AMENDED AND RESTATED SUPPLEMENTAL BENEFIT AGREEMENT
AMENDED
AND RESTATED
This
Amended and Restated Supplemental Benefit Agreement (the “Agreement”) is made
and entered effective as of December 4, 2006 by and between Rural Telephone
Finance Cooperative, a District of Columbia cooperative corporation (“RTFC”) and
Xxxxxxx X. Xxxxxxxx (the “Executive”) in order to amend, restate and clarify the
Supplemental Benefit Agreement previously entered into by and between RTFC and
the Executive (the “Existing Agreement”).
WHEREAS,
RTFC and the Executive desire to memorialize their mutual understanding that
under the Existing Agreement, pursuant to which RTFC retained the Executive to
provide services as its Chief Executive Officer, both RTFC and the Executive
intended that the Executive function as an independent contractor, and not as an
employee, of RTFC; and
WHEREAS,
the Executive has, in fact, continually performed as an independent contractor,
and not as an employee, of RTFC under terms of the Existing Agreement;
and
WHEREAS, the RTFC and the Executive
wish to amend and restate the Existing Agreement in order to remove any
ambiguity with respect to the matters set forth above;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the parties hereby
agree as follows:
1. Service. Subject
to and upon the terms and conditions herein provided, RTFC hereby agrees to
retain the Executive and the Executive hereby agrees to provide services to RTFC
for the Term of Service, as defined in Section 3 hereof. The
Executive is not required to provide services on RTFC premises, unless
specifically requested by RTFC, and shall exercise his own discretion in
determining the number of hours required to fulfill his responsibilities
hereunder.
2. Position and
Responsibilities. During the Term of Service hereunder, the Executive
shall be retained as an independent contractor to provide services as the Chief
Executive Officer of RTFC, or in such other senior executive capacity or
capacities as may be mutually satisfactory to the Executive and
RTFC. The Executive will provide services as the senior officer of
RTFC, reporting only to the Board of Directors of RTFC (the
“Board”). In fulfilling his responsibilities hereunder, the Executive
shall have discretionary authority customarily granted to an executive of
similar status, including but not limited to hiring decisions, work hours,
resource allocation and the like.
3. Term of
Service. The Term of Service under this Agreement shall
commence as of July 22, 2004, and shall terminate on February 28, 2009 unless
earlier terminated as provided in Section 5 below or extended as provided in the
following sentence (the “Term of Service”). The Term of Service shall
automatically be extended on March 1, 2009 and each subsequent March 1 for an
additional year unless, not later than 6 months prior to any such date, either
party to this Agreement shall have given written notice to the other party that
he or it does not wish to extend or further extend the Term of
Service.
4. Compensation. RTFC
has created, on its books of account, a deferred compensation account with
respect to the Executive (the “Account”). As of March 1, 1995, and on
January 1 of each year thereafter, RTFC has credited the Account in the amount
of $30,000. Each year thereafter during the Term of Service, RTFC
shall make a similar credit. Except as provided in Section 5 below,
the balance in the Account shall be deemed to be credited with interest annually
on December 31st of each
year during the Term of Service at a rate equal to the effective cost to RTFC’s
affiliate corporation, the National Rural Utilities Cooperative Finance
Corporation (CFC), for 20 year Medium Term Notes computed at the time of each
annual deposit. RTFC shall provide an alternative investment
mechanism whereby the opportunity to earn a higher rate of return could be
offered, if at Executive’s option, such an alternative were
requested. RTFC shall not be required to create a separate account or
any reserve of cash or investments in connection with its obligations with
respect to this Account and the Executive will have the status of a general
creditor of RTFC with respect to any compensation to be provided under this
Agreement.
5. Payments to the Executive Upon
Termination of Service.
5.1 Termination by
RTFC.
(a) RTFC
shall have the right to terminate the Executive’s service at any time with or
without “Cause” as defined in Section 5.6. If, during the Term of
Service, RTFC terminates the service of the Executive under this Section 5
without Cause, the Term of Service shall terminate immediately thereafter; provided, however,
that:
(i) the
Account will be deemed to be continued in effect for the lesser of (A) a period
of 12 months or (B) the remaining period of the Term of Service prior to such
termination (but in no case less than 6 months) (the “Extended Period”) and all
credits described in Section 4 shall continue to be made;
(ii) if the
end of the Extended Period occurs on other than a December 31st, RTFC
shall further credit the Account with simple interest for the period from
January 1 to the end of the Extended Period at the same rate that was used to
credit interest on the prior December 31st;
and
(iii) within 15
days after the end of the Extended Period, RTFC will pay to the Executive in a
single lump sum an amount equal to the balance in the Account at the end of the
Extended Period after the additional credit described in (ii) above has been
made.
(b) If
during the Term of Service, RTFC terminates the service of the Executive for
“Cause”, as defined below, the Term of Service shall terminate immediately
thereafter, and the Executive shall not be entitled to any payment with respect
to the Account.
5.2 Termination by the
Executive. The Executive has the right to terminate his service hereunder
at any time during the Term of Service upon not less than 90 days prior written
notice to RTFC. If during the Term of Service the Executive
terminates his service with RTFC, the Term of Service shall terminate
immediately, and RTFC shall pay the Executive such compensation as is set forth
in Section 5.1(a).
5.3 Disability. In the
event of the termination of the Executive’s service by reason of “Disability”,
as defined below, during the Term of Service, RTFC shall pay the Executive the
amount described in Section 5.1(a).
5.4 Death. In
the event of the termination of the Executive’s service by reason of death
during the Term of Service, RTFC shall pay the Executive’s Designated
Beneficiary the amount described in Section 5.1(a).
5.5 Expiration of
Term. In the event of the termination of the Executive’s
service by reason of the completion of the Term of Service without further
extension as described in Section 3, within 15 days from the expiration of the
Term of Service RTFC shall pay to the Executive an amount equal to the Account
balance, after the additional credit described in Section 5.1(a) above as if the
February 28th date
were the end of the Extended Period.
5.6
Definitions.
(a) “Cause”. For purposes
of this Agreement, Cause shall mean (i) the willful and continued failure by the
Executive, as determined in good faith by two-thirds of the members of the Board
(after notice to the Executive and providing the Executive an opportunity to
meet with the Board), to perform his duties under this Agreement or comply with
written policies of RTFC, or (ii) willful conduct materially injurious to RTFC
or to an affiliate of RTFC or (iii) conviction of a felony involving moral
turpitude provided, however, that any act
or omission by the Executive shall not fall within the scope of this Section
5.6(a)(i) and (ii) if it was done or omitted to be done by the Executive in good
faith and with a reasonable belief that such action or omission was in the best
interests of RTFC.
(b) “Disability”. For
purposes of this Agreement, Disability shall mean that the Executive has not
performed his full-time duties with RTFC for three consecutive months as a
result of his incapacity due to physical or mental illness and within thirty
(30) days after written notice of termination is given to the Executive he shall
not have returned to the full-time performance of his duties
hereunder.
(c) “Designated
Beneficiary”. For purposes of this Agreement the Designated
Beneficiary shall be any person designated by the Executive in a written
instrument signed by the Executive and delivered to RTFC to be the beneficiary
of payments to be made by RTFC hereunder upon the death of the Executive if such
person survives the Executive. Any Designated Beneficiary may be
changed by the Executive at any time or times by a written instrument signed by
the Executive and delivered to RTFC. If no Designated Beneficiary
survives the Executive, the Designated Beneficiary shall be the estate of the
Executive.
6. Relationship of the
Parties
6.1 Independent
Contractor. Executive understands and agrees that in the performance of
this Agreement he is acting as an independent contractor. Executive
will perform the requested services, under the general direction of the RTFC,
but he will determine, in his reasonable discretion, the manner and means by
which the services, are accomplished, subject to the requirement that he shall
at all times comply with applicable law and proper business practices and meet
accepted professional and industry standards.
6.2 Employment Taxes and
Benefits. As an independent contractor, Executive has the responsibility
and agreement to file all returns required by law and at all times to abide by
applicable federal, state, and local law requirements, assuming sole liability
for all self-employment and income taxes due on income earned pursuant to this
Agreement. The RTFC will not treat Executive as an employee, with
respect to performance under this Agreement, for federal, state or local tax
purposes or otherwise. The RTFC will not be responsible for payment
of workers’ compensation insurance or unemployment compensation or disability
insurance, or for withholding or paying employment-related taxes based on
services provided under this Agreement. Executive acknowledges that
he is not entitled to any rights or benefits (including, but not limited to,
vacation and insurance) to which the RTFC employees may be
entitled. Executive agrees to indemnify and hold the RTFC harmless
from any liabilities, claims or actions relating to employment taxes or
benefits.
7. No Mitigation. RTFC
agrees that if the Executive’s service is terminated during the Term of Service,
the Executive is not required to attempt in any way to reduce the amounts
payable to the Executive by RTFC under this Agreement. Further, the
amount or nature of any payment to be paid to or with respect to the Executive
shall not be reduced by any compensation earned by the Executive as a result of
any employment, by retirement benefits, or offset against any amount claimed to
be owed by the Executive to RTFC or any of its subsidiaries or
otherwise.
8. Service
Information. The Executive shall not at any time during his
service with RTFC or following termination or expiration of this Agreement,
directly or indirectly, disclose, publish or divulge to any person (except in
the regular course of RTFC’s business or as required by law or regulations), or
appropriate, use or cause, permit or induce any person to appropriate or use,
any proprietary, secret or confidential information of RTFC including, without
limitation, knowledge or information relating to its copyrights, trade secrets,
business methods, the names or requirements of its customers, vendors,
contractors, agents, dealers and distributors or the prices, credit or other
terms extended or granted to any of such persons, all of which the Executive
agrees are and will be of great value to RTFC and shall at all times be kept
confidential. Upon the termination of the Term of Service hereunder,
the Executive shall promptly deliver or return to RTFC all materials of a
proprietary, secret or confidential nature relating to RTFC together with any
other property of RTFC which may have theretofore been delivered to or may then
be in the possession or control of the Executive. RTFC and the
Executive agree that the provisions of this Section shall survive the
termination of the executive’s service hereunder.
9. Legal Fees and
Expenses. In the event that a claim for payment under this
Agreement is disputed, the executive shall be reimbursed for all reasonable
attorney fees and expenses incurred by the executive in pursuing such claim,
provided that the Executive is successful as to at least part of the disputed
claim by reason of litigation, arbitration or settlement.
10. Amendment; Waiver.
This Agreement contains the entire agreement of the parties with respect to the
matters set forth herein, and may only be amended by subsequent written
agreement of the parties hereto. The Existing Agreement is intended
by the parties to be amended and restated in its entirety by this Agreement,
with no provisions thereof surviving, and any other prior agreements between the
Executive and RTFC, whether in writing or not, relating to terms and conditions
of service, are hereby cancelled. No waiver by RTFC of any breach by
the
11.
Binding
Effect. The Executive’s rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, such rights
shall not be subject to commutation, encumbrance, or the claims of the
executive’s creditors, and any attempt to do any of the foregoing shall be null
and void. The provisions of this Agreement shall be binding upon and
inure to the benefit of the Executive and his heirs, beneficiaries and personal
representatives, and shall be binding upon and inure to the benefit of RTFC and
its successors or assigns.
12. Governing Law;
Severability. Except as otherwise set forth herein, this Agreement is
governed by and is to be construed and enforced in accordance with the laws of
the State of Virginia without regard to principles of conflicts of
law. If any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by
law.
13. Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.
14.
Headings. The
headings contained in this Agreement are for reference purposes only and shall
not be deemed to be part of the Agreement or to affect the meaning or
interpretation of this Agreement.
15.
Notices. Any
notice given to either party hereto shall be in writing and shall be deemed to
have been given when delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly and properly addressed to
the party concerned at the address indicated below or to such changed address as
party may subsequently give notice of:
If to
RTFC:
The Rural
Telephone Finance Cooperative
Woodland
Park
0000
Xxxxxxxxxxx Xxx
Xxxxxxx,
Xxxxxxxx 00000
ATTN: President
If to the
Executive:
Xx.
Xxxxxxx X. Xxxxxxxx
000
Xxxxxxxx Xxxxxx X.X.
Xxxxxxxx,
Xxxxxxxx 00000
16.
Enforcement of
Agreement. The respective rights and obligations of the parties hereunder
shall survive any termination of this Agreement or the Term of Service for any
reason to the extent necessary to obtain the intended provision of such rights
and the intended performance of such obligations.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year first above written.
RURAL
TELEPHONE FINANCE COOPERATIVE
By: /s/ X. X. XXXXXXXXX III
X. X.
Xxxxxxxxx III, President
/s/ XXXXXXX X. XXXXXXXX
Xxxxxxx X. Xxxxxxxx
