ARTICLE XXVII:
RIGHT OF SET-OFF
INDEX
Section 1. Set-off Calculation
Section 2. Successive Terminations
Section 3. Deferred Compensation
Section 4. Waiver of Set-off
Right
Section
1. Set-off Calculation.
(a) When a Team (“First Team”) terminates
a Player Contract (“First Contract”) in
circumstances where the First Team, following the termination,
continues to be liable for Compensation called for by
the First Contract (including any Deferred Compensation),
the First Team’s liability for such Compensation
shall be reduced pro rata by a portion of the compensation
earned by the player (for services as a player) from
any professional basketball team or teams (the “Subsequent
Team(s)”) during each Salary Cap Year covered
by the First Contract (including, but not limited to,
compensation earned but not paid during such period).
The reduction in the First Team’s liability shall
be calculated for each Salary Cap Year (or partial Salary
Cap Year) as follows:
Step 1: |
Calculate the total compensation
earned by the player (for services as a player)
from the Subsequent Team(s) during the Salary
Cap Year (or partial Salary Cap Year). |
Step 2: |
Subtract from the result in Step
1 (i) if the player had zero (0) Years of Service
at the time the First Contract was terminated,
the Minimum Annual Salary applicable to such
player for the Salary Cap Year in which the
First Contract was terminated, or (ii) if the
player had one (1) or more Years of Service
at the time the First Contract was terminated,
the Minimum Annual Salary applicable to a player
with one (1) Year of Service for the Salary
Cap Year in which the First Contract was terminated. |
Step 3: |
If the result in Step 2 is a
negative amount, there is no reduction in the
First Team’s liability for the relevant
Salary Cap Year (or partial Salary Cap Year).
If the result in Step 2 is a positive amount,
the reduction in the First Team’s liability
for the relevant Salary Cap Year (or partial
Salary Cap Year) shall equal 50% (fifty percent)
of such amount. |
(b) For the purposes of this Article, a “professional
basketball team” shall mean any team in any country
that pays money or compensation of any kind to a basketball
player for rendering services to such team (other than
a reasonable stipend limited to basic living expenses).
For purposes of this Article, “compensation”
earned by a player shall include all forms of compensation
(including, without limitation, any non-cash compensation)
other than benefits comparable to the type of benefits
(e.g., medical and dental insurance) provided to an
NBA player in accordance with Article IV above, travel
and moving expenses, and any car and housing provided
temporarily by a professional basketball team to the
player during the period of time for which the player
renders services to such team.
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Section 2. Successive
Terminations.
In the event of successive terminations by NBA Teams
of Player Contracts involving the same player, the Team
first to terminate shall be entitled to the right of
set-off provided for by this Article XXVII until its
compensation liability has been eliminated in its entirety,
and the right of set-off shall then pass in order to
the Team(s) terminating any subsequent Contract(s).
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Section 3. Deferred
Compensation.
In calculating the amount of set-off to which a Team
may be entitled pursuant to this Article, Deferred Compensation
payable to a player for or with respect to a period
covered by the terminated Contract shall be discounted
on an annual basis by a percentage equal to the prime
rate as set by Citibank, N.A. and in effect at the time
the agreement providing for such Deferred Compensation
was made.
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Section 4. Waiver
of Set-off Right.
A Team and a player may agree in an amendment to an
already-existing Player Contract to modify or eliminate
the set-off right provided in this Article, but only
pursuant to and to the extent allowed by Article II,
Section 3(l ).
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