Article 4 BENEFITS

4.1 Player Pension 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:

  1. 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.
  2. 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:
      1. 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.
      2. 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.
      3. 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.
      4. 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.
      5. 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.
      6. 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.
      7. 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.
      8. 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.
  3. 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.
  4. 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.

4.2 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:

  1. 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.
  2. 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).
  3. 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.

4.3 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.

4.4 Labor-Management Cooperation and Education Trust.

  1. 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.
  2. 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.
    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.
  4. 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.
  5. 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.
  6. 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.

4.5 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:

  1. 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).

  2. Disability insurance benefits, as set forth in the Houston Casualty Company Policy No. 05/700131.

  3. Workers’ compensation benefits in accordance with applicable statutes.

  4. 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 2006-2007Season 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.

  5. Vision benefits in accordance with the Davis Vision Policy No. 500153.

  6. 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.

  7. 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.

  8. The employer’s portion of payroll taxes.

  9. 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).

  10. The Players Association’s share of the costs of the Anti-Drug Program as provided for by Article XXXIII.

    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.

  12. The benefits funded by the New Benefit Amount set forth in Section 7 below.

4.6 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.

4.7 New Benefits Funding.

    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).
  2. 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.
  3. 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.

4.8 Projected Benefits.

  1. 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.
  2. 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.
  3. 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.
  4. Projected Benefits for the 2005-06 Salary Cap Year shall be deemed to be $112 million.