(1) “Adjustment Player” means, with respect to a Salary Cap Year, every current or former player included in a Team’s Team Salary for such Salary Cap Year and every player who is excluded from Team Salary pursuant to Section 4(h) above.

(2) “Aggregate Compensation Adjustment Amount” means, with respect to a Salary Cap Year, the lesser of (i) the Aggregate Salaries and Benefits Adjustment Amount, and (ii) a percentage of Total Salaries for such Salary Cap Year as follows:

For purposes of clause (ii) above, Total Salaries shall be increased by the amount that is included in Benefits for such Salary Cap Year pursuant to Article IV, Section 5(k)(1) of this Agreement.

(3) “Aggregate Compensation Adjustment Amount Shortfall” means the amount by which the amount received by the NBA from the Escrow Agent with respect to a Salary Cap Year pursuant to Section 12(d)(1) below is less than the Aggregate Compensation Adjustment Amount for such Salary Cap Year.

(4) “Aggregate Salaries and Benefits Adjustment Amount” means, with respect to a Salary Cap Year, the lesser of (i) the Overage (as defined in Section 12(a)(14) below) for such Salary Cap Year, and (ii) a percentage of Total Salaries and Benefits for such Salary Cap Year as follows:

(5) “Audit Report Challenge Period” means the period beginning with the date on which an Interim Audit Report is issued by the Accountants and ending on the last date by which all challenges thereto brought pursuant to Article XXXII, Section 9(b) are resolved.

(6) “Deduction Date” means each of the twelve (12) semi-monthly payment dates from November 15 through May 1 provided for under paragraph 3 of the Uniform Player Contract.

(7) “Designated Percentage” means, with respect to a Salary Cap Year, the percentage set forth in Section 12(b)(3) below.

(8) “Escrow Agent” means, for purposes of this Section 12, the escrow agent identified in the Salary Escrow Agreement.

(9) “Escrow Amount” means for an Adjustment Player, with respect to a Salary Cap Year, an amount equal to the sum of the player’s “Base Escrow amount” (as defined below) plus the player’s “Performance Bonus Escrow Amount” (as defined below) plus the player’s “Trade Bonus Escrow Amount” (as defined below). “Base Escrow Amount” means for an Adjustment Player, with respect to a Salary Cap Year, an amount equal to a percentage of the Adjustment Player’s Salary for such Salary Cap Year as follows:

For purposes of calculating an Adjustment Player’s Base Escrow Amount in accordance with the preceding sentence: (i) a player’s Salary shall exclude all Performance Bonuses included in Salary under Section 3(d) above; and (ii) the Salary of a player under a one-year Contract making the Minimum Player Salary shall include the portion of such Minimum Player Salary that is reimbursed out of the League-wide benefits fund described in Article IV, Section 5(k)(2). “Performance Bonus Escrow Amount” means for an Adjustment Player, with respect to a Salary Cap Year, an amount equal to a percentage of the Performance Bonuses earned by such player during such Salary Cap Year specified in the table above. “Trade Bonus Escrow Amount” means for an Adjustment Player whose Contract contains a trade bonus, with respect to a Salary Cap year in which the player’s Contract is traded during the period following the conclusion of the Team’s Season through June 30, an amount equal to a percentage of the portion of the trade bonus that is included in Salary for such Salary Cap year as specified in the table above.

(10) “Escrow Schedules” means the schedules prepared by the NBA with respect to each Salary Cap Year setting forth: the Base Escrow Amount; when calculable following the conclusion of the applicable Regular Season, the Performance Bonus Escrow Amount; when calculable, the Trade Bonus Escrow Amount; and the dates on which each Adjustment Player’s Base Escrow Amount, Performance Bonus Escrow Amount and Trade Bonus Escrow Amount are to be deducted from the player’s Compensation and/or delivered to the Escrow Agent.

(11) “Individual Compensation Adjustment Amount” means for an Adjustment Player, with respect to a Salary Cap Year, the amount calculated following the conclusion of the Salary Cap Year by multiplying the Aggregate Compensation Adjustment Amount for such Salary Cap Year by a fraction, the numerator of which is the Adjustment Player’s Salary for such Salary Cap Year and the denominator of which is the sum of all Adjustment Players’ Salaries for such Salary Cap Year. For purposes of calculating the fraction described in the preceding sentence: (i) a player’s Salary shall include all Performance Bonuses excluded from Salary under Section 3(d) above but actually earned by the player during such Salary Cap Year, and shall exclude all Performance Bonuses included in Salary under Article VII, Section 3(d) above but not actually earned by the player during such Salary Cap Year; and (ii) the Salary of a player under a one-year Contract making the Minimum Player Salary shall include the portion of such Minimum Player Salary that is reimbursed out of the league-wide benefits fund described in Article IV, Section 5(k)(2).

(12) “Individual Shortfall Adjustment Amount” means, with respect to each Contract that is amended pursuant to Section 12(e)(1) below, the amount that the Compensation otherwise payable in accordance with that Contract shall be reduced pursuant to Section 12(e)(2) below.

(13) “New Benefit Adjustment Amount” means an amount equal to the difference between the Aggregate Salaries and Benefits Adjustment Amount and the Aggregate Compensation Adjustment Amount.

(14) “Overage” means the amount, if any, by which Total Salaries and Benefits for a Salary Cap Year exceed an amount equal to the Designated Percentage of BRI for such Salary Cap Year.

(15) “Performance Bonus Deduction Date” means, with respect to an Adjustment Player, the earlier of (i) the date that any Performance Bonus earned by the player during the applicable Salary Cap Year is paid to the player pursuant to his Contract, or (ii) the day following the date of the last game of the NBA Finals occurring during such Salary Cap Year.

(16) “Salary Escrow Agreement” means the escrow agreement in the form agreed upon by the parties (or such other form to which the parties may agree) to be entered into with the Escrow Agent.

(17)

(i) “Tax Level” means, with respect to a Salary Cap Year, an amount determined by the following calculation:

Step 1:	Compute 61% of Projected BRI (as defined in Section 1(c) above).
Step 2:	Subtract Projected Benefits (as defined in Article IV, Section 8) for such Salary Cap Year from the result in Step 1.
Step 3:	Divide the result in Step 2 by the number of Teams (excluding Expansion Teams during their first two (2) Salary Cap Years) in the NBA during such Salary Cap Year.

(ii) In the event that the Audit Report for a Salary Cap Year has not been completed as of the last day of the Moratorium Period immediately following the end of such Salary Cap Year, then the Tax Level for the Salary Cap Year that commenced on the immediately preceding July 1 will be calculated using Interim Projected BRI instead of Projected BRI, Estimated BRI instead of BRI and Estimated Benefits instead of Benefits for all purposes under this Section 12(a)(17) including, without limitation, the adjustments set forth in Section 12(a)(17)(iv) and (v) below. In the event that the Interim Audit Report for a Salary Cap Year has not been completed as of the last day of the Moratorium Period immediately following the end of such Salary Cap Year, then the Tax Level for the Salary Cap Year that commenced on the immediately preceding July 1 shall, until such Interim Audit Report is completed, be an amount that would have been the Tax Level for the preceding Salary Cap Year had Projected BRI or Interim Projected BRI, as the case may be, for such preceding Salary Cap Year included, with respect to the NBA’s national broadcast, national telecast or network cable television contracts, the rights fees or other non-contingent payments stated in such contracts for the Season following the Season covered by such preceding Salary Cap Year instead of for the Season covered by such preceding Salary Cap Year.

(iii) In the event that the Tax Level for a Salary Cap Year is calculated in accordance with Section 12(a)(17)(ii) above (i.e., is based upon an Interim Audit Report for the prior Salary Cap Year) and BRI and Benefits as set forth in the Audit Report for the prior Salary Cap Year are different from those in the Interim Audit Report such that the Tax Level would have been different from that based upon the Interim Audit Report, any such difference in the Tax Level shall be debited or credited, as the case may be, to the Tax Level for the subsequent Salary Cap Year, except that, with respect to the 2010-11 Salary Cap Year (or, in the alternative, if the NBA exercises its option pursuant to Article XXXIX, the 2011-12 Salary Cap Year) any such differences shall be debited or credited, as the case may be, to the Tax Level for the then-current Salary Cap Year, in all such cases with interest (at a rate equal to the one year Treasury Bill rate as published in The Wall Street Journal on the date of the issuance of the Interim Audit Report).

(iv) In the event that 61% of BRI for a Salary Cap Year, beginning with the 2005-06 Salary Cap Year, is greater or less than 61% of Projected BRI for that Salary Cap Year, then for purposes of calculating the Tax Level for the subsequent Salary Cap Year: (A) if 61% of BRI is greater than 61% of Projected BRI, the difference shall be added to 61% of Projected BRI for such subsequent Salary Cap Year; or (B) if 61% of BRI is less than 61% of Projected BRI, the difference shall be deducted from 61% of Projected BRI for such subsequent Salary Cap Year.

(v) In the event that Benefits for a Salary Cap Year, beginning with the 2005-06 Salary Cap Year, is greater or less than Projected Benefits for that Salary Cap Year, then for purposes of calculating the Tax Level for the subsequent Salary Cap Year: (A) if Benefits is greater than Projected Benefits, the difference shall be added to Projected Benefits for such subsequent Salary Cap Year; or (B) if Benefits is less than Projected Benefits, the difference shall be deducted from Projected Benefits for such subsequent Salary Cap Year.

(vii) The tax level with respect to the 2005-06 Salary Cap Year shall be deemed to be $61.7 million.

(18) “Trade Bonus Deduction Date” means, with respect to an Adjustment Player, the earlier of (i) the date that any trade bonus earned by the player during the applicable Salary Cap Year is paid to the player pursuant to this Contract, or (ii) the June 30 of such Salary Cap Year.

(1) In the event that there is an Overage in any Salary Cap Year, (i) the Contracts of all Adjustment Players shall be amended by operation of this Agreement, such that the aggregate Compensation otherwise payable to all such Adjustment Players with respect to such Salary Cap Year shall be reduced by the Aggregate Compensation Adjustment Amount, and (ii) the New Benefit Amount for such Season as provided for by Article IV, Section 7(a)(1) (i.e., the New Benefit amount that is presently specified in Article IV, Section 7(a)(1) or such lesser New Benefit Amount as is designated by the Players Association, in accordance with the provisions of Article IV, Section 7(a)(1), by notice in writing to the NBA delivered on or before the March 15 prior to the commencement of the Salary Cap Year encompassing such Season) shall be reduced by the New Benefit Adjustment Amount.

(2) Subject to Section 12(d) and (e) below, to effectuate the aggregate Compensation reduction provided for in Section 12(b)(1)(i) above, the Compensation otherwise payable in accordance with each Adjustment Player’s Contract shall be reduced by the player’s respective Individual Compensation Adjustment Amount.

(3) The Designated Percentage for each Salary Cap Year shall be 57%, except that:

(i) if BRI for any Salary Cap Year exceeds BRI for the 2004-05 Salary Cap Year by more than 30%, then the Designated Percentage for such Salary Cap Year shall be 57.5%; and

(ii) if BRI for any Salary Cap Year exceeds BRI for the 2004-05 Salary Cap Year by more than 60%, then the Designated Percentage for such Salary Cap Year shall be 58%.

(1) The following shall apply with respect to each Salary Cap Year (subject to Section 12(d) below regarding final reconciliation):

(i) The Compensation otherwise payable to each Adjustment Player shall be reduced by the Escrow Amount applicable to such Adjustment Player; and

(ii) Each Team shall deposit the Escrow Amount with respect to each of its Adjustment Players with the Escrow Agent.

(2) Except as set forth in Section 12(c)(4) below: (i) the Base Escrow Amount for each Adjustment Player shall be collected in twelve (12) equal installments from each of the player’s semi-monthly Compensation payments on each Deduction Date; (ii) the Performance Bonus Escrow Amount for each Adjustment Player shall be collected in one (1) installment on the Performance Bonus Deduction Date; and (iii) the Trade Bonus Escrow Amount for each Adjustment Player shall be collected in one (1) installment on the Assignment Bonus Deduction Date.

(3) The procedure for deducting and depositing Escrow Amounts shall be as follows:

(i) The NBA will prepare and send to the Players Association the Escrow Schedules on or before November 8 of each Salary Cap Year, and periodically thereafter to reflect any new or adjusted Escrow Amounts calculated in accordance with Section 12 (c)(4) below.

(ii)

(A) Within three (3) business days after each Deduction Date, each Team shall deliver to the Escrow Agent, in accordance with the Salary Escrow Agreement, the aggregate Base Escrow Amounts that the Team is obligated to deduct with respect to such Deduction Date for all of its Adjustment Players. Within three (3) business days following the date of the last game of the NBA Finals occurring during each Salary Cap, each Team shall deliver to the Escrow Agent, in accordance with the Salary Escrow Agreement, the aggregate Performance Bonus Escrow Amounts for all of its Adjustment Players. Within three (3) business days following an Adjustment Player’s Trade Bonus Deduction Date, the player’s Team shall deliver to the Escrow Agent, in accordance with the Salary Escrow Agreement, the player’s Trade Bonus Escrow Amount. All amounts received by the Escrow Agent shall be invested and disbursed in accordance with the provisions of the Salary Escrow Agreement.

(B) It is the intention of the NBA and the Players Association that the provisions of this Section 12(c) result each Salary Cap Year in the delivery to the Escrow Agent, with respect to each Adjustment Player, of the player’s full Escrow Amount. Accordingly, if for any reason the procedures in this Section 12(c) would result in less than the full Escrow Amount with respect to any Adjustment Player being delivered to the Escrow Agent, the NBA and the Players Association shall agree on such supplemental measures as are necessary to effectuate the deduction of the appropriate amount from the player’s Compensation for delivery to the Escrow Agent.

(4) After November 8, the NBA shall periodically update the Escrow Schedules to add Escrow Amounts for players who enter into new Player Contracts and to make such adjustments as may be necessary to previously-listed Escrow Amounts (such as adjustments resulting from earned Performance Bonuses, Contract terminations, Renegotiations, etc.). Any portion of a Base Escrow Amount that has not been deducted as of the date any such updated Schedules are prepared shall be deducted in equal installments from each of the remaining semi-monthly Compensation payments to be made to the player from November 15 through May 1 of the applicable Salary Cap Year.

(5) Within seven (7) days after receiving any set of Escrow Schedules from the NBA, or within seven (7) days after any event that the Players Association believes warrants a change in any previously-issued Schedules, the Players Association may bring a proceeding before the System Arbitrator, in accordance with Article XXXII, Section 10, contesting the NBA’s calculation of any player’s Escrow Amount for such Salary Cap Year. Notwithstanding the commencement of any such proceeding, each Team shall commence and continue remitting to the Escrow Agent the total deductions due with respect to each Deduction Date and each Performance Bonus Deduction Date as set forth in the Schedules, and in no event shall any Team be prohibited from remitting to the Escrow Agent any such deduction prior to a final determination in any such proceeding.

(6) In the event that the NBA makes a determination in accordance with Section 12(c)(4) above, or a final determination is made in a proceeding in accordance with Section 12(c)(5) above, that an Escrow Amount was erroneously calculated by the NBA, the sole remedy with respect to any amounts erroneously deducted from the player’s Salary shall be to modify, as soon as practicable, the deduction schedule applicable to such player so as to reduce, in equal amounts, all scheduled future deductions from post-determination payments of Compensation until the amount of any prior over-deduction is fully off-set; provided, however, that to the extent that reducing the player’s future deductions would not fully offset the prior over-deductions, the parties shall instruct the Escrow Agent to pay the player as soon as practicable, with interest, such additional amounts as are necessary to fully off-set such over-deductions.

(1) In the event of an Overage: (i) the NBA shall be entitled to receive from the Escrow Agent, with respect to each Adjustment Player, such player’s Individual Compensation Adjustment Amount (or, in the event that the player’s Escrow Amount is less than his Individual Compensation Adjustment Amount, a portion of his Individual Compensation Adjustment Amount equal to his Escrow Amount); and (ii) each Adjustment Player shall be entitled to receive from the Escrow Agent the amount, if any, by which the player’s Escrow Amount exceeds his Individual Compensation Adjustment Amount. In the event that there is no Overage, each Adjustment Player shall be entitled to receive from the Escrow Agent his entire Escrow Amount.

(2) Any interest earned on Escrow Amounts remitted to the Escrow Agent shall be allocated among the Adjustment Players, collectively, and the NBA in proportion to the percentage of the aggregate Escrow Amounts that the Adjustment Players, collectively, and the NBA are to receive from the Escrow Agent in accordance with Section 12(d)(1) above. The Adjustment Players’ collective share of interest shall be allocated among the individual players in proportion to each player’s Escrow Amount.

(3) The parties shall cause the Accountants to include in the Interim Audit Report and the Audit Report (or, if no final Audit Report has been submitted at the conclusion of the Audit Report Challenge Period, in the Interim Escrow Audit Report) for each Salary Cap Year schedules setting forth, with respect to such Salary Cap Year:

(i) the amount of any Overage;

(ii) the Aggregate Salaries and Benefits Adjustment Amount, if any;

(iii) the Aggregate Compensation Adjustment Amount, if any;

(iv) the New Benefits Adjustment Amount, if any;

(v) each Adjustment Player’s Individual Compensation Adjustment Amount, if any;

(vi) each Adjustment Player’s Escrow Amount, if any, as set forth in the Escrow Schedules;

(vii) a list of all Adjustment Players whose Individual Compensation Adjustment Amounts exceed their Escrow Amounts, which list shall also include (A) each such player’s Individual Compensation Adjustment Amount, (B) each such player’s Escrow Amount, (C) the amount by which each such player’s Individual Compensation Adjustment Amount exceeds his Escrow Amount, (D) the sum of all such players’ Escrow Amounts, (E) the sum of all such players’ Individual Compensation Adjustment Amounts, and (F) the aggregate amount by which all such players’ Individual Compensation Adjustment Amounts exceed their Escrow Amounts;

(viii) a list of all Adjustment Players whose Individual Compensation Adjustment Amounts are equal to or less than their Escrow Amounts, which list shall also include (A) each such player’s Individual Compensation Adjustment Amount, (B) each such player’s Escrow Amount, (C) the amount, if any, by which each such player’s Escrow Amount exceeds his Individual Compensation Adjustment Amount, (D) the sum of all such players’ Escrow Amounts, (E) the sum of all such players’ Individual Compensation Adjustment Amounts, and (F) the aggregate amount by which all such players’ Escrow Amounts exceed their Individual Compensation Adjustment Amounts;

(ix) in accordance with the provisions of Section 12(d)(1) and (d)(2) above, (A) the percentage of the interest earned on the Escrow Amounts to be allocated to the NBA, (B) the percentage of the interest earned on the Escrow Amounts to be allocated to the Adjustment Players collectively, and (C) the percentage of the interest earned on the Escrow Amounts to be allocated to each individual Adjustment Player;

(x) the Tax Level; and

(xi) the amount, if any, by which each Team’s Team Salary as completed in Section 12(f) below exceeds the TSO Level.

(4) In addition to the information described in Section 12(d)(3) above, the parties shall cause the Accountants to include in the Audit Report (or, if no final Audit Report has been submitted at the conclusion of the Audit Report Challenge Period, in the Interim Escrow Audit Report) a separate Notice to the NBA and the Players Association, in the form attached to the Salary Escrow Agreement, setting forth:

(i) the amount, if any, by which each Team’s Team Salary as computed in Section 12(f)(3) below exceeds the Tax Level.

(ii) in the space designated in paragraph 1 of the Notice, the sum of the amounts described in Section 12(d)(3)(vii)(D) and Section 12(d)(3)(viii)(E) above, which sum is to be disbursed by the Escrow Agent to the NBA;

(iii) in the space designated in paragraph 2 of the Notice, the amounts described in Section 12(d)(3)(viii)(C) above, which amounts are to be disbursed by the Escrow Agent to each respective Adjustment Player described in Section 12(d)(3)(viii) above;

(iv) in the space designated in paragraph 3 of the Notice, the information described in Section 12(d)(3)(ix)(A) above, which information shall be the basis for the Escrow Agent’s calculation of interest earned on the Escrow Amounts, which interest is to be disbursed by the Escrow Agent to the NBA; and

(v) in the space designated in paragraph (4) of the Notice, the information described in Section 12(d)(3)(ix)(C) above, which information shall be the basis for the Escrow Agent’s calculation of interest earned on the Escrow Amounts, which interest is to be disbursed by the Escrow Agent to each Adjustment Player.

(5) No later than seven (7) business days after the earlier of (i) the completion of the Audit Report for the prior Salary Cap Year, or (ii) the completion of the Audit Report Challenge Period, the NBA and/or the Players Association shall deliver to the Escrow Agent the completed Notice to the NBA and the Players Association. As soon as practicable following receipt of such Notice, the Escrow Agent shall disburse the specified sums to the specified payees.

(6) Any amounts that the Escrow Agent is obligated to disburse to a player pursuant to this Section 12, including, if the Players Association so elects, the amounts described in Section 12(d)(4)(iv) above, shall be reduced by all amounts required to be withheld by federal, state, and local authorities, which withholdings shall be disbursed by the Escrow Agent to the Player’s Team for remittance to the appropriate authorities. To assist the Escrow Agent in disbursing the appropriate amounts to each Adjustment Player and his respective Team, each Team, based on the information set forth in paragraph 2 (and, if applicable, paragraph 4) of the Notice to the NBA and the Players Association, shall promptly provide the Escrow Agent with a schedule for each of its Adjustment Players showing the exact withholding amount to be disbursed to the Team for remittance to the appropriate federal, state and local authorities. In no circumstance shall the employer’s share of FICA, FUTA, or any other employer taxes be paid out of the amounts deposited in escrow or any interest or earnings thereon. Any such obligations shall remain with each player’s individual employer.

(1) If, with respect to any Salary Cap Year, there is an Aggregate Compensation Adjustment Amount Shortfall, then the Contract of each of the following Salary Cap Year’s Adjustment Players shall be amended by operation of this Agreement, in accordance with Section 12(e)(2) below, such that the aggregate Compensation paid to all such players with respect to the Season covered by such following Salary Cap Year shall be reduced by the Aggregate Compensation Adjustment Amount Shortfall, which reduction shall be in addition to the full amount of any reduction for such following Salary Cap Year called for in Section 12(b)(1)-(2) above.

(2) The Individual Shortfall Adjustment Amount for each Adjustment Player whose Contract is amended in accordance with Section 12(e)(1) above shall be calculated by multiplying the Aggregate Compensation Adjustment Amount Shortfall for the prior Salary Cap Year by a fraction, the numerator of which is the player’s then-current Salary, and the denominator of which is the sum of all such players’ then-current Salaries. For purposes of calculating the fraction described in the preceding sentence, the Salary of a player making the Minimum Player Salary shall include the portion of such Minimum Player Salary that is reimbursed out of the league-wide benefits fund described in Article IV, Section 5(k).

(3) The Individual Shortfall Adjustment Amount for each Adjustment Player shall be deducted by the player’s Team in four (4) equal installments from each of the player’s first four (4) semi-monthly Cash Compensation payments following delivery to the Escrow Agent of the completed Notice to the NBA and the Players Association. All such deductions shall be promptly remitted by the Teams to the NBA.

(1) Each Team whose Team Salary exceeds the Tax Level for any Salary Cap Year shall be required to pay a tax to the NBA equal to the amount by which the Team’s Team Salary exceeds the Tax Level. For purposes of computing the amount of tax a Team owes: (i) a Team’s Team Salary shall be the sum of: (A) its Team Salary as of the start of its last Regular Season game, plus all Performance Bonuses excluded from Salary under Article VII, Section 3(d) but actually earned by the player during such Salary Cap Year, less all Performance Bonuses included in Salary under Section 3(d) above but not actually earned by the player during such Salary Cap Year; plus (B) with respect to any trade that occurs following the conclusion of the Team’s last Regular Season game, the portion of any trade bonus earned by a player that is included in the Team’s Team Salary for such Salary Cap Year, plus (C) any amount that is added to the Team’s Team Salary for such Salary Cap Year following the start of the Team’s last Regular Season game pursuant to Section 4(a)(iii) above; and (ii) the Salary attributable to the Contract of any player with zero (0) Years of Service or one (1) Year of Service who signs for the Minimum Player Salary shall be deemed to equal the Minimum Player Salary that would be applicable to a player with two (2) Years of Service.

(2) Each Team that owes a tax shall make the required tax payment to the NBA no later than ten (10) business days following the earlier of (i) the completion of the Audit Report for the prior Salary Cap Year, or (ii) the completion of the Audit Report Challenge Period.

(3) For purposes of this Section 12(f) and subject to the provisions of Section 12(f)(1) above and Section 12(f)(4) below, Team Salary shall be calculated by the Accountants in the same manner as Team Salary is calculated by the Accountants for purposes of computing Total Salaries and Benefits in the Audit Report.

(4) The Salary of one (1) player who was signed or acquired by a Team prior to June 21, 2005, and whose Contract is terminated by such Team in accordance with the NBA waiver procedure following a request for waivers made by such Team on or before August 15, 2005 (or was terminated prior to the date of this Agreement), shall be excluded from such Team’s Team Salary solely for the purpose of computing the amount of tax such Team owes, provided that the Team designates the player for such treatment by written notice to the NBA on or before August 15, 2005. If a Team so designates a player, the Team shall be prohibited from re-signing or re-acquiring the player prior to the conclusion of the term of the terminated Contract.

(1) The Escrow Amounts remitted to the NBA by the Escrow Agent pursuant to Section 12(d) above with respect to each Salary Cap Year shall be used and/or distributed as follows:

(i) the NBA may elect to distribute all or a portion of such amounts to NBA teams, provided that any such distribution pursuant to this Section 12(g)(1)(i) must be made to all Teams in equal shares; and

(ii) amounts not distributed in accordance with Section 12(g)(1)(i) above shall be used for one (1) or more “League purposes” (as defined in Section 12(g)(3) below) selected by the NBA.

(2) The tax amounts remitted to the NBA by NBA Teams pursuant to Section 12(f) above for each Salary Cap Year shall be used and/or distributed as follows:

(i) the NBA shall distribute to each Team that does not owe a tax for such Salary Cap Year an amount equal to the aggregate tax remitted to the NBA multiplied by a fraction, the numerator of which is one (1) and the denominator of which is the number of Teams in the NBA during such Salary Cap Year; and

(ii) amounts not distributed in accordance with Section 12(g)(2)(i) above shall be used and/or distributed in the manner described (with respect to the use and/or distribution of Escrow Amounts) in Section 12(g)(1)(i) and (ii) above.

(3) For purposes of this Section 12(g), the use of Escrow amounts or tax amounts for a “League purpose” shall mean the use of such amounts for any purpose, including, but not limited to, the distribution of such amounts to one (1) or more Teams; provided, however, that such amounts may not be distributed to a Team or expended for the benefit or detriment of a Team in a manner that is based, directly or indirectly, on the amount of the Team’s Team Salary or on whether the Team is a taxpayer. By way of example and not limitation, a team-assistance plan adopted by the NBA and funded with Escrow amounts and/or tax amounts shall be considered a “League purpose” if, pursuant to the plan, (i) a Team’s entitlement to an assistance payment and/or the amount of such payment is based, in whole or in part, on a pro forma profit, loss, and/or expenses computation determined by the NBA under which all Teams are assumed to have the same Team Salary, and/or (ii) a Team’s assistance payment is limited to an amount not to exceed the Team’s actual losses as determined by the NBA; provided, however, that (x) with respect to clause (ii) of this Section 12(g)(3), in determining whether a Team has sustained an actual loss, the only expense amount that may be used in respect of the Team’s Compensation expenditures shall be an amount that is no less than its Team Salary, and (y) in order to qualify as a “League purpose,” such a plan may not otherwise base a Team’s entitlement to assistance and/or the amount of such assistance on the amount of a Team’s Team Salary or on whether the Team is a taxpayer. If the NBA adopts a team assistance plan, it will advise the Players Association of the terms thereof, provided that the Players Association agrees to sign, and to counsel its representatives to sign, a confidentiality agreement similar to the confidentiality agreement annexed hereto as Exhibit J-1.

(1) Notwithstanding any other provision of this Agreement, the computation of an Adjustment Player’s Salary shall for purposes of the rules set forth in this Agreement be made without regard to any reduction in such player’s Compensation made pursuant to this Section 12.

(2) The NBA shall be permitted to assign to such designee, as the NBA may determine, any rights the NBA has to receive amounts from the Escrow Agent or NBA Teams pursuant to this Section 12.

(3) Consistent with Section 3(f) above (One-Year Minimum Contracts), except for purposes of calculating the amounts referred to in the definitions of Escrow Amount, Individual Compensation Adjustment Amount, and Individual Shortfall Adjustment Amount (set forth in Sections 12(a)(9), (b)(11), and (b)(12) above), and subject to Section 12(f)(1)(ii) above, the Salary of every player who signs a one-year Contract after the date of this Agreement for the Minimum Player Salary applicable to such player shall, for all other purposes in this Section 12, be the lesser of (i) such Minimum Player Salary, or (ii) the portion of such Minimum Player Salary that is not reimbursed out of the League-wide benefits fund described in Article IV, Section 5(k)(1).

(4)

(i) For purposes of the computations made by the Accountants pursuant to Section 10 above and this Section 12, the Salary of a player who is suspended by the NBA – but not by a Team – shall be reduced (for the Salary Cap Year covering the Season during which the player is suspended) by an amount equal to fifty percent (50%) of the suspension-related Compensation amount that is collected from the player and retained by the NBA at the time the computations of the Accountants are made. Other than as set forth in the preceding sentence, the computation of a player’s Salary under the CBA shall be made without regard to any reduction in Compensation that results from the player’s suspension by the NBA or his Team.

(ii) When (A) a player has forfeited a portion of his Compensation for a Season as a result of a suspension imposed by the NBA or his Team and (B) the player’s Compensation is later reduced pursuant to Section 12(b)(1) and (2) above, the player shall be entitled to a refund of a portion of the Compensation forfeited as a result of the suspension. The refund shall be in an amount equal to (x) the player’s Individual Compensation Adjustment Amount for the Salary Cap Year to which the suspension related multiplied by a fraction, the numerator of which is the amount of the player’s Compensation that was forfeited as a result of the suspension and the denominator of which is the player’s Base Compensation for such Season as of the date(s) he served the suspension, less (y) all amounts required to be withheld by federal, state, and local authorities. For purposes of the calculation required in clause (x) above, a player’s Individual Compensation Adjustment Amount shall be deemed to include only the portion of the player’s Individual Compensation Adjustment Amount that relates to the player’s Base Compensation earned under the Player Contract for the NBA team that the player was playing for while he was suspended. Such refund shall be made to the player within thirty (30) days following the Accountants’ submission to the NBA and the Players Association of a final Audit Report or an Interim Escrow Audit Report for the Salary Cap Year covering the Season for which the suspension-related Compensation amount is collected.

(5) In the event that the Overage for any Salary Cap Year exceeds the Aggregate Salaries and Benefits Adjustment Amount for such Salary Cap Year, the NBA shall not be entitled to reduce player Compensation in such Salary Cap Year or any subsequent Salary Cap Year so as to recover any amounts in excess of the Aggregate Compensation Adjustment Amount.