10.4 Draft Choice Compensation for Restricted Free Agents. Any Club that is entitled to but does not exercise its Right of First Refusal pursuant to Section 10.3 shall be entitled to obtain Draft Choice Compensation from the New Club. The number and quality of draft choices due to the Prior Club shall be based on the average annual value of the compensation contained in the Principal Terms (as defined in Section 10.3(e) hereof) of the New Club's Offer Sheet (determined by dividing such compensation by the lesser of the number of years of the Offer Sheet or five), based on the following scale:
GROUP 2 COMPENSATION CHART OFFER SHEET COMPENSATION
$1,110,249 or below None
Over $1,110,249 to $1,682,194 Third Round
Over $1,682,194 to $3,364,391 Second Round
Over $3,364,391 to $5,046,585 First Round and Third Round
Over $5,046,585 to $6,728,781 First Round, Second Round, and Third Round
Over $6,728,781 to $8,410,976 Two First Rounds, Second Round, and Third Round
Over $8,410,976 Four First Rounds
The dollar amounts set forth in the scale outlined above shall be increased on an annual basis at the same percentage rate of annual increase as the Average League Salary, with the first such increase occurring based upon a comparison of the 2014/15 Average League Salary to the 2013/14 Average League Salary. By way of example, if the Average League Salary for the 2014/15 League Year has increased by ten (10) percent from the Average League Salary for the 2013/14 League Year, then each of the dollar amounts stated in the table above shall be increased by ten (10) percent, and the basis for determining the number and quality of draft choices due to the Prior Club for the loss of a Restricted Free Agent signed after such date shall be adjusted accordingly. Clubs must use their own draft picks (being those awarded directly to the Club by the League for use by it in the Entry Draft, including such draft picks described in the first clause of this parenthetical that a Club has traded or encumbered, and subsequently reacquired or unencumbered).
Clubs cannot acquire picks to use as compensation (with the exception being a Club's own draft selections that are traded and then re-acquired).
Clubs owing one (1) draft selection must have it available in the next draft.
Clubs owing two (2) draft selections in different rounds must have them available in the next draft. 39 ARTICLE 10 10.4-10.4
Clubs owing three (3) draft selections in different rounds must have them available in the next draft.
Clubs owing two (2) draft selections in the same round, must have them available in the next three (3) drafts.
Clubs owing three (3) draft selections in the same round must have them available in the next four (4) drafts, and so on.
When a Club owes two (2) or more draft selections in the same round, the signing Club does not elect the years in which such selections shall be awarded to the Prior Club; rather, the selections next available will be transferred to the Prior Club (i.e., a Club that owes two (2) selections has them available in the next two (2) drafts – that is when they are transferred).
