(1) For each Salary Cap Year during the term of this Agreement, there shall be a Salary Cap. Subject to the adjustments set forth in Section 2(d) below, the Salary Cap for each Salary Cap Year will equal the percentage of Projected BRI for such Salary Cap Year set forth below, less Projected Benefits (as defined in Article IV, Section 8) for such Salary Cap Year, divided by the number of Teams scheduled to play in the NBA during such Salary Cap Year, other than Expansion Teams during their first two Salary Cap Years in the NBA:

(2) Notwithstanding Section 2(a)(1) above, in the event that, subject to the adjustments set forth in Section (d) below, Projected BRI for any Salary Cap Year, in which one or more Expansion Teams is scheduled to play its second Season, plus Projected Local Expansion Team BRI for such Salary Cap Year, multiplied by the applicable percentage of Projected BRI set forth in Section 2(a)(1) above, less Projected Benefits for such Salary Cap Year (including for the Expansion Team(s)), divided by the number of Teams scheduled to play in the NBA during such Salary Cap Year (including the Expansion Team(s)), exceeds the Salary Cap calculated in accordance with Section 2(a)(1) above, the Salary Cap shall equal the amount calculated pursuant to this Section 2(a)(2).

(3) The Salary Cap for the 2005-06 Salary Cap Year for all Teams other than the Charlotte Bobcats shall be deemed to be $49.5 million. The Salary Cap for the 2005-06 Salary Cap Year for the Charlotte Bobcats shall be deemed to be $37.125 million.

(4) The Salary Cap for a Salary Cap Year will be in effect commencing on the day following the last day of the Moratorium Period in such Salary Cap Year and shall continue through and including the last day of the Moratorium Period in the next Salary Cap Year.

(5) In the event that the Audit Report for a Salary Cap Year, beginning with the 2005-06 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 Salary Cap for the Salary Cap Year that commenced on the immediately preceding July 1 will be calculated pursuant to Section 2(a)(1)-(2) above, except that Interim Projected BRI shall be utilized instead of Projected BRI, Estimated BRI shall be utilized instead of BRI and Estimated Total Salaries and Benefits shall be utilized instead of Total Salaries and Benefits, for all purposes under this Section 2 including, without limitation, the adjustments set forth in Section 2(d) below. In the event that the Interim Audit Report for a Salary Cap Year, beginning with the 2005-06 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 Salary Cap 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 Salary Cap for the preceding Salary Cap Year (except that if the preceding Salary Cap Year was the 2005-06 Salary Cap Year, then an amount that would have been the Salary Cap for the 2005-06 Salary Cap Year had it been computed based on 51% of Projected BRI rather than 49.5% of Projected BRI) 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.

(1) For each Salary Cap Year during the term of this Agreement, there shall be a Minimum Team Salary equal to 75% of the Salary Cap for such Salary Cap Year. The Minimum Team Salary for the 2005-06 Salary Cap Year for all Teams other than the Charlotte Bobcats shall be deemed to be $37.125 million. The Minimum Team Salary for the 2005-06 Salary Cap Year for the Charlotte Bobcats shall be deemed to be $27.844 million.

(2) In the event that, by the conclusion of a Salary Cap Year, a Team has failed to make aggregate Salary payments and/or incur aggregate Salary obligations equal to or greater than the applicable Minimum Team Salary for that Salary Cap Year, the NBA shall cause such Team to make payments equal to the shortfall (to be disbursed to the players on such Team pro rata or in accordance with such other formula as may be reasonably determined by the Players Association).

(3) Nothing contained herein shall preclude a Team from having a Team Salary in excess of the Minimum Team Salary, provided that the Team’s Team Salary does not exceed the Salary Cap plus any additional amounts authorized pursuant to the Exceptions set forth in this Article VII.

(1) During the first Salary Cap Year in which it begins play, an Expansion Team shall have a Salary Cap equal to 66 and 2/3% of the Salary Cap applicable to all other Teams (the “First Year Expansion Team Salary Cap”); and shall have a Minimum Team Salary equal to 75% of the First Year Expansion Team Salary Cap.

(2) During the second Salary Cap Year in which it begins play, an Expansion Team shall have a Salary Cap equal to 75% of the Salary Cap applicable to all other Teams (the “Second Year Expansion Team Salary Cap”); and shall have a Minimum Team Salary equal to 75% of the Second Year Expansion Team Salary Cap.

(1) In the event that (i) 49.5% of BRI for the 2005-06 Salary Cap Year is less than 49.5% of 2005-06 Projected BRI; or (ii) 51% of BRI for any other Salary Cap Year is less than 51% of Projected BRI for such Salary Cap Year, then, in either case, for purposes of calculating the Salary Cap for the subsequent Salary Cap Year, the difference shall be deducted from 51% of Projected BRI for such subsequent Salary Cap Year.

(2)

(i) In the event that Total Salaries and Benefits paid with respect to the 2005-06 Salary Cap Year is less than 49.5% of BRI for such Salary Cap Year, then for purposes of calculating the Salary Cap for the 2006-07 Salary Cap Year, the amount of such shortfall shall be added to 51% of Projected BRI for the 2006-07 Salary Cap Year.

(ii) In the event that Total Salaries and Benefits paid with respect to any Salary Cap Year beginning with the 2006-07 Salary Cap Year is less than 51% of BRI for such Salary Cap Year (plus, if applicable, any shortfall against the applicable percentage of BRI for the prior Salary Cap Year (i.e., 49.5 % of BRI for the 2005-06 Salary Cap Year and 51% of BRI for each subsequent Salary Cap Year)), then for purposes of calculating the Salary Cap for the subsequent Salary Cap Year, the amount of such shortfall shall be added to 51% of Projected BRI for the subsequent Salary Cap Year.

(3) In the event that Benefits for any Salary Cap Year exceeds Projected Benefits for such Salary Cap Year, then for purposes of calculating the Salary Cap for the subsequent Salary Cap Year, the difference shall be added to Projected Benefits for such subsequent Salary Cap Year.

(4) In the event that Benefits for any Salary Cap Year is less than Projected Benefits for such Salary Cap Year, then for purposes of calculating the Salary Cap for the subsequent Salary Cap Year, the difference shall be deducted from Projected Benefits for the subsequent Salary Cap Year.

(5) In the event that the Salary Cap for a Salary Cap Year, beginning with the 2006-07 Salary Cap Year, is calculated in accordance with Section 2(a)(5) above (i.e., is based upon an Interim Audit Report for the prior Salary Cap Year) and BRI and Total Salaries 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 Salary Cap would have been different from that based upon the Interim Audit Report, any such difference in the Salary Cap shall be debited or credited, as the case may be, to the Salary Cap 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 Salary Cap 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).

(1) In the event that for any Salary Cap Year Total Salaries and Benefits is less than 57% of BRI, the difference shall be paid by the NBA to the Players Association no later than thirty (30) days following the completion of the Audit Report for such Salary Cap Year for distribution to all NBA players who were on an NBA roster during the Season covered by such Salary Cap Year on such proportional basis as may be reasonably determined by the Players Association.