ARTICLE VII: BASKETBALL RELATED INCOME, SALARY CAP, MINIMUM TEAM SALARY, AND ESCROW ARRANGEMENT

INDEX
Section 1. Definitions
Section 2. Calculation of Salary Cap and Minimum Team Salary
Section 3. Determination of Salary
Section 4. Determination of Team Salary
Section 5. Operation of Salary Cap
Section 6. Exceptions to the Salary Cap
Section 7. Extensions, Renegotiations and Other Amendments
Section 8. Trade Rules
Section 9. Miscellaneous
Section 10. Accounting Procedures
Section 11. Players Association Audit Rights
Section 12. Escrow and Tax Arrangement

Section 11. Players Association Audit Rights.
(a) Team Audits.
The Players Association shall have the right as part of the annual review of BRI Reports to retain its own accountants (the “Players Association’s Accountants”), at its own expense, after the submission of each Audit Report under this Agreement (the “First Audit”), to audit the books and records of five (5) NBA teams (of its choosing) and shall also have the right to review the books and records of the NBA League Office; provided, however, that such review shall be limited to (1) revenue items, and (2) expense items that appear or should have appeared in the BRI Reports. In the event that, in the opinion of the Players Association’s Accountants, such audit indicates misallocations or miscategorizations of revenues or expenses (other than with respect to matters that constituted Disputed Adjustments in connection with the prior Audit Report) resulting in an understatement of BRI in excess of $3 million, they shall submit to the NBA proposed adjustments to BRI consistent with their findings. In the event that the NBA disputes such proposed adjustments, such proposed adjustments shall be deemed to be “Disputed Adjustments” and shall be resolved in accordance with the procedures set forth in Article XXXII. In addition, in the event that First Audit Disputed Adjustments in excess of $3 million are resolved in favor of the Players Association, the Players Association shall then have the right, that Season, to have the Players Association’s Accountants audit an additional five (5) NBA teams, in accordance with the foregoing procedures (the “Second Audit”). If, as a result of the Second Audit, additional Disputed Adjustments in excess of $3 million are resolved in favor of the Players Association, the Players Association shall then have the right, that Season, to have the Players Association’s Accountants audit all remaining NBA Teams. The amount of any and all Disputed Adjustments that are ultimately resolved in favor of the Players Association in accordance with this Section 11 (a) shall be added to BRI in the Season in which such resolution is reached.

(b) Expense Audit.
The Players Association shall have the right to retain the Players Association’s Accountants to conduct one (1) audit, at its own expense, of the expenses incurred in connection with the proceeds that come within Article VII, Section 1(a)(1)(viii) above regardless of whether such expenses exceed the applicable Expense Ratios set forth in Exhibit D. In the event that in the opinion of the Players Association’s Accountants, such audit indicates a misallocation or miscategorization of expenses resulting in an understatement of BRI, they shall submit proposed adjustments to the NBA consistent with their findings. In the event the NBA disputes such proposed adjustments, such proposed adjustments shall be deemed to be Disputed Adjustments and resolved in accordance with the procedures set forth in Article XXXII. The amount of any and all such Disputed Adjustments that are resolved in the Players Association’s favor shall be included in BRI in the Season in which such resolution is reached. In addition, in the event that any such Disputed Adjustments are resolved in the Players Association’s favor, the Accountants shall be directed to correct such expense misallocations and/or miscategorizations in the remaining Seasons covered by the Agreement.

(c) Confidentiality.
In connection with any audit conducted by the Players Association pursuant to this Section 11, the Players Association agrees to sign, and to cause its representatives to sign, a confidentiality agreement in the form annexed hereto as Exhibit J-1. The Players Association also agrees to sign, and to cause its representatives to sign, a similar confidentiality agreement with respect to information obtained in connection with the Accountants’ audit pursuant to Section 10 above.

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