The NBA set the stage for the $US2 billion ($A2.15 billion) sale of the Los Angeles Clippers to Steve Ballmer on Friday, halting its efforts to strip Donald Sterling of the club.
Sterling's wife Shelly negotiated the sale to ex-Microsoft chief Ballmer on Thursday in a deal still to be approved by the league's board of governors.
"The NBA, Shelly Sterling and the Sterling family trust today resolved their dispute over the ownership of the Los Angeles Clippers," the league said.
"Under the agreement, the Clippers will be sold to Steve Ballmer, pending approval by the NBA Board of Governors, and the NBA will withdraw its pending charge to terminate the Sterlings' ownership of the team."
The league said Shelly Sterling and the Sterling trust had also agreed not to sue the NBA, and to indemnify the league against lawsuits from others, including Donald Sterling.
Shortly before the NBA's announcement, Donald Sterling filed a $US1 billion ($A1.08 billion) suit against the NBA in the US federal court, alleging breach of contract and anti-trust and civil rights' violations.
Asked how the settlement would affect that lawsuit, Sterling attorney Maxwell Blecher said simply, "good question".
Sterling had argued the NBA had no grounds to sanction him for racist conduct detrimental to the league because the racially charged remarks for which he has been punished came in a private conversation recorded without his permission.
Blecher had said Sterling was ready to act not only over the league's effort to terminate his ownership but also over the NBA's lifetime ban and $US2.5 million ($A2.7 million) fine.
NBA executive Rick Buchanan said Sterling's lawsuit was "predictable, but entirely baseless".
Despite some remaining uncertainties, the sale to Ballmer appeared to be fast-tracking.
"I am delighted that we are selling the team to Steve, who will be a terrific owner," Shelly Sterling said.
Three quarters of the other 29 NBA club owners must ratify any sale.
The price tag, for a team that had never won a championship, would set a NBA record - well above the record $US550 million ($A595 million) paid for the Milwaukee Bucks in April.
It would mark a massive financial return for the 80-year-old Sterling on a club he purchased in 1981 for $US12 million ($A13 million).
The 58-year-old Ballmer, Microsoft CEO from 2000 until this February, says he loves basketball and will do "everything in my power to ensure that the Clippers continue to win - and win big - in Los Angeles."
Ballmer reassured Clippers fans he wouldn't move the team to Seattle, where he had once hoped to relocate the NBA's Sacramento Kings.
Ballmer indicated he wanted the team to move past the ugly episode.
"LA is one of the world's great cities - a city that embraces inclusiveness, in exactly the same way that the NBA and I embrace inclusiveness."
Former Lakers great Magic Johnson was among Los Angeles luminaries to welcome the sale.
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