Neither deal was announced by the team on Wednesday, as the Yankees must complete the language on both contracts before making them official. Williams' deal could be announced as early as Thursday.
Damon, who agreed to a four-year deal worth between $52-$53 million late Tuesday night, spoke with Yankees owner George Steinbrenner for about 15 minutes on Wednesday afternoon.
Steinbrenner's spokesman, Howard Rubenstein, said the owner characterized the talk as a "good conversation."
Williams has been with the Yankees for 15 years, the past 13 as the starting center fielder, making him the longest-tenured player on the current team. Damon will inherit the starting center field job, and Williams will take over the bench role filled by Ruben Sierra over the past two years.
The Yankees offered Williams arbitration on Dec. 7, with the understanding that he would decline it. By doing so, they extended the negotiating deadline to Jan. 8, though the two sides were able to come to terms before Christmas.
Williams made more than $12 million in 2005, so he returns to the Bronx with a significant pay cut. Sierra earned $1.5 million last season, the same amount Williams will receive for 2006.
Williams ranks in the top 10 on several all-time Yankees lists, including hits (2,218, fifth place), runs (1,301, fifth), home runs (275, sixth), RBIs (1,996, seventh) and doubles (420, fourth).
Shave and save? Damon, who is as well known for his long locks and bushy beard as he is for his skills as a leadoff hitter and center fielder, will have to clean up his look before he joins the Yankees this week.
New York has a team policy that prohibits long hair or facial hair below the lip, a policy that no player in the Joe Torre era has tried to challenge. Damon told WBZ-TV in Boston on Tuesday night that he would do whatever the team wanted him to do when it came to his hair.
"Without a doubt, George Steinbrenner has a policy, and I'm going to stick to it," Damon said. "Our policy with the Yankees is to go out there and win, and we're going to try and bring another championship to them."
With Damon expected to shave his beard before the press conference later this week, Philips Norelco has extended an offer to the newest Yankee.
The company has offered a $15,000 donation to the charity of Damon's choice if he does the deed with an electric shave courtesy of Philips Norelco.
Philips Norelco's vice president of marketing Elwin de Valk said: "As Johnny makes the significant transformation from a Red Sox to a Yankee, Philips Norelco, long known for helping men put their best face forward, is offering up our entire lineup of men's grooming products, a barber and a $15,000 donation to the charity of his choice if Johnny embraces The Boss' clean shave policy.
"We're so excited Johnny is going to be wearing pinstripes," he added, "that Norelco is willing to brave the NYC Transit strike and meet him anytime, anywhere if he wants to take us up on our offer and get a Norelco shave to benefit his favorite charity."
Giambi excited: Jason Giambi, who played with Damon in Oakland, helped recruit the center fielder.
"Johnny and I spoke a few times over the last week and I strongly encouraged him to sign with the Yankees," Giambi said through his agent, Arn Tellem. "It is good to know that our lineup next year will include a natural leadoff hitter whose presence allows Jeter and A-Rod to return to their preferred places in the batting order. Johnny is a good friend and a great guy to have in the clubhouse. I am very excited about having him as a teammate again."