| Article XI. Container Royalties |
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ARTICLE XI CONTAINER ROYALTIES Section 1. First and Third Container Royalties. The First and Third Container Royalties (effective in 1960 and 1977) each in the amount of $1.00 per weight ton of containerized cargo not stuffed or stripped by ILA-represented labor (with lesser amounts for containerized cargo carried on vessels that are not full container vessels as determined in the Stein Award, a copy of which 17 is appended to this Master Contract as Appendix E) shall continue to be paid to the various local port and district container royalty funds until the Container Royalty Cap is reached as provided in Section 4 of this Article XI. The First and Third Container Royalties, which are subject to the provisions of the Stein Award and any accommodation approved pursuant to Article XIV of this Master Contract, shall be used by the various local port and district container royalty funds to provide supplemental wage benefits to eligible employees covered by this Master Contract. Section 2. Second Container Royalty. The Second Container Royalty (effective in 1971) in the amount of $1.00 per weight ton of containerized cargo not stuffed or stripped by ILA-represented labor (with lesser amounts for containerized cargo carried on vessels that are not full container vessels as determined in the Stein Award, which is attached to this Master Contract as Appendix E) shall continue to be paid during the term of this Master Contract to MILA to be used exclusively for the purpose of funding the managed healthcare program administered by MILA in accordance with the provisions of Article XII of this Master Contract. The Second Container Royalty is subject to the provisions of the Stein Award but not to the provisions of any accommodation approved pursuant to Article XIV of this Master Contract. Section 3. Limitation on Supplemental Wage Benefit. The supplemental wage container royalty benefit paid to eligible employees shall not exceed a maximum payout of $16,500 per eligible employee per year. Employees who enter the industry on or after October 1, 1996, will not be entitled to receive supplemental wage container royalty benefits until they have at least three (3) qualifying years and shall not receive more than $7,500 in any year in which they receive a benefit, as such benefits are determined to be payable by the local container royalty fund trustees. Any excess remaining in a local container royalty fund each year after application of the $16,500 and $7,500 limitations to the payment of benefits shall be distributed to employees other than those who have been paid the maximum benefits as determined by the local port or district container royalty fund trustees, who shall adopt appropriate trust amendments as may be required. 18 Section 4. Container Royalty Cap. (a) Cap Levels. The maximum contributions of the First and Third Container Royalties in any contract year shall not exceed the Container Royalty Cap level. During the term of this Master Contract the Container Royalty Cap shall be at the following levels: Effective Date Cap Level October 1, 2004 58 million tons October 1, 2006 63 million tons October 1, 2008 68 million tons October 1, 2009 73 million tons The Container Royalty Cap levels exclude containerized tons in the Port of Miami/Port Everglades upon which First and Third Container Royalties are each paid at the rate of 55 cents per weight ton. (b) Port Benchmarks. The port benchmarks shall be determined as follows: (i) During the term of this Master Contract for each Contract Year in which the Cap Level changes the port benchmarks for the ports of New York/New Jersey, Hampton Roads, Charleston, Savannah, Miami/Port Everglades, and the West Gulf will be recalculated using the tons reported to the local container royalty funds in the "Base Contract Year." The "Base Contract Year" is the year which commences two (2) years prior to the contract year in which the Cap changes (e.g., the port benchmarks for the contract year commencing October 1, 2004, will be calculated based on the container royalty tons reported in the Base Contract Year beginning October 1, 2002, and ending September 30, 2003). Individual port benchmarks for the ports of New York/New Jersey, Hampton Roads, Charleston, Savannah, Miami/Port Everglades, and the West Gulf will be calculated using the following formula: Base Year Applicable CR Cap Level Local CR Tons x Base Year CR Tons In All Master Contract Ports 19 (ii) During the term of this Master Contact with respect to the ports of Boston, Philadelphia, Baltimore, Wilmington, NC, Jacksonville and New Orleans, the port benchmark for each of these ports shall be the lesser of (a) the port’s benchmark as of September 30, 2004, or (b) the tons reported in the port for container royalty purposes in the Contract Year ending September 30, 2003. (c) Distribution of Cap Excess. The payment of First and Third Container Royalty assessments shall cease in every port when the number of tons reported to the local container royalty fund in the port exceeds the benchmark determined using the formula set forth in Section 4(b)(i) of this Article XI as if that formula were applicable to all Master Contract ports, and First and Third Container Royalty assessments in excess of such benchmarks shall be paid to CCC Service Corporation for distribution as follows: (i) Forty (40) percent shall be refunded to the carriers; (ii) Twenty (20) percent shall be paid to MILA; and (iii) Forty (40) percent shall be paid to an escrow fund established by a single local port or by a group of ports ("Local Escrow Fund") to pay local benefits. (d) Benchmark Payments in Excess of Cap Level. In the event the application of the provision in Section 4(b)(ii) of this Article XI results in an obligation to pay Container Royalty Dollars Nos. 1 and 3 on tons in excess of the agreed upon Cap Level set forth in Section 4(a) of this Article XI, such obligation shall be satisfied solely from that portion of the container royalties in excess of the benchmarks collected and set aside for distribution to the Local Escrow Funds pursuant to Section 4(c) of this Article XI without any allocation of the amount of that obligation to any particular port. (e) Adjustment of Benchmarks. During the term of this Master Contract, a port’s existing benchmark may be reviewed and adjusted prospectively at the beginning of a Contract Year by the parties to this Master Contract if such port experiences a dramatic annual decrease in the tons reported for container royalty purposes. 20 (f) Limitation on Use of Cap Refund to Local Escrow Fund. The portion of the Cap refund paid to a Local Escrow Fund pursuant to Section 4(c) of this Article XI shall not be used for supplemental cash benefits (except as provided in Section 4(d) of this Article XI), nor shall the use of this portion of the Cap refund result in any carrier being considered an employer in relation to any local port employee pension benefit plan within the meaning of the Employee Retirement Income Security Act ("ERISA") except in any port where the carrier already is an employer under ERISA. (g) Interest Charges. Any carrier failing to pay to CCC Service Corporation container royalty assessments in excess of the benchmark in any port as required by Section 4(c) of this Article XI shall become liable to pay interest thereon at an annualized rate of eighteen (18) percent for each month or part thereof for which payment is not received by CCC Service Corporation. With respect to carriers continuing to pay to any local port or container royalty fund assessments in excess of the benchmark in that port, any such local port container royalty fund shall pay such excess to CCC Service Corporation. Any port or district container royalty fund failing to pay such excess to CCC Service Corporation shall pay interest thereon at an annualized rate of eighteen (18) percent for each month or part thereof for which payment is not received by CCC Service Corporation. If all payments due in a Contract Year from any local port container royalty fund for container royalty assessments in excess of the benchmark in that port are not received by CCC Service Corporation by the succeeding March 1, then all carriers that are members of USMX or signatories to this Master Contract can cease to make further First and Third Container Royalty contributions to that port container royalty fund until the full amount due and owing from the fund has been paid to CCC Service Corporation with interest. Thereafter, all payments of container royalties, including monies withheld, shall be resumed. Each port and district container royalty fund shall be obligated to forward to CCC Service Corporation the fund’s tonnages, payments, and all other information required by CCC Service Corporation for each fund’s plan year not later than sixty (60) days following the close of the plan year. 21 Section 5. Carrier-ILA Container Freight Station Trust Fund. The Carrier-ILA Container Freight Station Trust Fund ("CFS Fund") shall continue in effect during the term of this Master Contract. The contribution to the CFS Fund shall be 30 cents per weight ton during the term of this Master Contract. The periodic distribution of the amounts to be paid from the CFS Fund and the purposes thereof shall be determined solely by the trustees of the CFS Fund. The CFS Fund shall continue to provide funding for training purposes to the extent that any funds remain after payment for the support of container freight stations. Training programs in each port or district shall be operated under guidelines approved by the trustees of the CFS Fund and shall be funded primarily by funds generated in each local port or district before application is made to the trustees of the CFS Fund. Section 6. Carrier-ILA Container Royalty Fund. The 75 cents per weight ton Container Royalty No. 4 was eliminated, effective October 1, 1996, and shall not be resumed during the term of this Master Contract. USMX and the ILA shall amend the Agreement and Declaration of Trust of the Carrier-ILA Container Royalty Fund ("CR-4 Fund") to provide that the sole and exclusive purpose of the CR-4 Fund shall be to provide funding for MILA. Each port or district container royalty fund shall be required to report to the trustees of the CR-4 Fund on a basis of not less than once each quarter the total income from each port’s or district’s collection of First and Third Container Royalty assessments on a tonnage and dollar basis. Such information shall be supplied on uniform forms made available by the trustees of the CR-4 Fund to each local port or district container royalty fund. The required reports shall be supported by annual certified public accountant reports in the form now issued by such local fund’s certified public accountant. 22 |