.S. Life Policy shall
be reduced commensurate with the reduced funding (but
in no event shall such benefits be less than those provided
pursuant to Article IV, Section 1(b) of the 1999 NBA/NBPA
Collective Bargaining Agreement).
(b) Disability insurance benefits, as set forth in the
Houston Casualty Company Policy No. 05/700131.
(c) Workers’ compensation benefits in accordance
with applicable statutes.
(d) Medical and dental insurance benefits in accordance
with the terms of the CIGNA HealthCare Policy No. 3211244
(the “CIGNA Policy”). With respect to a
Veteran Free Agent, such medical and dental benefits
shall remain in effect until the August 31 following
the last Season of the player’s Contract.
The CIGNA Policy or any subsequent policy or plan providing
medical and dental benefits shall be modified or replaced
effective as of the commencement of the 2006-2007 Season
or as of the commencement of any subsequent Season covered
by this Agreement, as requested in writing by the Players
Association (a “Player Change”), provided
such written request is delivered to the NBA on or before
the March 1 preceding such Season. Any Player Change
shall be subject to the approval of the NBA, which approval
shall not be unreasonably withheld. Any additional aggregate
costs that might be incurred by the Teams for medical
and dental benefits with respect to the 2006-2007 or
any subsequent Season as a result of a Player Change,
over the aggregate cost of medical and dental benefits
that otherwise would have been incurred by the Teams
for the players under the CIGNA Policy with respect
to such Season, absent any Player Change: (1) shall
be applied against the New Benefit Amount provided for
by Section 7 below; and (2) shall be limited to the
portion of the New Benefit Amount, if any, that is available
for this purpose pursuant to Section 7(b)(4) below.
(e) Vision benefits in accordance with the Davis Vision
Policy No. 500153.
(f) Funding for the annual Players Association High
School Basketball Camp (or any substitute program mutually
agreed upon by the parties) in the amount of $433,000
for the 2005-2006 Season, increasing by 7.5% per Season
thereafter for the term of this Agreement.
(g) Player Playoff Pool amounts, as follows:
2005-2006 Season — $10 million
2006-2007 Season — $10 million
2007-2008 Season — $11 million
2008-2009 Season — $11 million
2009-2010 Season — $12 million
2010-2011 Season — $12 million
2011-2012 Season (if the NBA exercises its option
to extend this Agreement pursuant to Article XXXIX)
— $12 million
If the NBA increases the number of Teams participating
in the playoffs, the Player Playoff Pool shall be increased
by $558,000 for each Team added with respect to the
2005-06 and 2006-07 Seasons; by $586,000 with respect
to the 2007-08 and 2008-09 Seasons; and $615,000 with
respect to each subsequent Season. The NBA will consult
with the Players Association with respect to the method
of allocation of the Player Playoff Pool.
(h) The employer’s portion of payroll taxes.
(i) The Players Association’s one-half share of
the payment of fees and expenses to the Accountants
(as defined in Article VII, Section 10(a) below) in
connection with any audit conducted under this Agreement,
and the Player Association’s one-half share of
the payment of fees and expenses payable with respect
to the TV Expert (as defined in Article VII, Section
1(a)(7)(iii) below) and any expert selected in accordance
with Article VII, Section 1(a)(7)(i).
(j) The Players Association’s share of the costs
of the Anti-Drug Program as provided for by Article
XXXIII.
(k)
(1) The sum of the Compensation paid to each player
with three (3) or more Years of Service who signs
a one-year, 10-Day or Rest-of-Season Contract for
the Minimum Player Salary during a Season, less, for
each such player, the Minimum Player Salary for a
player with two (2) Years of Service.
(2) The Compensation paid to any player with three
(3) or more Years of Service who signs a one-year,
10-Day or Rest-of-Season Contract for the Minimum
Player Salary in excess of the Minimum Player Salary
for a player with two (2) Years of Service shall be
paid by the player’s Team pursuant to the terms
of such player’s Uniform Player Contract, and
then reimbursed to the Team out of a League-wide fund
created and maintained by the NBA. Such reimbursement
shall be made at the conclusion of the Season covered
by the Contract.
(l) The benefits funded by the New Benefit Amount set
forth in Section 7 below.
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Section 6. Insurance
Carriers.
At any time during the term of this Agreement, the NBA
may change the carrier of any of the foregoing insurance
programs, subject to the Players Association’s
prior written approval, which approval shall not be
unreasonably withheld. In no event shall any change
in insurance carrier result in a change in the types
or levels of any of the benefits provided for above,
except as otherwise requested by the Players Association
under Section 5(d) above. In the event that a type of
or level of benefit is not commercially available, the
NBA may substitute a type of or level of benefit of
comparable value, subject to the Players Association’s
approval, which approval shall not be unreasonably withheld.
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Section 7. New Benefits
Funding.
(a)
(1) For each Salary Cap Year during the term of this
Agreement, an aggregate amount (the “New Benefit
Amount”) equal to $1.1 million multiplied by
the number of Teams in the NBA during the Covered
Season shall be provided by the Teams to fund the
benefits described in Section 7(b) below, unless the
Players Association designates a lesser amount with
respect to a Salary Cap Year, by notice in writing
to the NBA delivered on or before the March 15 prior
to the commencement of such Salary Cap Year.
(2) Notwithstanding subsection (a)(1) above, the New
Benefit Amount for each Salary Cap Year shall be subject
to reduction pursuant to Article VII, Section 12(b)(1).
For purposes of all calculations called for under
the CBA of, or relating to Benefits (including, but
not limited to, for purposes of (i) preparing the
Audit Report, Interim Audit Report, or Interim Escrow
Audit Report, and calculating Total Benefits, Total
Salaries and Benefits, and Projected Benefits), the
amount to be included with respect to the New Benefit
Amount shall be the full New Benefit Amount specified
in Section 7(a)(1) above and not the reduced New Benefit
Amount provided for under Article VII, Section 12(b)(1).
(b) Subject to Section 7(c) below, the New Benefit
Amount, after taking into account the reduction provided
for in Section 7(a)(2) above, shall be utilized in the
following manner for each Salary Cap Year:
(1) The New Benefit Amount shall first be utilized,
to the extent necessary, to fund any pension contribution
increases described in Article IV, Section 1(b)(4)(vi)
and to pay the costs described in Article IV, Section
1(b)(5). If the New Benefit Amount is insufficient
for these purposes, the shortfall, over as short a
period of time as is reasonably possible, shall be
offset against: (i) the amounts owed to the Players
Association pursuant to the Group License Agreement;
(ii) the New Benefit Amount for the next Salary Cap
Year; and/or (iii) the NBA’s obligation to provide
Benefits (other than Benefits funded via the New Benefit
Amount) under this Article IV. The determination of
the allocation of and type(s) of offset(s) to be applied
(as among (i), (ii) and/or (iii) above) shall be made
by the Players Association, subject to the NBA’s
consent, which shall not be unreasonably withheld.
(2) Subject to the provisions of Section 2 above,
and after taking into account the expenditure described
in Section 7(b)(1) above, the remainder of the New
Benefit Amount, if any, shall be utilized, to the
extent necessary, to fund the cost of matching contributions
with respect to players under the 401(k) Plan (and,
if applicable, to fund the cost of any alternative
arrangement described in Sections 2(b) and (c) above).
(3) After taking into account the expenditures described
in Section 7(b)(1) and (2) above, the remainder of
the New Benefit Amount, if any, shall be utilized,
to the extent necessary, to fund $582,000 of the cost
of the life insurance and accidental death and dismemberment
benefits described in Section 5(a) above.
(4) After taking into account the expenditures described
in Section 7(b)(1) – (3) above, the remainder
of the New Benefit Amount, if any, shall be utilized,
to the extent necessary, to fund an incremental cost
of changes in the medical and dental benefits made
pursuant to a Player Change in accordance with provisions
of Section 5(d) above.
(5) After taking into account the expenditures described
in Section 7(b)(1) – (4) above, the remainder
of the New Benefit Amount, if any, shall be utilized,
to the extent necessary, to fund the education and
career counseling programs to be operated and administered
by the Education Trust (or any programs that, pursuant
to Section 4(f) above, are substituted for such education
and career counseling programs) described in Section
4 above and to pay the costs described in Section
4(c) above.
(6) After taking into account the expenditures described
in Section 7(b)(1) – (5) above, the remainder
of the New Benefit Amount, if any, shall be utilized
to fund the Supplemental Benefit Plan (and, if applicable,
to fund the cost of any alternative arrangement described
in Sections 3(f) and (g) above) in accordance with
the provisions of Section 3 above and to pay the costs
described in Section 3(c) above.
(c) Notwithstanding anything to the contrary in this
Article IV:
(1) In no event shall the Teams (or the NBA) pay
amounts for any Salary Cap Year with respect to the
benefits described in Section 7(b) above in excess
of the New Benefit Amount for such Salary Cap Year.
(2) Until the final Audit Report (or, if applicable,
the Interim Escrow Audit Report) for a Salary Cap
Year is completed, the NBA shall not be required to
spend, or commit to spend, any portion of the New
Benefit Amount for such Salary Cap Year.
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Section 8. Projected
Benefits.
(a) For purposes of computing the Tax Level, Salary
Cap and Minimum Team Salary in accordance with Article
VII, “Projected Benefits” shall mean the
projected amounts, as estimated by the NBA in good faith,
to be paid or accrued by the NBA or the Teams, other
than Expansion Teams during their first two Salary Cap
Years, for the upcoming Salary Cap Year with respect
to the benefits to be provided for such Salary Cap Year.
In the event that the amount of any benefit for the
upcoming Salary Cap Year is not reasonably calculable,
then, for purposes of computing Projected Benefits,
such amount shall be projected to be 104.5% of the amount
attributable to the same benefit for the prior Salary
Cap Year.
(b) For purposes of computing Projected Benefits, the
amount to be included with respect to players with three
(3) or more Years of Service who receive the Minimum
Player Salary shall be the same amount included in Benefits
with respect to such players for the immediately preceding
Season, except that with respect to the 2005-06 Salary
Cap Year, the amount to be included with respect to
such players shall be $7,868,066.
(c) For purposes of computing Projected Benefits with
respect to a Salary Cap Year, there shall be taken into
account any reduction in the New Benefit Amount with
respect to a Salary Cap Year as designated by the Players
Association, by notice in writing to the NBA delivered
on or before the March 15 immediately preceding the
commencement of such Salary Cap Year.
(d) Projected Benefits for the 2005-06 Salary Cap Year
shall be deemed to be $112 million.
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