Paul E. Hathaway and Brenda J. Hathaway - Page 7

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          scratch pad entries to his order writers.  The order writers then           
          documented the orders on forms provided by TAG, and sent the                
          forms to TAG.  When a TAG sales representative opened a new                 
          account, the sales representative was required to fill out a                
          credit report for that prospective customer.  TAG sales                     
          representatives were not required to submit to TAG any other                
          types of reports.                                                           
               Apart from placing orders, Hathaway communicated with TAG on           
          an irregular basis; he spoke to TAG’s comptroller and national              
          sales manager primarily when he had a problem with a customer.              
          Hathaway also called on TAG’s national sales manager, for                   
          example, to meet with a potential customer's upper-level                    
          management when he closed a contract with a major company.  TAG’s           
          national sales manager had final approval when a special                    
          arrangement with respect to price, service, or advertising was              
          requested by a major company.  Events such as these might cause             
          Hathaway to communicate with TAG as often as three times in a               
          week, or as rarely as once a month.                                         
                              Compensation and Benefits                               
               TAG paid its sales representatives on a commission basis,              
          calculated on the amount and cost of merchandise shipped by TAG,            
          not based on the orders a sales representative placed with TAG.             
          The commissions a sales representative earned were put into a               
          reserve.  TAG then paid its sales representatives a draw against            
          the previously earned commissions in the reserve on a semimonthly           

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Last modified: May 25, 2011