- 18 -
(2) $315,603 that was awarded pursuant to the management agree-
ment for the period April 1, 1986, through December 1986,
(3) $933,333 that was awarded pursuant to a deferred compensation
arrangement adopted on March 20, 1987, by Mr. Ruf as the sole
director of petitioner's board of directors (1987 deferred
compensation arrangement), and (4) $73,117 of interest on the
$315,603 awarded pursuant to the management agreement.
The 1987 deferred compensation arrangement provided in per-
tinent part:
WHEREAS, Jesse Ruf, as this Corporations's presi-
dent and chief operating officer,[14] has been required
and continues to be required to render services sub-
stantially in excess of those which would ordinarily be
required in connection with his office due to the con-
dition of the Corporation's business at the time of his
employment and the need to render extraordinary efforts
to prevent the Corproation [sic] from failing; and
WHEREAS, Jesse Ruf has, in his capacity as presi-
dent and chief operating officer, provided extraordi-
nary leadership and ability as evidenced by the Cor-
poration's current operating profits and steadily
improving financial position;
NOW, THEREFORE, BE IT RESOLVED, that a special
deferred compensation arrangement is hereby awarded to
Jesse Ruf in the amount of One Million Five Hundred
Thousand Dollars ($1,500,000.) to be accrued in three
(3) equal installments of Five Hundred Thousand Dollars
($500,000.) each during this Corporation's fiscal years
1988, 1989 and 1990, the amount so accrued shall [sic]
be payable by the Corporation in all events provided
only that Jesse Ruf shall complete twelve (12) calendar
months of employment during each such corporate year. *
* *
14 Although the 1987 deferred compensation arrangement provided
that Mr. Ruf was serving as petitioner's president and COO, he
was also serving as petitioner's CEO at that time. As CEO, he
assumed responsibility for all of petitioner's operations, in-
cluding acting as COO.
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