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Exhibit 10.20
January 30, 1998
Mr. Xxxx Xxxx
0000 Xxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxx 00000
Dear Xxxx:
The following shall constitute the Employment Agreement by and
between Cleveland Indians Baseball Company Limited Partnership, an Ohio limited
partnership (the "Club"), and you and shall, upon acceptance by you, replace
your existing contract dated October 20, 1994.
1. TERM.
(a) Subject to the terms and conditions set forth
below, the Club agrees to employ you as Executive Vice President,
General Manager of the General Partner of the Club, for the period
commencing on January 1, 1998 and ending December 31, 2003, subject to
subsections (b), (c), (d) and (e) below.
(b) The Club shall have the unilateral option to
extend the term of this Agreement through December 31, 2004, at a
salary of $775,000.00 for 2004. Such option may be exercised by written
notice personally delivered or mailed to you at the Club's offices on
or before December 1, 2002.
(c) The Club shall have the unilateral option to
extend the term of this Agreement through December 31, 2005 at a salary
of $800,000.00 for 2005. Such option may be exercised by written notice
personally delivered or mailed to the Club's offices on or before
December 1, 2003.
(d) The Club shall have the unilateral option to
extend the term of this Agreement through December 31, 2006 at a salary
of $825,000.00 for 2006. Such option may be exercised by written notice
personally delivered or mailed to the Club's offices on or before
December 1, 2004.
(e) The Club shall have the unilateral option to
extend the term of this Agreement through December 31, 2006 at a salary
of $850,000.00 for 2007. Such option may be exercised by written notice
personally delivered or mailed to the Club's offices on or before
December 1, 2005.
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January 30, 1998
Page 2
(f) Your salary shall be payable each calendar year
in twenty-four equal semi-monthly installments.
2. SALARY.
(a) SALARY. Your salary as Executive Vice President,
General Manager during the period of your employment under this
Agreement shall be as follows, less the amounts deferred pursuant to
paragraph (b) of this Section 2:
January 1, 1998 to December 31, 1998 at the rate of
$600,000.00 per year.
January 1, 1999 to December 31, 1999 - $625,000
January 1, 2000 to December 31, 2000 - $650,000
January 1, 2001 to December 31, 2001 - $675,000
January 1, 2002 to December 31, 2002 - $700,000
January 1, 2003 to December 31, 2003 - $750,000
Option Years:
January 1, 2004 to December 31, 2004 - $775,000
January 1, 2005 to December 31, 2005 - $800,000
January 1, 2006 to December 31, 2006 - $825,000
January 1, 2007 to December 31, 2007 - $850,000
(b) DEFERRED COMPENSATION PLAN. On or before December
1 of the year immediately preceding any calendar year, you may elect to
defer the payment of not more than 50% of the salary otherwise payable
under subsection (a) of this Section 2 and 100% of any bonus payments
for such calendar year, and on June 15 of such calendar year (or, if
later, the date that any bonus payment would otherwise have been
payable), the Club shall deposit such deferred compensation in a trust,
the earnings on which are not currently taxable for federal income tax
purposes, which shall be established by the Club to provide deferred
compensation to you in accordance with this subsection (b) (the
"Deferred Compensation Account"); a copy of such trust is attached
hereto as Exhibit I. Notwithstanding the
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January 30, 1998
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foregoing, if you terminate employment, die or become "permanently
disabled" (as defined under Section 10) during a calendar year, the
amount to be credited to the Deferred Compensation Account for that
year shall be equal to the portion of the deferred amount that you
actually earned through the date of your termination of employment,
death or permanent disability. The fair market value of the Deferred
Compensation Account, as determined under clause (i) of this subsection
(b), shall be paid by the Club to you, or in the case of your death, to
your beneficiary, in ten installments commencing on the first business
day of January of the calendar year following the earlier of the date
of your death, permanent disability or termination of your employment
with the Club. The payments will be computed in accordance with the
following schedule:
Percentage of
Fair Market Value
Payment of Deferred
Number Compensation Account
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1 10%
2 11.11%
3 12.5%
4 14.28%
5 16.67%
6 20%
7 25%
8 33.33%
9 50%
10 100%
The Club will reimburse you for the annual premium cost of an
insurance policy that you may purchase to insure that the amount of the
deferred compensation benefits will be paid to you in the event that
the Club fails to pay such benefits due to a bankruptcy or other
financial difficulties of the Club. The obligation to reimburse you for
such premiums will remain in full force and effect until the entire
amount of deferred compensation benefits have been paid to you or your
beneficiaries.
(i) INVESTMENT POLICY. Any deferred compensation credited to
your Deferred Compensation Account pursuant to this Section 2 shall be
deposited in a segregated investment account maintained under the trust
known as the "Trust Agreement under the Cleveland Indians Baseball
Company Limited Partnership Deferred Compensation Plans (the
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January 30, 1998
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"Trust") for the Cleveland Indians Baseball Company Limited Partnership
Deferred Compensation Plan for Xxxx Xxxx (the "Segregated Investment
Account"). Deferred compensation credited to the Segregated Investment
Account pursuant to this Section 2 and all income attributable to such
amounts (net of expenses) shall be invested and reinvested in
accordance with the Trust until such time as the Deferred Compensation
Account is paid to you, or your beneficiary, as applicable. The fair
market value of your Deferred Compensation Account hereunder shall be
based upon the fair market value of the Segregated Investment Account
under the Trust.
The trust known as the Trust Under Cleveland Indians Baseball
Company Limited Partnership Deferred Compensation Plan for Xxxx Xxxx,
under which Independence Bank is the trustee, shall be revoked by the
Club within an administratively reasonable period of time following the
Club's receipt of your acceptance of this amendment to the Agreement
and the assets held under such trust (net of expenses) shall be
transferred in kind to the Trust for deposit in the Segregated
Investment Account.
(ii) DEATH BENEFITS. You shall be entitled to
designate a beneficiary (or beneficiaries) who shall be entitled to
receive that portion of your undistributed Deferred Compensation
Account, as determined under the first paragraph of this subsection (b)
if you die before receiving the total value of the Deferred
Compensation Account. The designation of a beneficiary (or
beneficiaries) must be made in writing on a form substantially similar
to the form attached as Exhibit II to this Agreement and delivered to
the Club. You may change or revoke a beneficiary designation by filing
a new designation or notice of revocation with the Club. If you fail to
designate a beneficiary or if no designated beneficiary survives you,
the Club will pay any amounts payable pursuant to this subsection (b)
to your surviving spouse, and to your personal representative if there
is no surviving spouse.
(iii) HARDSHIP. Regardless of the date on which
payment of the deferred compensation under this subsection (b)
otherwise is to be paid, in the event of your hardship, payment of all
or a portion of the fair market value of the Deferred Compensation
Account can be accelerated by the Club's determination of hardship. The
Club shall have sole discretion as to whether a hardship has occurred
and if so, also shall have sole discretion to determine the amount of
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January 30, 1998
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deferred compensation that may be distributable to you in order to
alleviate that hardship. For this purpose, hardship shall mean any
emergency or necessity affecting your personal or family affairs having
a significant adverse financial effect.
(iv) NO FORFEITURE OF DEFERRED COMPENSATION. All
deferred compensation credited to the Deferred Compensation Account
shall be nonforfeitable.
(v) DEBITING OF DEFERRED COMPENSATION ACCOUNT. Once
an amount of deferred compensation has been paid, such amount shall be
debited from the Deferred Compensation Account and shall cease to
exist.
(vi) PARTICIPANT'S RIGHTS ARE UNFUNDED AND UNSECURED.
Notwithstanding the creation of the trust described herein, all
deferred compensation benefits under this subsection (b) are unfunded
for purposes of the Employee Retirement Income Security Act of 1974, as
amended. Your (or your beneficiary's) right to receive a distribution
hereunder shall be an unsecured claim against the general assets of the
Club, and neither you nor your beneficiary shall have any rights in or
against any amounts credited hereunder or any other specific assets of
the Club or the trust referred to herein. Any deferred compensation
benefits payable hereunder to you or your beneficiary may be payable
out of the trust established by the Club, or may be payable from the
general assets of the Club.
(vii) ANTI-ASSIGNMENT. No right or deferred
compensation payment under this subsection (b) shall be subject to
alienation, sale or assignment.
3. SALE BONUS. In the event of (1) a sale or exchange of
substantially all of the assets of the Club to any person or entity not
controlled by Xxxxxxx X. Xxxxxx, his estate or any inter vivos or testamentary
trust of which Xxxxxxx X. Xxxxxx is the grantor, (2) a sale of ownership
interests in the Club or the General Partner possessing more than 50% of the
voting power of such entity to any person other than Xxxxxxx X. Xxxxxx, his
estate or any inter vivos or testamentary trust of which Xxxxxxx X. Xxxxxx is
the grantor, or (3) a public offering of securities possessing more than 50% of
the aggregate value of the Club, you shall be paid a bonus equal to $100,000.
4. LIFE INSURANCE. The Club understands that you may acquire
life insurance policy to insure receipt of proceeds based
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January 30, 1998
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upon the unpaid portion of the salary amounts set forth in paragraph 2. Each
year during the term of this Contract, including any option years if the
applicable option has been exercised, The Club will reimburse you for the cost
of such policy in an amount not to exceed the annual premium based upon
preferred issued rates for a term insurance policy with a death benefits equal
to $2,000,000.
Reimbursement will be made with respect to the option years
only if the option for such year has been exercised.
5. POST SEASON BONUS. In the event that the Club wins the
Central Division Championship, American League Championship Pennant or the World
Series during any championship season during the term of this Agreement,
including any option year if the applicable option has been exercised, you shall
be paid bonus payments as follows:
American League Central Division Championship or
Wild Card $ 50,000
American League Championship $100,000
World Series Championship $100,000
6. GROUP PLAN. In addition to all of the other rights and
benefits under this Agreement, you shall be eligible to participate in any
current or future plan which may be provided by the Club for the benefit of its
executives or employees, provided you qualify, and subject to such plan's or
program's terms and conditions. You may participate in, among other things, any
and all group life insurance policies, plans, and medical and health benefits
maintained by or on behalf of the Club to the fullest extent possible in
accordance with the terms and provisions thereof.
7. EXPENSES. You shall be entitled to incur on behalf of the
Club reasonable and necessary expenses in connection with your duties, in
accordance with the Club's customary practice, including expenses incurred in
connection with your use of an automobile which will be provided by the Club for
your exclusive use; or, in lieu of accepting the use of an automobile provided
by the Club, the Club will pay you a monthly automobile allowance of Three
Hundred Dollars ($300.00).
8. JOB DESCRIPTION. During the term of your employment, you
shall faithfully perform the duties and have the responsibilities of Executive
Vice President, General Manager of the Club, subject to the control and
direction of the President and Chief Executive Officer, if any, the Chairman of
the Board,
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January 30, 1998
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the Board of Directors of the Club and its General Partner. You agree to devote
your full time, energies, talent, and best efforts exclusively to your duties as
Executive Vice President, General Manager and to such other duties as may be
assigned to you as provided above. You agree that the Club will not grant
permission to any other Major League Baseball Club to discuss other employment
opportunities with you during the term of this Contract.
9. PUBLIC CONTACT. You agree to conduct yourself with
propriety and with due regard to public convention and morals, and agree not to
engage in conduct which is detrimental to or contrary to the rules of the Club,
the League and/or professional baseball, and you further agree to abide by and
be subject to the discipline of the Commissioner of Baseball and to his
decisions rendered in accordance with the Professional Baseball Agreement.
10. DEATH OR DISABILITY. Your death or permanent disability
during the term of this Agreement shall immediately terminate this Agreement.
For the purposes of this Section 7, permanent disability is defined as any
condition caused by an accident, sickness or otherwise, which, in the reasonable
judgment of the President and Chief Executive Officer of the Club, if any, the
Chairman of the Board or the Board of Directors of the Club or its General
Partner, disables, or may in the future disable, you from substantially
performing the duties and services required under this Agreement for a period of
120 days, whether consecutive or non-consecutive, in any 12-month period. Upon
termination of this Agreement pursuant to this Section 7, you shall be entitled
to no compensation or any of the other rights or benefits provided in this
Agreement not already earned as of the date of such termination or otherwise
required by law.
11. TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the
event that you fail to observe and comply with the provisions of this Agreement
in any material respect or in the event of your fraud or dishonesty in the
performance of your duties, the Club may discharge you prior to the expiration
of the term of this Agreement by giving you written notice, which notice shall
state the specific facts upon which the discharge is based. In the event of such
discharge, you shall be entitled to no compensation or any of the other rights
or benefits provided in this Agreement not already earned as of the date of such
discharge or termination, except as otherwise required by law. Both parties
agree, however, that you shall have no right to terminate this Agreement
voluntarily.
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January 30, 1998
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12. TERMINATION WITHOUT CAUSE. You agree that, should you be
discharged from your duties without cause, you are obligated to seek and, if
offered, accept other comparable employment, either from another Major League
Club or from some other baseball or non-baseball employer. In the event that you
are so discharged without cause, you will receive not less than five days
written notice of such discharge. The compensation due by the Club under this
Agreement will be reduced by any compensation which you receive from such other
employment following such termination. The amount to be deducted includes, but
is not limited to, compensation of any kind for services, including salary,
bonuses, fees, commissions, payments in kind, and similar items, and the
reasonable value of services rendered by you should you become self-employed
following termination.
13. REPRESENTATIONS AND ADDITIONAL COVENANTS.
(a) You hereby represent that you are free to accept
employment with the Club as contemplated hereunder, and that such
employment will not violate the terms of any other agreement or
instrument to which terms you are subject.
(b) You hereby represent that you do not directly or
indirectly, own stock or any other financial interest in the ownership
or earnings of any Major League Club, and you agree that you will not
hereafter acquire or hold any such interest except in accordance with
Major League Rule 20(e).
14. CONFIDENTIALITY. The parties agree that the terms of this
Agreement and all of the conversations and negotiations regarding your
employment with the Club are in strictest confidence and shall be and will
remain confidential and not subject to public disclosure of any kind without our
mutual consent or as may be required by law. In addition, you agree to maintain
the confidentiality of all business information of the Club which you acquire
during your employment hereunder, and to preserve such information for the
exclusive benefit of the Club.
15. INJUNCTIVE AND EQUITABLE RELIEF. Because during the course
of your employment under this Agreement you will gain an intimate knowledge of
the business, activities and affairs of the Club, and because of the special,
unique and extraordinary services you are capable of performing for the Club or
one of its competitors, you recognize that the services to be rendered by you
hereunder are of a character giving them a peculiar value, the loss of which
cannot be adequately or reasonably compensated for by damages. You therefore
agree that if you fail to comply
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January 30, 1998
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with any of the provisions of this Agreement, in addition to the remedies and
procedures provided elsewhere in this Agreement, the Club shall be entitled to
obtain immediate injunctive or other equitable relief to restrain you from
failing to fulfill your obligations hereunder or from becoming affiliated,
directly or indirectly, with any of the Major League Clubs or their respective
minor league affiliates, without prejudice to any other remedies to which the
Club may be entitled under law.
16. BINDING EFFECT. This Agreement shall be binding upon, and
shall inure to the benefit of, both you and the Club. This Agreement may not be
assigned or transferred without the consent of both parties.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties, and supersedes in its entirety any prior agreements,
arrangements and understandings between the parties with respect to the subject
matter hereof, and no amendment hereof shall be deemed valid unless in writing
and signed by the parties hereto.
18. GOVERNANCE. This Agreement is subject to and is governed
by, all applicable rules and regulations of Major League Baseball and the
American League of Professional Baseball Clubs, and any rules or regulations
which the Club may announce from time to time.
19. EXECUTION BONUS. As additional consideration for entering
into this Contract, the Club shall pay you the sum of $100,000 (the "Execution
Bonus"). The Execution Bonus shall be payable, subject to any federal, state,
and local payroll taxes that are required by law to be withheld, upon the
execution of this Contract by you and the Club.
20. CONSULTING AGREEMENT. Upon termination of your employment
pursuant to the terms of this Contract, if you and Club mutually agree, you will
be retained by the Club as a consultant for a period of five (5) years. The
annual consulting fee shall be $200,000. In addition, you shall be eligible to
participate in any medical and life insurance benefit plan which may be provided
by the Club for the benefit of its executives or employees, provided you
qualify, and subject to such plan's or program's terms and conditions. You may
participate in, among other things, any and all group life insurance policies,
plans, and medical and health benefits maintained by or on behalf of the
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January 30, 1998
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Club to the fullest extent possible in accordance with the terms and provisions
thereof.
Very truly yours,
CLEVELAND INDIANS BASEBALL
COMPANY LIMITED PARTNERSHIP
By: Its General Partner,
Cleveland Baseball
Corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
ACCEPTED:
/s/ Xxxx Xxxx
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Date: February 5, 1998
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