Paul E. Hathaway and Brenda J. Hathaway - Page 12

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          that customer, bore any risk of loss, and received payment on the           
          account.  On some occasions TAG asked Hathaway if he would be               
          willing to guarantee a prospective customer’s credit.  Over the             
          years, there were three occasions when Hathaway guaranteed a                
          prospective customer’s credit and payment was not forthcoming;              
          Hathaway had to bear the losses resulting from his guarantees.              
                              Sales For Other Companies                               
               Some of TAG's sales representatives also handled lines of              
          merchandise from other companies.  TAG knew that some of its                
          sales representatives handled other lines of merchandise, but did           
          not actively discourage this practice.  Sales representatives for           
          TAG, however, were permitted to handle other manufacturers’ lines           
          of merchandise only if those lines did not conflict with any line           
          of TAG merchandise.  TAG management made the decision as to                 
          whether a line of merchandise was conflicting.                              
               In 1989 and 1990, while Hathaway was a sales representative            
          for TAG, he also handled a gloves line for Gates-Mills, Inc., for           
          which he received commissions in the amounts of $14,693.94 and              
          $5,000 in 1989 and 1990, respectively.  Gates-Mills, Inc., is               
          unrelated to TAG.  TAG knew that Hathaway handled the sale of               
          apparel for other manufacturers.                                            
               TAG could have terminated Hathaway’s position as a sales               
          representative at any time.  Likewise, Hathaway could have                  
          terminated his position with TAG at any time.  However, if a                

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Last modified: May 25, 2011