Article 4 BENEFITS
4.1 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 benefits to NBA players and, in the case of Section (a) below, former NBA players:
- Subject to the provisions of Section (a)(3) below, League-wide pension benefits in accordance with the terms of the National Basketball Association Players’ Pension Plan, as restated effective February 2, 1996, as amended by the First and Second Amendments thereto (the “Plan”). In accordance with the collective bargaining agreement made as of September 18, 1995, the Plan has been amended so that the “Normal Retirement Pension” payable to a player under the Plan is the maximum monthly amount permitted by the applicable benefit limitations under the Internal Revenue Code of 1986, as amended (the “Code”) to be paid to the player at his “Normal Retirement Date” under the Plan (the “Maximum Monthly Benefit”).
Effective only for the duration of this Agreement or as otherwise required by the Code, the 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(b)(1)(A) 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 contributions (to be made to the Plan to fund for such adjusted benefit for the Plan Year) to exceed, by more than five (5) percent, the actuarially determined contributions that would be made to the 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 current actuaries of the Plan on a consistent basis and 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 Plan to which the increase relates (the “Benefit Increase Commencement Date”), shall apply only with respect to benefit payments to be made on or after the Benefit Increase Commencement Date, and shall not require the recalculation of benefit payments made prior to the Benefit Increase Commencement Date. Notwithstanding the foregoing:- The benefits payable under the Plan shall at all times be subject to the limitations on benefits under the Code.
- If all or any portion of the actuarially determined contributions to be made to the 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 (ii), including any actuarial assumptions and projections related thereto, shall be made by the current actuaries of the Plan and any such determinations shall be binding and conclusive.
- Notwithstanding anything else in this Agreement: (i) if any change or amendment made to the Code, or the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or to any regulations (whether final, temporary or proposed) or rulings issued thereunder; or (ii) 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 Internal Revenue Service, of the Code, ERISA, or any regulations or rulings issued thereunder; or (iii) if any regulations (whether final, temporary or proposed) or rulings issued by the Internal Revenue Service under the Code or ERISA; or (iv) if any provisions of this Agreement, including any of the amendments or benefit increases to be provided under the Plan pursuant to this Section, would result in the 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 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 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 (x) to unilaterally implement during the term of this Agreement any terms concerning the provision of pension benefits to the players, (y) to lockout, or (z) 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 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.
- Players employed by Toronto and Vancouver (“Canadian Players”) or by an NBA Team located in any other country other than the United States shall receive pension benefits of comparable value. Canadian Players shall receive such benefits by means of the Plan and separate pension plans established and maintained by Toronto and Vancouver (“Separate Plans”); provided, however, that (i) if the provision of pension benefits under the Plan to the Cana-dian Players would, at any time, result in the 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 Plan, the NBA Teams and/or the Canadian Players), and/or (ii) if the Separate Plans would not, upon their establishment or at any future time, either satisfy U.S. tax qualification requirements 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 both the Plan with respect to Canadian Players and the Separate Plans pursuant to this Agreement or pursuant to any prior collective bargaining agreement shall terminate. In the event of such termination, Toronto and Vancouver shall provide alternative benefits to the Canadian Players at an annual cost (as determined on an after-tax basis) to Toronto and Vancouver equal to the annual cost that Toronto and Vancouver would have incurred under the Plan and the Separate Plans commencing on the date of termination. The NBA and the Players Association shall agree upon the type(s) of alternative benefits to be provided.
- Subject to the provisions of Section (a)(3) below, League-wide pension benefits in accordance with the terms of the National Basketball Association Players’ Pension Plan, as restated effective February 2, 1996, as amended by the First and Second Amendments thereto (the “Plan”). In accordance with the collective bargaining agreement made as of September 18, 1995, the Plan has been amended so that the “Normal Retirement Pension” payable to a player under the Plan is the maximum monthly amount permitted by the applicable benefit limitations under the Internal Revenue Code of 1986, as amended (the “Code”) to be paid to the player at his “Normal Retirement Date” under the Plan (the “Maximum Monthly Benefit”).
Life insurance and accidental death and dismemberment benefits, as set forth in the Prudential Insurance Company Policy No. NBA 16144 (the “Prudential Policy”) (which benefits were in effect for the 1997-1998 Season).
Disability insurance benefits, as set forth in the Standard Security Life Insurance Co. of New York, Policy No. SSL524-16343.
Workers’ compensation benefits in accordance with applicable statutes.(e) Medical and Dental insurance benefits in accordance with the terms of the Prudential Policy, which policy was modified to the following extent effective commencing with the 1996-1997 Season:
- Subject to deductibles, the Prudential Policy covers 80% of the first $5,000, and 100% thereafter, of qualifying expenses (as defined in the Prudential Policy) for each player and his eligible dependents in each year, subject to a maximum co-insurance obligation per family per year of $3,000.
- Each player pays an annual deductible of $300 for himself and each family member; provided, however, no further deductible obligation is required for any family member in any plan year in which a deductible of $300 has been paid for each of three family members.
The Prudential Policy as applicable to medical and dental insurance benefits or any subsequent policy or plan providing medical and dental benefits shall be modified or replaced effective as of the commencement of the 1999-2000 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 July 1 preceding such Season. Any Player Change shall be subject to the approval of the NBA, which approval shall not be unreasonably withheld. Any Player Change with respect to the 1999-2000 Season shall not result in an increase in the aggregate cost of medical and dental benefits to the Teams for the players for the 1999-2000 Season, over the aggregate cost of medical and dental benefits that otherwise would have been incurred by the Teams for the players under the Prudential Policy, absent any Player Change. Any additional aggregate costs that might be incurred by the Teams for medical and dental benefits with respect to the 2000-01 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 Prudential Policy with respect to such Season, absent any Player Change, shall be applied against the New Benefit Amounts provided for by Section 5 below.
Funding for an HIV/AIDS education program through the 1998-1999 Season in accordance with the terms of the agreement between Mosaic Health Inc. and the National Basketball Players Association dated November 7, 1995 (the “Mosaic Agreement”), provided, however, that the Players Association shall use its best efforts to reduce the amount payable under the Mosaic Agreement for or with respect to the 1998-99 Season. For the 1999-2000 Season and subsequent Seasons, the NBA and the Players Association shall agree upon a continued or new education program(s) for players, funded in the 1999-2000 Season in an amount equal to 105% of the average of the amounts paid under the Mosaic Agreement for the 1996-1997 through 1998-1999 Seasons, with an increase of 5% of such average amount for each remaining Season of the Agreement so that the funding for the 2004-2005 Season would be 130% of such average amount.
Funding for the annual Players Association High School Basketball Camp (or any substitute program mutually agreed upon by the parties) in the amount of $232,925 for the 1998-1999 Season increasing by 10% per Season thereafter for the term of this Agreement.
Player Playoff Pool amounts, as follows:
1998-1999 Season $7.5 million 1999-2000 Season $7.5 million 2000-2001 Season $7.5 million 2001-2002 Season $8 million 2002-2003 Season $8 million 2003-2004 Season $8 million 2004-2005 Season $8.5 million If the NBA increases the number of Teams participating in the playoffs, the Player Playoff Pool shall be increased by $468,750 for each Team added with respect to the 1998-1999 through 2000-2001 Seasons; by $500,000 for each Team added for each Season thereafter through the 2003-2004 Season; and by $531,250 for each Team added for the 2004-2005 Season. The NBA will consult with the Players Association with respect to the method of allocation of the Player Playoff Pool.
The employer’s portion of payroll taxes.
The Players Association’s one-half share of the payment of fees and expenses to the Accountants in connection with any audit conducted under this Agreement.
The Players Association’s share of the costs of the Anti-Drug Program as provided for by Article XXXIII.
- The sum of the Compensation paid to each player with five (5) 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, (i) for the 1998-99 Season, an amount equal to 50/82 times $500,000 (prorated with respect to 10-Day and Rest-of-Season Contracts), and (ii) for each subsequent Season, the Minimum Player Salary for a player with four (4) Years of Service.
- The Compensation paid to any player with five (5) or more Years of Service in excess of the amounts set forth in clauses (i) and (ii) in subsection (l)(1) above 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.
The benefits funded by the New Benefit Amounts set forth in Section 5 below.
4.2 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 1(e) 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.
4.3 401(k) Plan.
- The NBA and the Players Association shall cause to be established for the 1999-2000 Season and for each subsequent Season during the term of this Agreement, a plan qualified under Section 401(a) of the Code which will permit deferrals by players pursuant to Section 401(k) of the Code (the “401(k) Plan”). Commencing with the 2000-2001 Season, the 401(k) Plan shall provide for Team matching contributions in respect of player deferrals, as requested in writing by the Players Association. The request for the matching contributions by the Players Association for a Season shall be made at least seventy-five (75) days prior to the commencement of that Season or under such other procedure as otherwise agreed to by the NBA and the Players Association. Team matching contributions and deferrals shall be subject to all applicable limitations under the Code. The cost of funding all such matching contributions shall be applied against the New Benefit Amounts provided for by Section 5 below. Notwithstanding the foregoing:(1) The total amount of the (i) deferrals to be made by players to the 401(k) Plan, plus (ii) the Team matching contributions to be made to the 401(k) Plan in respect of such deferral contributions, shall be limited to an amount that, after first taking into account the contributions made to the National Basketball Association Players’ Pension Plan, would result in all of such deferrals and matching contributions being fully deductible under the Code when paid to the 401(k) Plan; and (2) To the extent reasonably practicable, the terms of the 401(k) Plan shall permit participation by players with respect to employment in Canada on a tax-effective basis under Canadian income tax laws. If the NBA and the Players Association determine that the 401(k) Plan cannot be provided on a tax-effective basis under Canadian income tax laws with respect to employment in Canada, an alternative arrangement relating to employment in Canada, which is acceptable to both the NBA and the Players Association, shall be established in lieu of the 401(k) Plan. The cost to the Canadian Teams of funding for any such alternative arrangement shall be applied against the New Benefit Amounts provided for by Section 5 below.
4.4 Post-Career Benefit Plan and Post-Career Medical Plan.
- If requested by the Players Association in writing, the NBA and the Players Association shall cause to be established for the 2000-2001 Season and for each subsequent Season during the term of this Agreement, (1) a supplemental benefit plan (the “Post-Career Benefit Plan”) to provide a post-career income supplement for players, and/or (2) a post-career retirement medical plan (the “Post-Career Medical Plan”) to provide post-career medical benefits for players. The Post-Career Benefit Plan and Post-Career Medical Plan shall be in such form and provide for such benefits as shall be determined by the Players Association and communicated in writing to the NBA within a reasonable time (but not less than six (6) months) prior to the beginning of the Season, and shall be subject to the approval of the NBA, which approval shall not be unreasonably withheld. The cost of funding the Post-Career Benefit Plan and Post-Career Medical Plan and the plan costs incurred that are attributable to the establishment and administration of any such plan shall be applied against the New Benefit Amounts provided for by Section 5 below. The Post-Career Benefit Plan and Post-Career Medical Plan shall be structured and maintained in a manner that will result in all contributions by the Teams being fully deductible under the Code when paid; provided, however, that if a Team is disallowed a deduction (in whole or in part) for such contributions, the Team will bear the cost of any additional taxes (and penalties and/or interest) resulting from the disallowance of such deduction. If any Team is disallowed a deduction (in whole or in part) for contributions made to either or both the Post-Career Benefit Plan and/or Post-Career Medical Plan, and unless the NBA otherwise determines, the obligation to maintain either or both such Plans (as the case may be) and to make further contributions thereto shall immediately terminate; provided, however, that any such termination shall not impair the legally binding effect of any other provision of this Agreement, nor shall it create any right (i) to unilaterally implement during the term of this Agreement any terms concerning the provision of benefits provided for by the Post-Career Benefit Plan and/or Post-Career Medical Plan (as the case may be), (ii) to lockout, or (iii) to strike. In the event of such termination, the NBA Teams shall, subject to Section 5(c) below, 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 Post-Career Benefit Plan and/or Post-Career Medical Plan (as the case may be) commencing on the date of termination. The NBA and the Players Association shall agree upon the type(s) of alternative benefits to be provided, and the cost of funding for any such alternative benefits shall be applied against the New Benefit Amounts provided for by Section 5 below.(b) To the extent reasonably practicable, the terms of the Post-Career Benefit Plan and/or Post-Career Medical Plan shall permit participation by players with respect to employment in Canada on a basis under Canadian income tax laws that is substantially comparable to that under U.S. income tax laws. If the NBA and the Players Association determine that the Post-Career Benefit Plan and/or Post-Career Medical Plan cannot be provided on a basis under Canadian income tax laws that is substantially comparable to that under U.S. income tax laws, an alternative arrangement relating to employment in Canada, which is acceptable to both the NBA and the Players Association, shall be established in lieu thereof. The cost to the Canadian teams of funding for any such alternative arrangement shall be applied against the New Benefit Amounts provided for by Section 5 below.
4.5 New Benefits Funding.
Commencing with the 2000-2001 Season and for each subsequent Season during the term of this Agreement, the following aggregate amounts (the “New Benefit Amount”) shall be provided by the Teams to fund the benefits described in subsection (b) below, unless the Players Association designates a lesser amount with respect to a Season, by notice in writing to the NBA delivered on or before the March 15 prior to the commencement of the next Salary Cap Year:
Season New Benefit Amount 2000-2001 $500,000 multiplied by the number of Teams in the NBA during such Season 2001-2002 $666,666 multiplied by the number of Teams in the NBA during such Season 2002-2003 $833,333 multiplied by the number of Teams in the NBA during such Season 2003-2004 $1,000,000 multiplied by the number of Teams in the NBA during such Season 2004-2005 $1,100,000 multiplied by the number of Teams in the NBA during such Season Subject to subsection (c) below, the New Benefit Amount shall be utilized in the following manner for each Season, unless otherwise directed in writing by the Players Association, which direction shall be subject to the approval of the NBA, which approval shall not be unreasonably withheld:
- Subject to the provisions of Section 3 above, 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 for players on Canadian Teams).
- To fund any incremental cost of changes in the medical and dental benefits made pursuant to a Player Change in accordance with the provisions of Section 1(e) above.
- Subject to the provisions of Section 4 above, to fund the Post-Career Benefit Plan and/or the Post-Career Medical Plan and to pay the costs incurred that are attributable to the establishment and administration of any such plan (and/or, if applicable, to fund the cost of any alternative benefits or arrangement as may be agreed upon pursuant to Section 4 above).
Notwithstanding anything to the contrary in this Article IV, in no event shall the Teams (or the NBA) be required to pay amounts for any Season with respect to the benefits described in subsection (b) above in excess of the New Benefit Amount for such Season.
4.6 Projected Benefits.
- For purposes of computing the Salary Cap and Minimum Team Salary in accordance with Article VII, “Projected Benefits” shall mean the projected amounts to be paid or accrued by the NBA or the Teams, other than Expansion Teams during their first two Seasons, for the upcoming Season with respect to the benefits to be provided for such Season. In the event that the amount of any benefit for the upcoming Season is not reasonably calculable, then, for purposes of computing Projected Benefits, such amount shall be projected to be 108% of the amount attributable to the same benefit for the prior Season.
- For purposes of computing Projected Benefits, the projected amount to be paid to players with five (5) or more Years of Service who receive the Minimum Player Salary shall be computed by assuming that the number and Years of Service of players who sign one-year, 10-Day or Rest-of-Season Contracts for the Minimum Player Salary, and the duration of such Contracts, will be identical to the immediately preceding season.
- 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 Season 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 that Salary Cap Year.