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Exhibit 10.4
February 4, 1999
Mr. Xxxx Xxxxxxx
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 April 29, 1998.
1. TERM.
(a) Subject to the terms and conditions set forth below, the
Club agrees to employ you as Vice President for Baseball
Operations and Assistant General Manager of the General
Partner of the Club, for the period commencing on January 1,
1999 and ending December 31, 2002.
(b) Your salary shall be payable each calendar year in
twenty-four equal semi-monthly installments.
2. SALARY.
(a) SALARY. Your salary as Vice President for Baseball
Operations and Assistant 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, 1999 to December 31, 1999 at the rate of $200,000
per year.
January 1, 2000 to December 31, 2000 - $250,000
January 1, 2001 to December 31, 2001 - $275,000
January 1, 2002 to December 31, 2002 - $300,000
(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
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Mr. Xxxx Xxxxxxx
February 4, 1999
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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 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%
(i) INVESTMENT POLICY. Any deferred compensation
amounts credited to the Deferred Compensation Account pursuant to this
subsection (b) and all income attributable to such amounts (net of
expenses) shall be held in a segregated investment account within the
Trust and shall be invested and reinvested accordance with the Trust
agreement until such time as the entire fair
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Mr. Xxxx Xxxxxxx
February 4, 1999
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market value of Deferred Compensation Account is paid by the Club to
you, or your beneficiary, as applicable in accordance with Subsection
(b)(i) above.
(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 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
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Mr. Xxxx Xxxxxxx
February 4, 1999
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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. POST SEASON BONUS. In the event that the Club participates in a
division playoff series, league championship series or the World Series during
any championship season during the term of this Agreement, including either
option year if the applicable option has been exercised, you shall be entitled
to receive a bonus equal to the greater of (i) $25,000, or (ii) fifty (50%) of a
player's share payable to the Club's players as determined pursuant to Major
League Rule 45(b)(2) as the same shall be amended from time to time.
4. 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.
5 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 business 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 Four
Hundred Fifty Dollars ($500.00) per month during 1999 and Five Hundred Fifty
Dollars ($550.00) per month during 2000, 2001 and 2002.
6. JOB DESCRIPTION. During the term of your employment, you shall
faithfully perform the duties and have the responsibilities of Assistant General
Manager and Vice-President for Baseball Operations of the Club, subject to the
control and direction of the President and Chief Executive Officer, if any, the
Chairman of the Board, the Board of Directors, the Executive Vice President and
General Manager of the Club and its General Partner. You agree to devote your
full time, energies, talent, and best efforts exclusively to your duties as
Assistant General Manager and Vice President for Baseball Operations 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
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February 4, 1999
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Baseball Club to discuss other employment opportunities with you during the term
of this Contract.
7. 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.
8. 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 9, 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 General Partner of the Club,
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 9, 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.
9. 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.
10. 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.
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February 4, 1999
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11. 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).
12. 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.
13. 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 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.
14. 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.
15. 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.
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Mr. Xxxx Xxxxxxx
February 4, 1999
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16. 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.
Very truly yours,
CLEVELAND INDIANS BASEBALL COMPANY LIMITED
PARTNERSHIP
By: Its General Partner,
ACCEPTED: Cleveland Indians Baseball
Company, Inc.
/s/ Xxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx,
Date: February 23, 1999 Chief Executive Officer and
---------------------- President
