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
8. Trade Rules.
(a) A Team shall not be permitted to receive in connection
with any trade, directly or indirectly, more than $3
million in cash or other compensation, including cash
or other compensation received as reimbursement for
Compensation obligations to players who the Team is
acquiring. For purposes of this Section 8(a), if a Contract
is signed and then traded pursuant to Section 8(e)(1)
below, and the Contract contains a signing bonus, the
payment of all or any portion of such bonus by the Team
that signed the Contract shall be treated as a reimbursement
of a Compensation obligation of the assignee Team and
shall be subject to this Section 8(a).
(b) A player with a one-year Contract (excluding any
Option Year) who would be a Qualifying Veteran Free
Agent or an Early Qualifying Veteran Free Agent upon
completing the playing services called for under his
Contract cannot be traded without the player’s
consent. Should the player consent and be traded, then,
for purposes of determining whether the player is a
Qualifying Veteran Free Agent, Early Qualifying Veteran
Free Agent or Non-Qualifying Veteran Free Agent at the
conclusion of the Contract or any subsequent Contract
between the player and the assignee Team, the player
shall be considered as having changed Teams by means
of signing a Contract with the assignee Team as a Free
Agent (and not by means of trade).
(c) A Team cannot trade any player after the NBA trade
deadline occurring in the last Season of the player’s
Contract, or after the NBA trade deadline occurring
in any Season that could be the last Season of the player’s
Contract based upon the exercise or non-exercise of
an Option or Early Termination Option.
(d) Except as set forth in Section 8(e) below: (1) no
player who signs a Contract as a Free Agent may be traded
before the later of (i) three (3) months following the
date on which such Contract was signed or (ii) the December
15 of the Salary Cap Year in which such Contract was
signed; and (2) no Draft Rookie who signs a Player Contract
may be traded before thirty (30) days following the
date on which the Contract is signed.
(e)
(1) A Veteran Free Agent and his Prior Team may enter
into a Player Contract pursuant to an agreement between
the Prior Team and another Team concerning the signing
and subsequent trade of such Contract, but only if
(i) the Contract is for three (3) or more Seasons
(excluding any Option Year), (ii) the Contract is
not signed pursuant to the Mid-Level Salary Exception
or the Disabled Player Exception, (iii) the first
Season of the Contract is fully protected for lack
of skill, and (iv) the acquiring Team has Room for
the player’s Salary plus any Unlikely Bonuses
provided for in the first Season of the Contract.
(2) A player and his Team may amend a Player Contract
(including by entering into an Extension) pursuant
to an agreement between such Team and another Team
concerning the signing of the amendment and subsequent
trade of the amended Contract; provided, however,
that no such agreement may be made during the period
from the last day of the last Regular Season covered
by the Contract (or the last day of any Regular Season
that could be the last Regular Season covered by the
Contract based upon the exercise or non-exercise of
an Option or ETO) through the following June 30.
(3) A Player Contract or Extension entered into pursuant
to Section 8(e)(1) or (2) above may not contain an
Exhibit 6 thereto. However, the preceding sentence
shall not prohibit the Teams involved in the trade
from agreeing that the trade (and thus the validity
of the Player Contract or Extension) will be conditional
upon the passage of a physical examination to be performed
by a physician designated by the assignee-Team in
accordance with NBA procedures.
(f) In the event a Rookie Scale Contract is extended
pursuant to Section 7(b) above and a Team proposes to
trade such Contract to another Team prior to the July
1 immediately following such extension, then, only for
purposes of determining whether the acquiring Team has
Room for the Contract, the Salary for the last Season
of the original term of the Contract shall be deemed
to equal the average of the aggregate Salaries for such
Season and each Season of the extended term.
(g) If a Team trades a player and the assignee Team
subsequently terminates the Player’s Contract,
the assignor Team shall not be permitted to sign the
player to a new Contract until at least thirty (30)
days have passed following the date all conditions to
the trade were satisfied (or until at least twenty (20)
days have passed in the case of a trade that occurs
during the period from the last day of a Season through
the first day of the following Regular Season).
(h) Prior to the assignment of any Player Contract,
the Team from which such Player Contract is to be assigned
and the player whose Player Contract is to be assigned
shall be required to divest themselves, on terms mutually
agreeable to the player and the Team, of any pre-existing
financial arrangements between such Team and such player.
The foregoing shall not apply to Compensation earned
by the player prior to the assignment or to loans.
(i) Within one (1) week following each trade, the NBA
shall send to the Players Association, by fax or e-mail,
a summary of the principal terms of the trade; provided,
however, that the NBA may omit from such summary any
terms that the NBA or one (1) or more Teams involved
in the trade reasonably deem confidential (other than
such terms as may be necessary to verify the Teams’
compliance with Section 8(a) above).
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